Regardless of your age, it's never too early or too late to start thinking about retirement and working towards maximising your super, for an improved tomorrow. From your first job to retirement, there's steps you can consider taking to help improve your financial future.
Compounding returns – the secret ingredient to your super’s success
One of the largest and often overlooked contributors to your super balance will be the ability for your returns to compound over time.
What this means is that the returns earned on your contributions don’t just sit idle, those returns go on to earn more returns, which go on to earn even more returns, forming a cycle of growth that for the majority of people leads to an enormous increase in their super balance over the long haul.
By consistently adding money to your super coupled with the power of compounding investment returns, your balance has the potential to snowball over the years.
Although the magic of compounding returns is beneficial to everyone, it can be particularly advantageous if capitalised on early, as the earlier you start, the more time this process has to work.
Example - Compounding returns at work: SG contributed to an everyday transaction bank account vs. a super account1
Super-boosting strategies for all ages
While some super-boosting strategies may be better suited to an individual based on their age, there are others which are beneficial regardless of age.
Consider combining your super and avoid unnecessary fees
Having more than one super account could mean you’re paying multiple fees, Although these fees may not seem like much now, over several years, or even decades, it can have a significant impact on your balance by the time you reach retirement.
Visit our dedicated consolidation webpage to learn more about the benefits of consolidating your super, what you should consider and how to do it.2
Ensure your investment strategy aligns with your goals
As your life and financial goals change over time, your super investment strategies should too.
Visit our dedicated investment options webpage to learn more about how investment options work, the types we offer and how you can access advice to help choose the option(s) that’s right for you.
Check your super fund is working as hard as you are
Not all super funds are made equal. With each super fund performing differently, how your super fund performs over the long-term can make a significant difference to your final balance – especially when combined with low fees.
Visit our dedicated performance webpage to learn more about our history of strong performance.3 Or visit our dedicated fees webpage to learn more about how our fees are some of the lowest in the Australian superannuation market.4
Age-based super-boosting strategies
While the above strategies can be beneficial to people of all ages, there are some super-boosting strategies better suited to specific age groups.
Younger than 30: Laying the foundation
For those in the early days of their working life you have one of the most powerful super building strategies available to you. You have time.
By planning and taking action early, you can make the most of compounding returns, significantly increasing your super balance over the long-term.
Ages 30-58: Building momentum
During this stage, many people are well into their careers, often earning more than when they were younger.
This may mean you can turn up the heat on your super contributions, or, if you have one, team up with your spouse to get the most out of your super.
Ages 59 and beyond: Balancing withdrawals and growth
As retirement draws closer, people often look to downsize their home or work less, but not retire completely.
With this in mind there are still opportunities for you to continue getting the most out of your super.
Considerations before making contributions
Contribution caps
While adding extra to your super can be a good strategy, there are rules around how much you can add without tax implications – these are known as ‘contribution caps’.
Visit our dedicated contribution caps webpage to learn more about the caps, including how much you can contribute, which contributions count towards which cap, as well as implications for exceeding either of the caps.
Seek financial advice
Everyone’s situation and objectives are different, which means there’s no ‘one-size fits all’ strategy when it comes to financial advice. As a Mercer Super member you have access to a range of financial advice and support tools at no additional cost.
Visit our dedicated financial advice webpage to learn more about the different forms of financial advice available to you and how to access them.
1. Assumptions: Superannuation Guarantee (SG) contributions commenced at age 18 in 2023 and ceased at age 65. All future figures have been discounted for inflation. Wage growth matches inflation, except for specific age-based changes in salary, which are as follows – age 18 ($45,906), age 21 ($58,635), age 35 ($78,192), age 45 ($80,298) and age 55 ($71,417). SG rate starts at 11%, rising to 12% in 2025 as per legislative schedule. Bank interest assumed to be paid at inflation rate so there are no earnings in real terms. Growth oriented super based returns of 4.46% p.a. after inflation. Difference in returns (which may be positive or negative) and fees will alter the outcome. Contribution caps have been assumed not to be exceeded. The example shown may not apply to your own situation, so we recommend you consider your options carefully and seek financial advice if you’re unsure if making additional contributions is right for you. Past performance should not be relied upon as an indicator of future performance.
2. Combining your super can be a significant financial decision. If you decide to combine all or part of your other super account(s), carefully consider how this may have an impact on your existing insurance, contribution and tax arrangements, fees or charges, or any other benefits you may lose. If you intend to claim a tax deduction on your personal contributions, you will need to provide your existing fund with a notice of intent to claim and receive confirmation it's been processed before combining your super. We recommend you seek financial advice before deciding whether to combine your super accounts.
3. Mercer Super Trust’s analysis of Mercer SmartPath (born 1974-1978), one of the largest cohorts, after investment fees and tax, compared to the median of all default funds reported in SuperRatings Fund Crediting Rate Survey – Default Options as at 30 September 2023. Based on Mercer SmartPath membership data as at 30 September 2023. Past performance is not a reliable indicator of future performance.
4. Chant West MySuper Default Fee Tables June 2023 – for $50,000 account balance. Fees are for Mercer SmartSuper – SmartPath® (our MySuper product) at 1 April 2023 and the total includes administration, investment and transaction fees. Chant West uses our 1964-1968 investment option for purposes of comparison with other MySuper funds – as this is the highest annual fee for our SmartPath options. You may pay less than this if you are in another SmartPath option or in an employer plan. For details on fees for each of our SmartPath options, or if you’ve chosen your own investment option(s), go to the ‘How Your Super Works’ Guide online. Fees and costs can vary from year to year. Past fees and costs are not a reliable indicator of future fees and costs. Fees and comparisons may differ for other investment options and account balances.
Disclaimer: Please note that any information in this material regarding legal, accounting or tax outcomes does not constitute legal advice or an accounting or tax opinion and prior to relying and acting on this information it is important that you seek independent advice from a qualified lawyer or accountant regarding this information.
Issued by Mercer Superannuation (Australia) Limited ABN 79 004 717 533, Australian Financial Services Licence #235906, the trustee of the Mercer Super Trust ABN 19 905 422 981 (‘Mercer Super’). ‘MERCER’ and SmartPath are an Australian registered trademark of Mercer ABN 32 005 315 917. Copyright 2023 Mercer Superannuation (Australia) Limited. All rights reserved.
Please consider the Product Disclosure Statement, Product Guide, Insurance Guide, and Financial Services Guide before making a decision about the product. Target Market Determinations for our products can be found here. If you are unsure of what action to take, seek professional advice from a licensed, or appropriately authorised financial adviser.
Any advice contained in this document is of a general nature only, and does not take into account the objectives, financial situation or personal needs of any particular individual. Prior to acting on any information contained in this document, you need to consider the appropriateness of the advice taking into account your own objectives, financial situation and needs.
The material contained in this document is based on information received in good faith from sources within the market and on our understanding of legislation and government press releases at the date of publication which we believe to be reliable and accurate. Neither Mercer nor any of its related parties accepts any responsibility for any inaccuracy. Past performance is not a reliable indicator of future performance.