We’re trillionaires but can’t afford to do nothing with superannuation

Australians’ superannuation savings are about to pass a big milestone, and it should be a wake-up call for all to check their slice of this wealth.

• Savings plan - make a super start to 2020
• These shares can help make you rich

Three trillion dollars is a bloody big number to get your head around.

Millionaires have become commonplace thanks to property price rises, and a billion dollars is still big bucks, but to have three trillion – that’s three thousand billion bucks – is mind-boggling.

Yet that’s how much superannuation we Aussies are about to own, if we don’t already.

The latest data from super regulator APRA shows we had a combined $2.93 trillion in super and related schemes as of October last year.

Super assets grew almost $200 billion over 12 months, which puts us on track to crack $3 trillion in February.

While everyone’s slice of that $3 trillion is relatively tiny, it helps to rank us among the world’s richest people.

It wise to check the size, cost and performance of your nest egg.

Australians’ average household wealth has topped $1 million, thanks to a surge among the top 20 per cent. Median wealth per couple is around $530,000, and super is becoming an increasingly large part of household assets.

So now we have this pot of gold, what do we do?

REMEMBER, IT’S YOUR MONEY

Too many people put super on the backburner until it’s too late. Laws stop them from accessing it until age 60, so they don’t bother checking it for the first few decades of their working life.

This can result in paying too many fees or being in an unsuitable investment option for years and can wipe tens of thousands of dollars off the value of a nest egg.

Always remember that your super is your money, just like cash in the bank or money put in shares.

You wouldn’t throw hundreds of dollars in cash into the gutter each year, so why do it with your super?

FEE CHECK

You may be paying a respectable 1 per cent in super fees, or you may be paying an unrespectable 3 per cent.

That fee difference does $200 of damage each year to every $10,000 you have in super, and the losses will multiply over many years because of compound interest.

Check your super statement or online for fee details, give them a call, look for online super fund comparison tools, or seek some professional advice.

Another way Australians get stung by higher fees is by having several super funds, each with separate fees.

Recent government changes are helping people to consolidate low balance and inactive super accounts, but some can still slip under the radar. Check what super funds you have on my.gov.au.

INSURANCE

Having life insurance protection within super is great for your family, and you don’t have money disappearing from your regular bank accounts.

But if you’re paying multiple premiums to multiple super funds you may be wasting money, plus duplicate insurance policies can offset each other – making some worthless.

Older Australians should revisit their insurance in super as they may no longer need to be paying high premiums if the kids have left the nest.

Once again, there have been recent government rule changes, so it’s a good idea to check with your fund by phone or online to see what your share of Australia’s $3 trillion is doing.

@keanemoney

Originally published as We’re trillionaires but can’t afford to do nothing with superannuation