Don’t ‘set and forget’ when planning your retirement

• Assess super fund performance
• Make sure you’re in the right investment option for your risk tolerance
• Options for accessing your super

The 2021–22 financial year has come to a close and in a follow-up segment on retirement planning, Chief Operating Officer Warren Day has told ABC Melbourne Drive host, Mary Gearin, that people should actively engage with their super statements.

‘As I’ve said previously, where you end up in retirement depends a lot on when you start planning and whether you’ve accumulated enough wealth during your working life’, Warren said.

‘While super is not the only source of retirement savings – the money may also come from investments, government benefits and your home, if you downsize – it is the only significant asset for many Australians. So, it’s important people actively manage their super and check the performance of their fund.

‘You may consider switching funds if your fund is consistently underperforming – but you should take a long-term view. Super fund returns will most likely be lower this financial year after high returns last year, you need to consider performance over a number of years to get an accurate picture.

‘If you’re in a MySuper fund – that is, a default account for people who don’t choose their own super fund when they start a new job – you can compare your fund’s performance using the Australian Taxation Office’s (ATO) YourSuper comparison tool. The performance is based on annual performance tests done by the Australian Prudential Regulation Authority’, Warren said.

Depending on how close you are to retirement, your risk approach will also likely be impacted.

‘Think about how much investment risk you’re comfortable with. A higher growth option will have higher risk and experience more volatile returns over the short term. But it will usually achieve higher returns over the long term. A conservative option, like cash or bonds, will offer lower risk but lower returns over the long term’, Warren said.

Warren said people should contact their super fund to discuss their options based on their long-term goals.

Once you’re retired, there are different ways to access your super.

1. Leave your super where it is for a while
2. Start a retirement income stream using an account-based pension or annuity
3. Withdraw as cash, all at once (as a lump sum) or in stages

Or you can do a combination of these. ASIC’s Moneysmart has general information on how they work and some of the pros and cons of each option, but you should talk to your super fund for more information.

‘If you’re thinking about selling your home and downsizing to help fund your retirement, consider the pros and cons. Check if selling your home affects your government benefits and make yourself aware of any tax benefits or penalties that may apply. More information is available on Moneysmart’, Warren said.

ASIC is Australia’s corporate, markets and financial services regulator.