You’ve worked hard to grow your super. But as retirement nears, overlooking the details (like keeping money in accumulation for too long, or paying an adviser out of your super) can quietly erode the savings you’ve spent years building.

In this article, we’ve rounded up the eight common super mistakes Australians make. Plus, we’ll share exactly how you can avoid them.

Prefer watching? This video breaks down the topic:

8 common superannuation mistakes

Keeping informed is the best way to avoid making costly retirement planning mistakes. Let’s walk through what to look out for, and what to do instead.

1. Leaving your super in a default or misaligned investment option

How your super is invested should reflect your life stage and financial goals. Otherwise, you could fall short of the retirement you’re aiming for.

Why it matters

Your investment option plays a major role in the kind of retirement you’ll be able to afford.

For example, a high-growth option might be too risky if you’re close to retirement. It exposes you to sharp market drops just before you need to start drawing down. That said, moving to a conservative option too early can hold back long-term growth that your super still needs.

What to do instead

To ensure your investment option aligns with your circumstances:

• Assess your situation – Determine how close you are to retirement, and how much risk you’re willing to take with your super.
• Plan ahead for your retirement – Set a clear income target (e.g. $60,000 per year), and check your progress using tools like the MoneySmart Retirement Planner.
• Invest with intention – Match your investment option to your retirement stage, not the default or a guess.

2. Keeping money in accumulation after you’ve retired

According to the Super Members Council, around 700,000 Australian retirees are keeping super in accumulation — and paying about $650 more in avoidable tax each year.

Why it matters

To recap, earnings in an accumulation account are taxed up to 15%. Typically, you hold your super in this phase while you’re still working. Once you retire and move into the retirement phase, earnings become tax-free.

Many people assume their super automatically moves into the retirement phase once they stop working — but it doesn’t. And if you leave your money in accumulation for longer than necessary, tax on earnings can quietly eat away at your savings.

What to do instead

To avoid paying extra tax unnecessarily:

• Plan your retirement timeline. – If you’re retired or over 65, you can start your pension, effectively moving super into the tax-free retirement phase. Set a clear retirement date and build a plan for it.
• Use the super system to your advantage – A transition to retirement (TTR) strategy, for example, can help you reduce tax and grow your balance.

3. Ignoring the impact of fees

Many people don’t know how much they’re paying in super fees, or what they’re even for. In fact, 34% of Australians have never reviewed or compared their fund’s fees.

Why it matters

Even small fees, compounded over time, can erode your super balance.

What to do instead

To understand and reduce the impact of your super fund’s fees:

• Check your latest super statement – See what fees you’re paying, including any adviser fees.
• Use the ATO’s YourSuper tool – Compare your fund’s fees and services with those of others.
• Read the Product Disclosure Statement (PDS) – This document contains a full breakdown of fees.

4. Paying an ongoing advice fee from your super

You could be paying an adviser directly from your super, even if you’re not receiving regular, tailored support.

Why it matters

Because the fee doesn’t come out of your bank account, it’s easy to miss. But over time, these fees can reduce your balance and take away from its long-term growth.

What to do instead

To make sure you’re not paying unnecessary advice fees:

• Check your super statement or transaction history – Look for ‘advice fee’ deductions or other related terms.
• Contact your fund – See if an adviser is linked to your account and what services they’re meant to be providing.
• Evaluate the service you’re receiving – Ask yourself whether the advice is regular and valuable. If not, consider a flat-fee or one-off arrangement with a financial adviser independent from your super fund.

5. Setting up an SMSF (especially close to retirement)

A self-managed super fund (SMSF) offers extra control and flexibility. However, if you’re approaching retirement, establishing your own fund may not be worth it.

Why it matters

SMSFs are complex and come with strict rules, ongoing costs, and a lot of responsibility.

On average, SMSFs cost around $2,000 – $4,000 per year in general accounting, admin, and compliance fees. That’s before adding setup, wind-down, investment management, and advice costs. On top of that, you’re personally responsible for staying compliant. If things go wrong, you expose yourself to potential legal risks and financial penalties.

