Insights

There is a number that most people focus on when they think about superannuation. The balance. The total sitting there, visible in the app or on the statement, growing slowly in the background while life happens around it.

And for a lot of people approaching retirement, that number looks reasonable. Sometimes it looks quite good. So the assumption follows: we are on track.

What that number does not tell you is whether the money is set up in a way that will actually serve you well when you need it. And that gap, between having enough and having it structured correctly, is where a surprising amount of value tends to quietly disappear.

What "structure" actually means

Super is not one thing. It is a set of decisions layered on top of each other, most of which get made by default rather than by design.

Which fund are you in, and is it still the right one for where you are now? How is the money invested, and does that still match your timeline and your risk tolerance? Is your super split between you and your partner in a way that makes sense from a tax and Centrelink perspective? Are you in accumulation phase, pension phase, or some combination of both, and is that the right answer for your current situation?

Most people have not revisited these questions in years. The fund was chosen at some point, the investment option was left on the default, and the balance has grown. That is not irresponsible. But it does mean that a lot of super accounts are working considerably harder than they need to in terms of tax, and considerably less efficiently than they could in terms of income.

The things that tend to go unnoticed

One of the most common patterns is a couple holding super in a way that creates an avoidable tax burden. This often comes down to how balances are distributed between two people, and whether contributions and withdrawals have been structured with that in mind. It is not complicated once someone looks at it properly, but it rarely gets looked at without a reason to do so.

Another is the investment setting. The default balanced option served a purpose during the accumulation years. But as retirement approaches, the question shifts from "how do we grow this?" to "how do we protect it while keeping it working?" Those are different problems, and they often call for a different approach.

Then there is the accumulation versus pension question. Moving super into pension phase at the right time can reduce the tax paid on investment earnings inside the fund to zero. Doing it at the wrong time, or not doing it deliberately at all, can leave money on the table that did not need to be there.

The honest read

None of this is designed to be alarming. Most people with solid super balances are in a reasonable position. The point is simply that a solid balance and a well-structured balance are not the same thing, and the difference between the two tends to show up most clearly at the point when you actually start relying on it.

A quick self-check

Run through these and see how you go:

• Do you know which investment option your super is in, and when you last reviewed it?
• If you and your partner have separate super accounts, do you know whether the split between them is tax-efficient?
• Have you looked at whether moving some or all of your super into pension phase makes sense given your age and income?
• Do you know roughly what you are paying in fees across all your accounts, and whether that has been reviewed recently?

If any of those draw a blank, it is worth finding out. Not because something is necessarily wrong, but because you would like to know either way.

A super review does not have to be complicated. If you would like someone to look at the structure rather than just the balance, reach out and we can take it from there.