Top four superannuation mistakes Australians are making according to finance expert

Real estate prices are going through the roof again leaving many locked out of the market. But one expert warns our obsession is a mistake.

Superannuation is one of the most important factors when it comes to determining what your financial future will look like, however finance educator Vanessa Stoykov says many underestimate its significance.

“While Australians are focusing on property, most are forgetting how turnkey their superannuation is, and this short-sightedness will be the downfall of so many in the future,” Ms Stoykov told news.com.au.

“Purely because people are confused by it or don’t take the time to learn about it, Aussies are making mistakes that can cause irreversible damage and will have lasting impacts when they reach retirement.”

Ms Stoykov stressed that it’s important to “change your mindset” around money and to “make sure future you is getting paid”.

“Being engaged with your super is lowering your risk and increasing your reward down the track,” she said.

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Finance educator Vanessa Stoykov says it’s important to change your mindset around money. Picture: Supplied

“Celebrate the future you. When you make the first step, you’re diversifying, which lowers your risk and you’re making money for you while doing something else.”

There are common mistakes Aussies are making that can easily be fixed to ensure they have plenty of money for the future.

“If you want to have a brighter financial future you need to take action today, even if it’s calling your super fund to see how they can help you. Every action will lead to more money in your pocket later in life,” Ms Stoykov said.

“I can’t urge enough that these mistakes are so common, yet so simple to fix,” she said.

Here, Ms Stoykov has detailed the most common mistakes people make around super, and how to avoid them.

HAVING MORE THAN ONE SUPER ACCOUNT

Over six million Australians have more than one superannuation fund – and many of those are inactive.

“If you have multiple accounts, you could be paying an exorbitant amount in fees and insurance premiums for each one, which will slowly drain your balance,” Ms Stoykov said.

“However, before you consolidate your super, make sure you do some research to ensure you choose the best provider for your situation and that you’re not stung by withdrawal fees.”

DEFAULTING TO YOUR EMPLOYER’S FUND

Assuming your employer’s default fund is right for you is a common mistake Aussies are making. Ms Stoykov suggests to do your research.

“If you don’t nominate a separate fund, your superannuation will be paid into the fund chosen by your employer. Although it could be the right choice for many, it’s best to make an educated choice around what fund will work for you and provide you with the best investment choices and your stage of life,” Ms Stoykov said.

RELYING ON SUPER CONTRIBUTIONS

Aussies tend to rely solely on superannuation guarantee contributions, but it might not be enough to lead you to a comfortable retirement.

Employers must contribute 9.5 per cent of your salary to your superannuation each year, but you should consider topping that up with other contributions if you can.

“Many people think this will be enough, but to have a comfortable retirement, you will need to rely on other contributions,” Ms Stoykov said.

“It’s worth considering options like pre-tax salary sacrifices or personal contributions to boost your superannuation.”

NOT MONITORING YOUR FUNDS

“Call it naivety, but many Australians wouldn’t check to see if their employers are making their contributions on time,” Ms Stoykov said.

“Although there is a hefty fine or potential imprisonment for the employer, research has found that up to 20 per cent of employers fail to meet their superannuation guarantee obligations.

“It’s incredibly important as it can also compromise the level of insurance cover your fund may provide.”

If you believe your super has been underpaid, speak to your employer, lodge a complaint with the ATO or seek advice from a lawyer.

WAITING UNTIL RETIREMENT

Many Australias are waiting until they get closer to retirement when they start thinking about their superannuation, which Ms Stoykov said is a common mistake.

“Even if you’re not close to retirement, any small contribution you make to your super now could have a huge impact in the long term,” she said.

“If you’ve crunched the numbers and you feel like your retirement income wouldn’t meet your needs or lifestyle, it’s worthwhile seeing if you can raise some money through other methods so you can bump up your personal contributions.”

OPTING FOR THE DEFAULT INVESTMENT OPTION

“It’s simple to just set up your account and then let it run itself, but individuals should decide on the smartest investment option based on their situation, and consider the risks, goals, and investment time frames relevant to them,” Ms Stoykov said.

“That may sound daunting, but most funds offer free personalised advice on which option suits your particular needs, so reach out to them and ask.

“It will pay off big time in the future,” she said.