Superannuation mistakes

Here are the 7 most common mistakes people make with their super, and how you can avoid them.

7 common super mistakes

• Having more than one fund
• Sticking with your first super fund
• Not investing in enough growth assets
• Switching to cash after the market falls
• Paying too much in fees
• Not making extra contributions
• Not checking it regularly

1. Having more than one super account

It's not unusual to end up with more than one super fund, especially if you've changed jobs a few times. The ATO says around 14 million people (22% of us), have 2 or more super accounts.

This might not seem like a big deal, but if you've got multiple funds, you're paying multiple sets of fees. This is unnecessary and will significantly eat away at your savings.

How to avoid it

Check how many super accounts you have in your name by logging into your myGov account online. Go to the ATO services section and click on 'Super' to see your current funds. If you've got more than one, choose which one you want to keep and follow the prompts to consolidate the others into that fund.

2. Sticking with your first super fund

A lot of people have stuck with the super account that was opened for them when they got their first job. This was likely the super fund that your employer at the time slected as their default fund for employees. However, it might not be the best fund for you.

The fund might be charging much higher fees than other similar funds, or you might find that the investment option you're been put it doesn't suit your stage of life.

How to avoid it

If you've stuck with the super fund you got from your first job, it's time to review it against others in the market. Take a look at how your fund has performed over the long term and what fees you're paying, and how this compares to other funds.

You might find that the fund you're with is great and suits you well, in which case it's perfectly fine to stick with it. But you might find that there's a better fund for you elsewhere. Your super is your money and you're in control of which fund you go with and how it's invested.

3. Not investing in enough growth assets

While you're young (in your 30s, 40s and even 50s), your super needs to be invested in more growth assets like shares which will help it deliver higher returns over the long term. If your super is invested in more defensive assets instead, like cash and bonds, it will result in lower returns over the long term and a smaller balance at retirement.

Don't make the mistake of assuming your super is invested in enough growth assets. If you haven't selected your super investment option you'll be placed in the fund's default option, which is usually a balanced option.

How to avoid it

Jump online and check which investment option you're currently in with your super fund. If you feel you're currently invested too heavily in defensive assets, you can switch to your fund's growth or high growth option instead.

If you don't like the look of your fund's high growth options, compare the high growth options offered by other funds. For even more control over your investments you can also consider creating your own investment mix using the fund's single asset class options.

Expert insight: Pick your high-growth option carefully

"For younger investors with over 30 years until retirement, opting for a high-growth superannuation fund can be strategic. However, not all high-growth options are the same. One fund might allocate 80% to growth assets, while another allocates 95%, leading to different outcomes. It's crucial to look beyond labels and understand how each fund invests your money."

Jessy Wang

Financial adviser, Financial Spectrum

4. Switching to a low-risk option after the market falls

It's tempting to switch your super to one of the low risk investment options after the share market crashes. You might think you're being proactive and helping to protect your super from more losses, but often the opposite is true.

If you switch you super from a high growth option to a low growth option after the market has already fallen, all you're doing is locking in that loss. You're also putting yourself at risk of missing out on the upside growth when the share market recovers if you're still invested in just cash. And while it may be nerve-wracking at the time, the market always recovers.

How to avoid it

Don't make any major investment decisions with your super out of panic and fear. It can be hard to watch your balance fall in times of market volatility, but try to remind yourself that super is a long term investment (one of the longest investments you'll ever have!) and it's designed to withstand periods of volatility.

Expert insight

"Saving for retirement is like running a marathon, and sometimes, marathon runners need to dodge obstacles; the current share market volatility is one of those. If you've prepared for your race in the form of good super habits and a clear plan, then the obstacles should only present small inconveniences. Rather than trying to time the market, it's about time in the market "

Pascale Helyar-Moray OAM

Founder of Grow My Money and author of Rich Woman, Poor Woman.

5. Paying too much in fees

Some people put a lot of time and energy into choosing a super fund with the best long term returns, but ignore the fees. This is a mistake.

Put simply, the more you pay in fees the less money you'll have to retire with. You might think a few hundred dollars difference a year isn't a big deal, but it can mean you retire with tens of thousands of dollars less.

How to avoid it

Check what fees you're currently paying with your super. If your annual fees are more than 1% of your balance, this is considered to be on the high side and there are lower-fee options available.

6. Not making extra contributions

Superannuation is an investment portfolio that benefits from compounded returns. The more you add to it the more it'll grow, because you'll earn returns on your returns.

People often don't contribute extra because they think it's not worth it unless you're going to add large amounts. But even small amounts added regularly will make a big difference over the long term.

Impact on super balance from making regular contributions

As you can see in the example above, adding just $20 per week could see you retire with an extra $63,930. And if you add $50 per week, this goes up to almost $160,000!

How to avoid it

If you're in a position to do so, speak to your employer about setting up a salary sacrifice arrangement for your super. This involves your employer sending a bit of your pre-tax income into your super fund instead of your bank account before you even get access to it. The benefit of this is that it's then taxed at the lower super rate of 15%, which means your overall taxable income is reduced.

7. Not checking your super regularly

Life can get busy, and checking your super balance might not be top of mind (especially when it's so long before you can even access it). But if you don't review your account regularly small mistakes, like missing contributions, might go unnoticed and cost you.

It's also a good opportunity to review how your fund is performing against others, and consider switching if it's underperforming.

How to avoid it

Make it a habit to check your super balance somewhat regularly. It doesn't have to be every week or even every month, but once or twice a year at a minimum is a good idea. Most super funds let you access your balance and investment options online or via their mobile app.

Written by

Alison Banney

Editorial Manager, Money

Alison is an editor at Finder and a personal finance journalist with over 10 years of experience, having contributed to major financial institutions and publications such as Westpac, Money Magazine, and Yahoo Finance. She is frequently quoted in media outlets like SmartCompany and SBS, offering expert insights on superannuation and money management. Alison holds a Bachelor of Communications in Public Relations and Journalism from the University of Newcastle, and has earned three ASIC RG146 certifications in superannuation, securities and managed investments and general financial advice, ensuring her expertise is fully aligned with ASIC standards. See full bio

Alison's expertise

Alison has written 644 Finder guides across topics including:

• Superannuation
• Savings accounts, bank accounts and term deposits
• Budgeting and money-saving hacks
• Managing the cost of living