Super advice for your 40s and 50s: the essential guide

In your 20s and 30s, super mostly looks after itself. In your 40s and 50s, it needs a plan.

This is when your income peaks, your RSUs pile up and the finish line comes into view. The choices you make now matter more than at any other time.

Your 40s: build the engine

For most tech execs, the 40s are the biggest earning years. Kids, a big home loan and a busy job leave little time to think about super. That is exactly why it gets neglected.

What to focus on

• Use your full $30K concessional cap every year. On a high salary, check how much your employer already contributes first.
• Stay invested for growth. With 15 to 20 years to go, a conservative option can cost you far more than a bad year in markets.
• Consolidate old funds from previous jobs, so you pay one set of fees.
• Get your insurance right. This is when your family relies on your income the most.

Your 40s are also when to start building wealth outside super, so work can become optional before 60. Your home equity and RSUs are the usual starting point.

Your 50s: fill it up

In your 50s, the kids are often older and the home loan smaller. Many of my clients find they suddenly have spare cash flow. Super is where much of it should go.

What to focus on

• Catch up on unused concessional cap from the past five years, if your balance was under $500K on 30 June.
• Add after tax money. Up to $120K a year, or $360K at once using the bring forward rule, if you are eligible.
• Even up balances with your partner, so you can both use your tax free retirement accounts later.
• Plan your last 10 years of work. Pay off non deductible debt and decide when work becomes optional.

My checklist for this stage is in 7 financial things to do 10 years before retirement.

Getting ready for 60

For anyone now in their 40s or 50s, you can generally access your super once you retire after 60. From there, you can move up to $2M per person into a retirement income account, where earnings and payments are tax free.

That is why a couple in their 50s should think of super as a family asset, not two separate accounts.

Mistakes I see most often

• Leaving super in the default option for decades
• Ignoring it until five years before retirement
• Paying for insurance twice across old funds
• Having no binding beneficiary nomination
• Putting everything into super, with nothing to live on before 60

Should you have an SMSF?

A self managed super fund gives you more control, but also more cost and more work. For most of my clients, a low cost public fund with the right investment option does the job.

An SMSF can make sense with a large combined balance, or a specific strategy such as holding business premises. It is worth getting advice before you set one up.

Get a second opinion

If you are in your 40s or 50s and not sure your super is on track, that is normal. Most people never get it reviewed.

See my superannuation advice service, read my 10 super tips for high income earners, or book a call below.