The halfway point of the financial year is an excellent time to take stock of your superannuation.
With six months of income and contributions already in place, you have enough data to assess your progress and make any necessary adjustments before the end of the financial year.
Here’s why a mid-year super check is important and how to adjust your strategy if needed.
Why Check in Mid-Year?
Superannuation is one of the most significant investments you’ll make in your lifetime, so regular monitoring is essential. By reviewing your super in January, you can:
- Track Your Contributions: Ensure you’re on track to meet the annual concessional (pre-tax) contribution cap, currently $30,000 for most Australians.
- Maximise Tax Benefits: Adjust contributions if you want to reduce your taxable income for the financial year.
- Align with Retirement Goals: Check whether your current super balance is on track to meet your retirement goals and make changes if needed.
- Identify Investment Opportunities: Assess how your super fund’s investments are performing and whether they align with your risk tolerance and financial goals.
How to Conduct a Mid-Year Super Check
A thorough review involves examining your contributions, fund performance, fees, and compliance with contribution caps.
- Review Contributions
o Employer Contributions: Confirm your employer is making regular super guarantee (SG) payments. For most employees, this is currently 11.5% of your ordinary time earnings. Check your payslips or log into your super account to verify.
o Personal Contributions: If you’ve been making voluntary contributions, ensure you’re not exceeding the concessional or non-concessional caps.
o Catch-Up Contributions: If you have unused concessional cap amounts from previous years and a super balance under $500,000, consider using the carry-forward rule to boost your savings. - Check Fund Performance
o Review your super fund’s investment returns over the past six months and compare them with similar funds.
o Evaluate whether the investment strategy (e.g., balanced, growth, or conservative) still aligns with your risk appetite and retirement timeline. - Evaluate Fees
o Check for excessive fees, including administration, investment, or insurance premiums, as these can erode your balance over time.
o Consider switching to a lower-fee fund if costs seem disproportionately high. - Update Beneficiary Details
o Ensure your beneficiary nominations are up to date to reflect your current wishes.
Adjusting Your Super Strategy
If your mid-year review highlights areas for improvement, here are some adjustments you can make:
- Increase Voluntary Contributions
If you’re not on track to meet the $30,000 concessional cap, consider increasing your salary sacrifice or personal deductible contributions. This can reduce your taxable income while boosting your retirement savings. - Review Investment Options
If your fund’s performance isn’t meeting expectations, consider switching to a different investment option within the fund or even exploring another super fund altogether. Be mindful of exit and entry fees. - Reassess Insurance
Superfunds often include life, disability, and income protection insurance. Ensure these coverages meet your needs, as premiums are deducted from your balance. - Consolidate Super Accounts
If you have multiple super accounts, consider consolidating them to avoid paying duplicate fees. Before consolidating, check for insurance benefits that may be lost in the process.
The Benefits of a Mid-Year Check
By taking a proactive approach halfway through the financial year, you can make smarter decisions about your superannuation, potentially saving on taxes, improving investment returns, and staying aligned with your long-term financial goals.
If you’re unsure how to assess or adjust your super, consult a financial advisor or your super fund for guidance. Superannuation is a powerful tool for building wealth, and small changes now can lead to a more comfortable retirement in the future.
Take the time this January to give your super the attention it deserves—you’ll thank yourself when retirement rolls around! Remember LT is here to help!
Disclaimer
The information contained in this publication is for general information purposes only, professional advice should be obtained before acting on any information contained herein. Neither the publishers nor the distributors can accept any responsibility for loss occasioned to any person as a result of action taken or refrained from in consequence of the contents of this publication.