How much has an average 29-year-old lost in superannuation this year?

Share market volatility and rising interest rates negatively impacted the super balances of many Australians in the 2021-22 financial year.

With so much conversation recently around the actual amount you need to save for retirement, it’s understandable that many may have concerns over sustained losses to their nest eggs.

So, how much did Australian super fund members lose over the 2021-22 financial year? RateCity has crunched the numbers.

Case study

Lauren started her first full time job in 2015 at age 23. She had a starting salary of $50,000 and began earning super guarantee contributions from her employer. As a member of one of Australia’s top performing super funds, she enjoyed an average return of 10.18% for the initial few years of her career – finishing off the 2020-21 financial year with a super balance of $38,064.

If Lauren’s super fund had continued to earn a return of 10.18% into the 2021-22 financial year, she could have expected her balance to reach $47,250 – that’s a return of $3857 on top of her employer contributions.

Instead, her super fund’s returns in the last financial year were -3.37%. This resulted in a loss of $1278, with her balance finishing the year $5135 lower than she may have expected based on her fund’s past performance.

Lauren’s superannuation earnings

*Source: RateCity Note: Earnings for the financial years between 2015 and 2021 calculated based on the average 5-year annualised balance returns of the five top-performing products as of 2021 (10.18%). Earnings for the 2021-22 financial year calculated based on the average balance returns of the same five funds that year alone (-3.37%). Factors in tax on contributions and earnings, plus wage inflation.

Depending on what stage of your career you’re currently in, and how close you are to retirement, you may have seen a lesser or greater superannuation loss than the average 29-year-old. But even smaller losses can have a genuine impact on compound interest earning opportunities over your decades-long career.

However, superannuation is a long-term investment that is expected to fluctuate over time. So, there’s likely no need to panic and make rash decisions about your nest egg. Instead, consider making a plan to routinely check your super and make well-informed, logical changes where need be.

How can you give your super the best opportunity for success?

While you can’t control the global share market, there are things you can do to have more control over the success of your retirement nest egg, including the following:

Keep an eye on performance

Even some of the top Australian super funds with the strongest past performance experienced negative returns last financial year. But there are tools you can use to ensure your fund is still performing comparatively.

If you’re in an underperforming MySuper fund, you may soon be notified following the release of the Australian Prudential Regulation Authority’s (APRA) 2022 MySuper performance test results – which saw five out of 69 products fail. If you are, it’s important to be proactive and consider stronger performing options.

If your fund passed the test, or you’re not a member of a MySuper fund, it’s still worth comparing its performance against others to ensure it remains competitive. RateCity’s super fund comparison table allows you to compare past 5-year performance across a range of products and providers.

Compare fees

The next factor to consider is the amount of fees your super fund charges. Fees can gradually eat away at your balance over time, so it’s important to ensure you know exactly how much you are paying in fees, and what they cover.

If your super fund is charging much higher fees than similar products, without offering additional value, it may be time to consider your options.

The Australian Taxation Office (ATO) offers a handy tool for comparing MySuper products, including the annual fees charged. And if you’re not a member of a MySuper fund, RateCity’s super comparison tables also provide a fee estimate on a wide range of funds.

Make voluntary contributions

If you’re looking to grow your super balance at a faster rate than what the super guarantee alone can achieve, you may want to consider making voluntary super contributions. There are two ways you can go about this:

1. Make pre-tax contributions – Pre-tax contributions are made by your employer on your behalf out of your pre-tax income. These payments, along with your employer’s super guarantee, make up what is known as your concessional contributions. They have a limit of $25,000 in total per financial year.
2. Make post-tax contributions – If you reach the concessional contribution cap, you could choose to make super contributions from your after-tax income, known as non-concessional contributions. The amount of non-concessional contributions you can make each financial year is capped at $100,000, for those with super balances of less than $1.6 million.

Compare super funds