Hospitality workers beware: Are super fees and charges eating away your retirement nest egg?
Calling all young hospitality workers! How would you like to earn an extra $100,000? It’s a no brainer, right? That extra $100,000 could be all yours if you just take the time to minimise your super fees and charges now while you’re still in your 20s, rather than waiting until later in your working career.
For most people, working multiple jobs through college is not unusual, but it probably means you’ve got multiple small super balances tucked away in multiple funds.
Likewise, if you’ve worked in a host of hospitality jobs in a number of companies to gain experience and on-the-job skills, you’ve probably picked up a slew of super funds to go with that experience.
With that slew of super funds comes multiple super fees and charges.
Costly consequences of having multiple super funds
While it may be difficult for you to even contemplate retiring as you embark upon your working life, not having a long-distance lens will cost you dearly.
Having multiple super funds typically with multiple super fees and charges means your retirement funds are under the threat of being eaten away by multiple admin expenses and insurance double-ups. If you have five accounts, you’ll be paying a yearly admin fee on each account each year so you’re paying five times the amount of fees for no reason.
Having $5000 tucked away in another super will not add to your nest egg. Sadly, the longer you leave it, the longer it will just tread water.
On the other hand, if you take action and consolidate your funds into one account now, that $5000 could easily be worth more $100,000 when you retire. A lump sum in one account rather than small sums in multiple accounts equals more interest for you in the long run.
As we highlighted in a recent post, the power of time combined with compound interest is all yours for the taking. As such an important part of your future, you need to pay attention to your super now and make the time to get your super fees and charges sorted now while you still have time to make changes that count.
Time is your biggest asset
Think about where you want to be in five or 10 years’ time. By doing this kind of thinking now, you will be much further down the track and hitting your super goals if you get it sorted now. Try ASIC’s super calculator to work out the additional contributions you’ll need to make in order to reach your super goals. Then, you can largely set and forget.
The more you can grow your super while working while you’re younger , the more comfortable your lifestyle will be when you retire.
Get your super sorted
1. Search for lost super
We’re talking about those multiple small balance funds in multiple accounts that were set up for you in all those jobs you’ve had at uni and beyond. It’s highly likely that your money is sitting in an account treading water and at the mercy of fees.
2. Consolidate your super
If you have super with multiple funds, by consolidating them into one account, you’ll save on fees and charges that could be eating into your balance. Before you do, double check for exit or termination fees.
3. Consider how your super is invested
Picking the right fund to grow your super is important because over the years, small differences in fees and returns can make a large difference in the amount you will retire with. By switching your super into a more growth-focused investment option may be a better option for you in your early career.
Remember, as soon as you are in full time employment and your employer is paying for your super, you need to get on top of it and make it work as hard as possible for you for as long as possible.
