The purpose of superannuation is to provide for your retirement. That’s it.

There are many reasons as to why the system is successful. The attractive tax rate and the compulsory employer super guarantee are integral. The supercharger here though is the time for which these savings are locked away to compound. That is not a unique aspect of super. It is the key to success for all investments. However, it is especially important for super because it is linked to retirement – the financial goal that traditionally has the longest time horizon.

The Australian Financial Review recently reported on a Rainmaker study that concludes that the best time to start taking your superannuation ‘seriously’ is in your mid-thirties.

It also details that those in their 50s and 60s have the chance to double and triple their money in superannuation. Of course, this makes intuitive sense. The larger the balance, the larger the impact of compounding.

However, I disagree completely with the premise that investors should take their superannuation ‘seriously’ almost 15 years* after starting work.

I’m currently 30 years old. After university, my first job was at a financial advice firm where I was able to immediately see the impact of taking your super seriously. Here’s a personal case study to show how my retirement outcomes could vary if I started at 35 years old by ignoring asset allocation, contributions, insurances and estate planning.

Asset Allocation

Scott Pape famously declared in his book ‘The Barefoot Investor’ that Host Plus’ Index Balanced fund had ‘beaten the pants off most stock pickers’. This declaration led to an influx of over 20,000 members into the fund – dubbed ‘The Scott Pape Effect’. Many of these investors were younger and just starting their investing journey with ‘The Barefoot Investor’.

The Barefoot acolytes rolled into a fund with 75% exposure to growth assets, and 25% exposure to defensive assets. This is typical, or even more aggressive, than most default superannuation funds. By definition, a ‘balanced’ fund would be a 50/50 split between aggressive and defensive assets.

A follower of Pape’s methodology recently posted in a Facebook group querying whether the jump was right, given the amount of time she has left until she retires.

I'm 35 with a healthy super balance and my husband is 30 with a lot less. We are currently with Hostplus.

We are in the indexed balanced option (75% growth 25% defensive) based on the recommendation from the Barefoot investor book due to the low fees.

However, I've read/heard elsewhere in the finance world that if you've got a long time left until retirement you should be in a high growth and almost no defensive investment option.
I've had a chat to Hostplus and based on my risk profile (very high - I understand the market and realise I am invested for a long period of time so will see many fluctuations but seek growth over many years), I should invest in 55% Australian shares and 45% International. The net return for Australian and International shares based on the previous 10 years is 9.72 and 9.82% from their website. Should we stay in indexed balanced or go with the advice from Hostplus? Thoughts?

Let’s look at how time – and risk - can impact your total return outcomes. For the purpose of this example, I am using Morningstar’s asset allocation models. They take into account future expected returns, instead of past performance of funds. This is a more realistic expectation and model for investors to understand expected portfolio growth.

The closest model to the Host Plus fund is the ‘Growth’ model, with 70% in growth assets, and 30% in defensive. My portfolio is closest to the ‘Aggressive model, 90% growth, 10% defensive.

Level of projected wealth

Projected wealth level of $100,000 invested over a decade (in dark blue) and the likely range of outcomes (95% confidence interval)

Over multiple decades, this effect is multiplied.

I am 30 years old with around $123,000 in my superannuation. I’ve assumed that this article represents the zenith of my career and my income stays the same over the next 35 years until retirement. I’ve experienced 2.8% p.a. inflation and contribute $18,000 across employer and salary sacrifice (post 15% contributions tax) per year. I used our Portfolio Projection tool to know where I’d end up at retirement.


Shani's projected retirement savings

As mentioned, I’m 30. Taking your super seriously means assessing your risk capacity. If I wait until I am 35 to change my asset allocation to ‘Aggressive’ from ‘Growth’ (similar to Hostplus Balanced), those five years would result in $70,000 less in retirement.


A large determinant of your retirement outcomes are your superannuation contributions. The current super guarantee is at 11%. However, there’s 2.2 million Australians that are self-employed and do not have any requirement to contribute to their super.

That means that if you are self-employed and do not contribute from age 20 to 35, 15 years of missed contributions will mean a large difference in how comfortable your retirement is. The is the difference between having $832,465 or $2,430,477 in your super account at age 65. The earlier you start, the more work that is taken off your plate with the help of compounding^^.

Of course, one of the beauties of super is that you can contribute up to $27,500 a year at the concessional tax rate of 15%. This means that if you have surplus cash, you can further contribute to your retirement savings in a tax effective way.

Say that you contribute an extra $3,000 each year to your retirement savings from the age of 20, on top of employer contributions^^. When you retire at 65, your retirement balance will be $3,109,927. Taking your super ‘seriously’ as soon as possible is about securing your financial independence later in life. Can you make up for these contributions later in life? Yes, you can. However, you will have to contribute significantly higher amounts for the same retirement outcome.


