However, it is not just over one year that you want solid fund performance, it is year after year.
The benchmark by which you should judge a balanced fund is an 8.5 per cent average annual return over five years and 8.2 per cent over 10 years, says SuperRatings.
Your returns are reported net of fees but it is still a good idea to know what you are paying because while investment performance is a variable, some fees can be fixed. And fees have a big bearing on your eventual retirement nestegg.
As I wrote recently, average fees reported to SuperRating’s database are $564 for a balanced fund holding $50,000. This comprises some investment and administration fees, including a member fee, and a total of 1.1 per cent is fairly standard. Àsk your fund for a comparison.
Look at the forecast
The forecast on your fund statement is highly useful. It provides a prediction of how much you would likely have when you do stop work.
The Association of Super Funds of Australia calculates that, to afford a “comfortable” retirement, a single adult would need a lump sum of $545,000 and, for a couple, $640,000. This is far less than the $1 million balance often bandied around because it assumes you eventually draw down all your capital and incrementally receive more age pension.
If you are still worried that you may not end up with enough super, check out the super calculator at moneysmart.gov.au to see how you could boost your balance. There, you can play around with additional salary sacrifice or concessional contributions. These cost you little each month (they are before tax, too) but make an enormous difference when compounded over time. The advantage is best if you start early.
If eligible, you could also take advantage of freebies, principally the federal government’s co-contribution and spouse contribution.
With the co-contribution, someone earning less than $56,112 can contribute $1000 after tax to receive a government top-up of up to $500.
With the spouse contribution, a higher earning spouse can contribute $3000 after tax to the fund of a spouse earning less than $40,000, to receive a tax offset of up to $540. The spouse does not have to be working, so it is a great way to prop up the super of a stay-at-home partner caring for children.
Take five minutes to sort your super – and future – today.