Is your retirement just around the corner? Then it’s time to make your super work harder by avoiding these common super traps.

1. Outdated investment strategies

As you approach retirement, you should revisit your investment strategy. But that doesn’t necessarily mean putting all your money into defensive assets like cash. Diversification is the key to smoothing out the inevitable bumps when economies, sectors and assets rise and fall. A well-diversified portfolio includes a good mix of asset classes — such as cash, fixed interest, property and shares.

2. Over-insurance

Just as your investment needs change, so will your insurance requirements. For instance, if you’ve eliminated or significantly reduced your debts, you may not need as much life insurance or income cover as you once did. And if you’re an empty nester, you’re insurance needs are likely to be very different to those of a young family’s sole breadwinner.

Your lifestyle might have also changed over the years — for example, you may no longer engage in high-risk work activities or leisure pursuits like skiing. So make sure your cover matches your needs.

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3. Missing out on tax benefits

Before the end of your career, it may be worth considering a Transition to Retirement (TTR) strategy. This involves drawing a pension from your super savings while you’re still working, which you can start doing once you’ve reached your preservation age (currently age 56). This pension income is likely to be taxed at a reduced rate or be tax-free. At the same time you can boost your super contributions through salary sacrificing, with any contributions of up to $35,000 taxed at just 15%.

This can give a valuable boost to your nest egg during the crucial pre-retirement years. That’s why it’s worth consulting a tax professional to find out the best TTR strategy for your situation.

4. Inadequate estate planning

Although it’s probably not something you like to think about, it’s important to consider what will happen to your estate when you pass away. When it comes to super and insurance, this means nominating who you want to receive your super savings and any payable insurance benefits. The tax implications for your beneficiaries can vary depending on their age, their relationship to you and whether the payments are classified as a lump sum or as an income stream. It’s therefore a good idea to seek professional advice on this when you’re putting your affairs in order.

5. Going it alone

Everyone’s circumstances are different, so your super strategies should be too. Talking to a financial adviser is the first step towards getting the most out of your super. To find out more, contact us on 02 9929 3343 today.