What to do instead

To avoid taking on more complexity than you bargained for:

• Understand the time and responsibility involved in running an SMSF – An SMSF may not suit your life stage, interest, or financial knowledge. It can also be especially costly for smaller balances.
• Consider if a retail or industry fund could meet your investment needs – For most retirees, these are better-suited, lower-cost options that avoid the extra admin, legal risks, and paperwork of an SMSF.
• Seek independent advice, if you’re still set on starting one – Make sure you’re confident about the compliance obligations, especially if you’re 5-10 years from retirement.

6. Letting unused concessional contribution caps go to waste

If you haven’t maxed out your concessional contributions in recent years, you may be able to carry forward the unused amounts. This ‘catch-up’ rule allows you to contribute above the annual cap in future years. But unused cap amounts only last five years.

Why it matters

If you don’t use your caps before they expire, you lose them! That’s a valuable tax-saving opportunity gone to waste, along with a chance to boost your super before retirement.

What to do instead

To make the most of your concessional contributions:

• Check if you qualify for the carry-forward rule – To access this strategy, your total super balance must be under $500,000 on 30 June of the previous financial year.
• Use up any unused caps – Consider making extra concessional contributions (before 30 June) to use available carried forward amounts.
• Speak to a financial adviser – A financial adviser can help ensure your contributions stay within the rules and support your retirement goals.

7. Not understanding how super is taxed after death

Many Australians don’t realise their super is taxed when it’s passed on after death.

Why it matters

Without the right strategy, your loved ones could end up losing more to tax than necessary. For example, if your super is paid to a non-tax dependent (e.g. an adult child), they will lose 17% of the taxable portion. That’s $17,000 for every $100,000!

What to do instead

To help ensure more of your super goes to your loved ones (and not the ATO):

• Understand how your super is taxed on death – Super consists of tax-free and taxable parts, and adult children will incur 17% in tax if they inherit it.
• Check who you’ve nominated to receive your super – Your will doesn’t automatically cover your super, so having a valid beneficiary nomination in place is important.
• Seek professional advice – A financial adviser can help you explore strategies to minimise potential taxes.

8. Sticking with an underperforming super fund

Staying loyal to your super fund might seem easier than switching, but it could cost you dearly. When you stick with a fund that continues to underdeliver, while better-performing, lower-fee options exist, you end up paying a so-called ‘loyalty tax.’

Why it matters

Over the long run, even a small difference in investment returns and fees can make a six-figure difference to your final balance.

What to do instead

To avoid the ‘loyalty tax’ of sticking with an underperforming fund:

• Compare your fund’s performance and fees – Use the ATO’s YourSuper comparison tool to see how your fund stacks up against others.
• Review your returns over time – Check your annual statement or fund reports for performance trends over several years, not just short-term dips.
• Be willing to switch – If your fund is falling behind, consider moving to one with stronger performance, competitive fees, and investment options that suit your risk profile.

The bottom line

The most costly retirement planning mistakes don’t come from doing the wrong thing, but from doing nothing at all. This could look like putting off decisions, staying in the wrong fund, or simply not knowing your options.

But remember: your super is your money. Being intentional with it now means more freedom and less stress down the track.

Want to gain clarity and confidence about your super?

At Toro Wealth, we’re here to help you avoid common superannuation and retirement planning mistakes and make informed decisions about your future. Learn more about how we can help you.

Sources:

• https://www.afr.com/wealth/superannuation/superannuation-fees-cost-us-100-000-and-many-don-t-even-know-it-20250225-p5lf2b
• https://www.ato.gov.au/individuals-and-families/super-for-individuals-and-families/super/withdrawing-and-using-your-super/early-access-to-super/tax-on-super-benefits#ato-Taxonsuperdeathbenefits
• https://www.choice.com.au/money/financial-planning-and-investing/superannuation/articles/how-much-underperforming-superannuation-funds-can-cost-you
• https://moneysmart.gov.au/financial-advice/financial-advice-costs