Mistake 1: Skipping Contributions When You’re Young
Here’s what catches people off guard: contributions in your 20s and 30s can ultimately be worth more than much larger amounts contributed in your 50s and 60s. That’s compounding at work.
If you’re self-employed or in a role without automatic contributions, it’s easy to postpone. Retirement feels far away. Other priorities compete for your attention.
But skip contributions early, and you’re not just missing that money – you’re missing decades of potential returns on it. You’ll need progressively larger contributions later to catch up.
What this means for your life
Even modest extra contributions when you’re younger create substantial differences in your final balance. Salary sacrificing claims tax benefits immediately while improving dollar cost averaging.
Got a pay rise recently? Redirect even 1% into super. You won’t notice it day-to-day, but your future self will thank you.
Mistake 2: Switching Investments at Exactly the Wrong Time
Super is forced saving, yet most Australians either ignore it completely or make reactive decisions at precisely the wrong moments.
Many switch to conservative options after markets have fallen, crystallising losses, or move to growth after markets have risen. That’s buying high and selling low.
Your timeframe matters. Decades from retirement? You can ride out volatility and benefit from growth returns. Approaching retirement? Gradually shift toward defensive investments to protect your capital.
What this means for your life
Select an appropriate investment profile for your time horizon, then stay the course. Market volatility is uncomfortable, but reacting emotionally compounds the problem.
Unsure if your current setting aligns with your timeline? That uncertainty is worth resolving. The right approach makes the difference between comfortable retirement and constant money worries.
Mistake 3: Paying Fees Without Getting Value
Not all funds are equal on fees. Some charge across multiple areas – platform fees, admin fees, investment management fees, insurance premiums. These quietly eat your returns.
A 1% fee difference might not sound significant. But over 30 years of compounding, it can reduce your final balance by tens or hundreds of thousands depending on your account size.
The question isn’t whether fees are high or low, it’s whether the features and performance justify what you’re paying.
What this means for your life
Paying for features you don’t use? You’re funding someone else’s retirement, not yours.
Review your annual statement. Understand what you’re paying for. Are you getting value from insurance? Are the investment options actually better than lower-cost alternatives?
Multiple funds from changing jobs? You’re likely paying multiple fee sets for no benefit. Consolidating can reduce costs and simplify your life.
Mistake 4: Maintaining Multiple Super Accounts
Changed jobs several times? You’ve probably accumulated multiple super accounts, each charging fees, each potentially holding insurance.
Unless there’s a specific strategic reason for separate accounts, multiple funds mean extra fees and possibly duplicate insurance premiums. These costs compound year after year.
What this means for your life
Consolidating can be straightforward, but approach it thoughtfully. Before consolidating, check insurance through old funds. Coverage obtained when you were younger and healthier can be valuable if current health makes new coverage difficult.
The principle is simple: get maximum value for your money. If multiple accounts aren’t serving a purpose, you’re better off with one well-chosen fund aligned with your needs.
Mistake 5: Neglecting Your Spouse’s Super Balance
This particularly affects couples where one partner took extended time from paid work, often caring for children or elderly parents. While this makes sense for your family, it creates retirement challenges.
Substantial balance imbalances limit flexibility approaching retirement and may affect Centrelink eligibility. The lower-balance partner may face a retirement where financial security depends entirely on their spouse’s super.
What this means for your life
Spouse contributions help balance accounts over time. They may also entitle you to a tax offset, making it tax-effective as well as practical.
Building both partners’ balances provides maximum flexibility. It enables strategies like starting pensions at different times, or helps an older spouse qualify for Centrelink. It also ensures both partners have financial independence in retirement.
What Happens If You Don’t Act
You’ll pay excessive fees for decades with no benefit, reducing your balance by thousands or tens of thousands. You’ll miss tax deductions that, once the financial year closes, are typically gone permanently.
You’ll fall behind on retirement goals, meaning you work longer or contribute significantly more later when budgets are stretched. Wrong asset allocation for extended periods leads to underperformance just as you’re approaching retirement with less time to recover.
You might reach retirement without resources to live how you’d hoped – to travel, pursue interests, support family, or simply live comfortably without financial stress.
Your Next Steps
Do a little extra. Next pay rise? Salary sacrifice a portion. You won’t miss 1% now, but it makes a substantial difference later.
Claim your deductions. Making extra contributions? Ensure you’re claiming available tax deductions, especially if self-employed.
Match investments to your timeline. Decades away? Position for growth. Approaching retirement? Start protecting capital.
Review fees and consolidate. Understand what you pay and what you get. Multiple accounts without purpose? Consolidation could save thousands.
Balance household super. Significant imbalance between partners? Explore whether spouse contributions make sense.
Live Life, Your Way
Your super exists to enable the retirement you want, where you have freedom and financial security to live on your terms.
Uncertain whether your super is positioned appropriately? Suspect one or more of these mistakes might be affecting your outcome? A super review can help identify specific improvements worth making.
The earlier you address these issues, the more time you have to benefit. Your future self is counting on today’s decisions.
Disclaimer: The advice provided here is general in nature only as, in preparing it we did not take account of your investment objectives, financial situation or particular needs. Before making an investment decision on the basis of this advice, you should consider how appropriate the advice is to your particular investment needs, and objectives. You should consider the relevant Product Disclosure Statement before making any decision relating to a financial product.
Ian Moiler Pty Ltd (Moiler Wealth) is an authorised representative of Count Financial Limited ABN 19 001 974 625 holder of Australian financial services licence number 227232 (“Count”). Count is owned by Count Limited ABN 111 26 990 832 of GPO Box 1453, Sydney NSW 2001. Count Limited is listed on the Australian Stock Exchange.
