Tips to boost your super when retirement is a long way off

Your ability to earn an income is probably your most valuable asset, yet many Australians are significantly underinsured.

Super funds usually offer life/death, total and permanent disability (TPD), and income protection insurance. If you’re not sure how much and what type of cover you need, your super fund may have an insurance needs calculator you can use. Many also offer personalised advice to help you decide.

Alternatively, you could also make sure you have adequate death and disability insurance held outside your super.

Nominating who should receive your super (and any life insurance you hold with it) in the event of your death is critical. If you don’t have a binding beneficiary nomination when you pass away, your fund’s trustee must decide who to pay. They may not choose to distribute your super death benefits the same way you would have, and the decision-making process can cause delays for your family.

4. Keep in touch with your money

Set up online access to your account and/or download your fund’s app. In most cases you won’t need to monitor your super regularly but having it at your fingertips can be motivation to keep saving.

You can also monitor your employer’s contributions to make sure you’re receiving what you’re entitled to. The minimum employer superannuation guarantee contribution is 11.5% of your salary in 2024–25 and 12% of salary from 1 July 2025.

Contribution tips

1. Get a co-contribution

If you’re a lower income earner, making an after-tax (non-concessional) contribution to your super may entitle you to a co-contribution from the government.

The maximum co-contribution of $500 is available in 2024–25 if you contribute $1,000 and earn below $45,400 during the financial year. The more you earn, the smaller the co-contribution you are entitled to, until it cuts out entirely for people with total income of $60,400 or more.

You can get a co-contribution every year while your income is below the upper limit, and the income limits increase every year.

The amounts may seem small, but a 50% return on your investment with no risk is hard to turn down and compound growth from investment returns sweetens the deal even more.  The younger you are, the longer your super has to grow and the bigger the difference extra contributions can make to your final balance.

2. Save tax with regular concessional contributions

Making voluntary concessional contributions (salary sacrifice or personal contributions you claim as a tax deduction) can reduce your income tax and increase the amount you can afford to save in super. This is thanks to the difference between marginal tax rates and the super tax rate of 15%.

For example, if you can afford to put aside $50 a week for retirement and you would usually pay 32% income tax on that money, you could contribute approximately $73.50 per week to super by salary sacrifice. This would reduce your take-home pay by $50 but add $62.50 to your super after 15% super contribution tax is deducted.

There is an annual cap on concessional contributions ($30,000 for the 2024–25 financial year) but you may be eligible to carry forward unused amounts from the past five financial years to contribute more.

It is also important to note that those with total income plus concessional contributions of $250,000 or more per year pay additional tax (division 293 tax).

3. Think about lump sum contributions

If you have savings you don’t need to access, you sell an investment, or receive a bonus or inheritance, a lump sum super contribution is worth looking into.

Lump sum contributions can be either concessional (by claiming a tax deduction) or non-concessional. The annual cap for non-concessional amounts is four times the concessional cap ($120,000 in 2024–25) and you may be eligible to contribute even more using the bring-forward rule.

A lump sum concessional contribution could reduce your income tax (including capital gains tax on the sale of an investment); a non-concessional contribution is not tax deductible but will help increase your super balance where investment returns are taxed at a maximum of 15%.

Investing tips

1.  Consider a growth-focused investment option

If you don’t choose your investment when you open a super account, your savings will be automatically placed into your fund’s default choice. In many cases, this means only 65–80% of your account will be allocated to growth assets such as shares, property, and alternatives with the remainder invested conservatively into cash, fixed interest, and bonds.

In the long term, growth assets generate higher returns but with wilder swings along the way. If you’re comfortable with short-term fluctuations in value, including occasional losses, choosing an option with a higher allocation to growth assets is a simple way to turbo-charge the growth in your balance. Taking the opportunity to invest in higher growth, higher-risk assets while you have plenty of time before retirement to recover from any losses can make a lot of sense.

According to ASIC’s Moneysmart retirement planner, a 25-year-old earning $70,000 a year starting in the workforce today can expect approximately $610,000 by age 67 if their super earns an average of 7% per year after tax and fees. If the average return is just 1% higher (8%), the result is just above $780,000. That’s potentially almost 30% more super by retirement without making any additional contributions.

For context, the 15-year average return from super investment options in Chant West’s ‘growth’ category (61–80% growth assets) to 30 June 2024 was 8%, while the 15-year average over the same period for ‘all growth’ options (96–100% growth assets) was 9.6%.

Changing your investment strategy for super is quite simple. Log on to your account via your fund’s website or app and get familiar with the choices that are available. Then, you can choose a new option (or a mix of the available choices), submit an investment switch request, and the changes should take effect within a few days.

2. Beware of investment fees

Unlike administration fees that are deducted directly from your account balance, investment fees in super can be less obvious and escape your notice. These fees cover the work of the investment experts that select the mix of assets the fund invests in.

These fees are usually considered before the investment return is calculated, so you don’t see any transactions coming out of your account. Instead, the fees reduce the investment return you receive.

You can check the fees for each of your fund’s investment options in their Product Disclosure Statement (PDS). There may also be a separate investment guide or fees and costs guide to refer to. If you have any difficulty finding the fees for all options, give your fund a call to find out where to look.

Investment fees can vary substantially, so shop around a few low-fee industry funds to make sure your chosen option is not too expensive in comparison to low-fee options with a similar asset allocation.

A simple way to minimise investment fees is to choose an indexed option. Rather than employing investment managers to select assets and try to ‘beat the market’, indexed options contain a representative sample of the entire index they are targeting.

For example, an Australian share indexed option would usually represent the ASX 200 or ASX 300 index. Many super funds also offer diversified indexed options that cover indexes for Australian and international shares as well as listed property.

3. Take investing to the next level with member-directed choices

If you’re comfortable with investing and have built your knowledge, it could be time to investigate taking more control over your super assets.

Many large super funds give you the option to choose your own mix of shares, exchange traded funds (ETFs), and term deposits. These options have various names depending on the fund but are usually called something like ‘member direct’ or ‘direct investment’.

This can be an accessible way to make your own investment decisions without the need to open a self-managed super fund (SMSF).

As a bonus, if you stay with the same super fund all the way through to retirement, you can transfer your assets from the accumulation phase to the tax-free retirement phase without any transaction costs or capital gains tax to pay.

To do this, you start a pension (income stream) for retirement, keeping the same investments with the same fund. Then, when you sell assets later to fund your withdrawals or just to select a new investment mix after starting your pension, the capital gains are tax free.

The downside is if you choose to move super funds you will need to sell your investments, realising any capital gains (and therefore paying tax), and incurring the transaction cost to sell. So think carefully and consider getting some financial advice before you grab the controls.

The bottom line

Getting a handle on your super can seem overwhelming, but it doesn’t need to be. Start small and follow the tips that make sense for you now. Even just sorting out access to your account and choosing the right investment option for you is a fantastic start.

Once you get started, the next moves can feel simpler and our step-by-step guides can help you along the way.