If you’re entering the employment market today, you can expect your first job will be just one of 17 you’ll have before you retire. You’ll stay an average of three years, and then move on to the next challenge.
The days of a ‘job for life’ are well and truly over, as Australians hop from employer to employer, and even industry to industry, navigating changing technology and trends.
And unless you’re the organised type, those 17 jobs will represent 17 different superannuation accounts.
That means 17 sets of fees, chipping away at each balance. And if some of those jobs were fleeting – a summer job to earn some cash for that gap year trip, for example – it’s likely your balance will disappear completely.
For example, if you have $3000 sitting in a high-fee superannuation account you no longer use, and you plan to retire in 22 years, by the time you hand in your lanyard that $3000 will have been whittled away to just $279.
To put it another way, if you have a single super account you’ll pay an average of $10,500 in fees over 30 years. If you have five super accounts, that will rise to a whopping $52,500 in fees over 30 years. That’s $42,000 less you’ll have in your pocket to make the most of your retirement.
Consolidating your super once involved phone calls and paperwork. Today it couldn’t be simpler.
Step one involves setting up a myGov account. This site allows you to access a range of government services online, including the Australian Tax Office, which is the department you’ll need here.
Once you’ve set up your account, which takes about five minutes, link it to the ATO, using your Tax File Number. You’ll be invited to do this once you’ve created your account.
Click on the super tab and you’ll see details of all your super accounts. Choose the fund you want to transfer your money to, click confirm and consider it done.
When choosing which fund to move your super into, don’t necessarily choose the one with the biggest balance.
You should also check how much each fund charges in fees, and what insurance and other benefits they include. If one fund has slightly higher fees, but far superior insurance provisions or better long-term returns, that might be something to include in your calculations.
In choosing where to consolidate your super, it’s worth noting that not-for-profit industry super funds have outperformed retail or bank super funds by 2.2 per cent over the past 10 years.
It’s also worthwhile finding out how much each fund charges for exiting.
And finally, make sure your current employer is able to contribute to your chosen fund.
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