Changes to superannuation means that as of 2021, insurance is no longer automatically attached to accounts of members under the age of 25. Most of you reading this article would have initiated a superannuation account prior to this time, and likely have insurance cover if you haven’t opted out.

If you’re not serious about your super early on, insurance can whittle away the small balances that you earn. My first job out of university paid me $40,000 inclusive of superannuation. At 9.5%, $3,800 was contributed to my super. That is $3,230 after contributions tax. The average life insurance policy through super is $300 a year . However, I used this insurance calculator through Rest (which was my first superannuation fund) and it came out to $413 for the three common insurances that you have within super – life, Total and Permanent Disability and Income Protection insurance.

Even using $300 a year as an example, these default insurances are reducing my account balance by around 10%.

I am not saying that you should remove insurances from your super. It is completely based on your circumstances. I had no dependants at that time, and I still have no dependants. However, my circumstances have changed as I have taken on a mortgage. As part of my employee benefits at Morningstar, they provide Death, TPD and Income protection insurances. This is not the case for a lot of people. The point is that it should be assessed based on your individual circumstances. I have no need for these default insurances within my superannuation. With many of us choosing to have kids later in life, it is likely that the start of your career, life insurance wouldn’t be necessary to help dependants in the event of your death.

I modelled out the difference that it would make over a career saving towards retirement. If you took action at 25 instead of 35, it’s a $29,200 difference in your favour at 65.


If you do have dependants (including financial dependants that you share financial obligations with), it is the opposite situation. Default insurances on your account are not custom to you and it may result in being underinsured. This could leave your financial dependants without proper cover in the case of an unexpected death or unforeseen health issue.

Outside of insurance, taking your super ‘seriously’ at an early age also means nominating beneficiaries.

Retail or industry superfunds will have a Nomination of Beneficiaries form. This allows you to nominate your wishes, but there are a few different types.

There are two main types of nominations for superannuation – binding and non-binding.
Binding nominations are a legally valid nomination to a valid dependant. Binding nominations can be lapsing, or non-lapsing. Non-lapsing is valid until death, but lapsing is the most common, and means that it expires every three years, and this is done because there’s room for circumstances to change.

For example, you might make a nomination for a spouse. Twenty years later you might have children, you might be remarried, you might be divorced – there’s a range of possibilities over the decades that you have super. A lapsing nomination expires to account for that. Once it does lapse, if it’s not renewed it turns into a non-binding nomination. This is a strong suggestion as to where a death benefit should be paid. The trustees of the superannuation fund will take current circumstances into account.

Take your super seriously as early as possible

Super should be taken seriously because there are a multitude of ways that your balance can be impacted early on to have outsized impacts on your retirement. I understand that the point of the Rainmaker study was to show the ages at which performance has the largest impact to superannuation balances. The results can be misinterpreted and contribute to an already lax approach to super by young Australians.

We’ve recently seen what happens when super isn’t taken seriously. We are living in a time where past governments have declared it good policy to open up the floodgates to super and release funds without any strict conditions of release. 2.5 million Australians took them up on this offer during the Morrison government’s early release stimulus package. $38 billion was drained from superannuation accounts.

Those that did access their superannuation reduced their balances by 51%. This tells me that it was mostly younger Australians or those that were self-employed. 75% withdrew the maximum amount available to them. It was colloquially named the ‘$120,000 pizza’, referring to the fact that a large amount of the money was spent on takeaway food and it will result in, on average, $120,000 less in individuals’ accounts at retirement. Gambling was one of the largest expenditures for the funds.

It is important for younger Australians to change their perception of retirement. It is difficult to see it as your money when you’re not able to access it for multiple decades. However, in all of the cases that I’ve shown above paying attention early makes a marked difference to your outcomes. The combination of all the above factors means the impact will be multiplied. Taking superannuation seriously is viewing it as an enabler of financial independence in retirement.

Reviewing your super for the first time? I’ve written an article on the steps to take.


*the Longitudinal Survey of Australian Youth's concludes that most Australians have commenced full time work by the age of 21 years old.

^An individual on $100,000 contributing 11% p.a. to their superannuation, with 6.7% p.a performance a year, paying $300 for insurances per year. (future expected returns for an aggressive portfolio from Morningstar Investment Management). Super account starts at $0 at 25. Accounts for contribution tax.

^^An individual on $100,000 contributing 11% p.a. to their superannuation, with 6.7% p.a. performance per year (future expected returns for an aggressive portfolio from Morningstar Investment Management). Super account starts at $0 at 20. Accounts for contribution tax.