In the realm of financial planning, the approach you take towards managing your superannuation can significantly impact your quality of life in retirement. While the "set and forget" strategy may seem appealing due to its simplicity, the benefits of conducting regular reviews of your superannuation cannot be overstated. This blog explores why staying actively engaged with your super is crucial for maximising your retirement savings.

Understanding Superannuation

Superannuation, or "super," is a long-term savings arrangement designed to provide you with an income in retirement. It's a crucial component of financial security in later life, but its effectiveness is heavily dependent on how it's managed throughout one's working years.

The Pitfalls of "Set and Forget"

The "set and forget" strategy is where you make initial choices about your super fund and investment options and then pay little to no attention to them over time. While this approach demands minimal effort, it comes with significant risks:

• Missed Opportunities for Growth: Investment markets evolve, and sticking with the same investment options for years may result in missed opportunities for higher returns.
• Inappropriate Risk Levels: As you age, your risk tolerance typically decreases. Without adjusting your investment options, you might find yourself exposed to higher risk than is suitable.
• High Fees and Charges: Super funds charge a range of fees that can eat into your retirement savings. Failing to review and compare fees periodically can result in paying more than necessary.
• Outdated Beneficiary Nominations: Life circumstances change, but if your beneficiary nominations are not updated, your super may not be distributed according to your current wishes.

The Benefits of Regular Reviews

Conversely, actively engaging with your super through regular reviews can provide numerous benefits:

• Tailored Investment Strategies: Regularly reviewing your investment options allows you to adjust your portfolio in line with changing market conditions and your personal circumstances, potentially enhancing returns.
• Risk Management: As you approach retirement, shifting towards more conservative investment options can protect your savings from market volatility, ensuring a more stable income in retirement.
• Cost Efficiency: By keeping an eye on the fees and charges associated with your super fund, you can switch to more cost-effective options, preserving more of your hard-earned money for retirement.
• Updated Information: Regular reviews ensure that your beneficiary nominations and personal details are always current, providing peace of mind that your super will be managed according to your wishes.

How to Conduct a Super Review

• Check Your Investment Options: Evaluate whether your current investment choices align with your risk tolerance and retirement goals.
• Assess Fees and Performance: Compare your fund's fees and performance against other funds to ensure you're getting good value.
• Update Personal Details: Make sure your contact details, beneficiaries, and other personal information are up to date.
• Consider Consolidation: If you have multiple super accounts, consider consolidating them to save on fees and simplify your finances.

Final Thoughts

While the allure of a "set and forget" strategy is understandable, the dynamic nature of financial markets and personal circumstances makes regular reviews of your superannuation essential. By taking an active interest in your super, you can make informed decisions that enhance your financial security in retirement. Remember, your future self will thank you for the attention and care you invest in your super today.