Having multiple super accounts is a common scenario for many individuals in Australia. With people changing jobs more frequently and employers defaulting to set up a new super account for each employee, it’s easy to end up with multiple accounts. But is it a good idea to have multiple super accounts? In this article, we will explore the implications of having multiple super accounts and provide guidance on whether consolidating them is the best option for you.
The Pros and Cons of Having Multiple Super Accounts
There are both advantages and disadvantages to having multiple super accounts. Let’s take a closer look at each:
Pros:
- Insurance Coverage: Some super accounts come with default insurance cover. By having multiple accounts, you may be able to access more than one insurance policy, providing additional protection in case of illness, injury, or death.
- Diversification: Having multiple super accounts can allow you to invest in different funds, which can help diversify your investment portfolio and potentially reduce risk.
- Employer Contributions: If you switch jobs frequently, you may end up with multiple super accounts that receive employer contributions. This can boost your overall super balance over time.
Cons:
- Multiple Fees: Each super account comes with its own set of fees, including administration fees, investment fees, and insurance premiums. Having multiple accounts means paying multiple sets of fees, which can eat into your overall super balance.
- Lost Super: With multiple accounts, it’s easy to lose track of your super and potentially miss out on valuable retirement savings. This can happen if you change address or fail to update your contact details with each super fund.
- Complexity: Managing multiple super accounts can be complex and time-consuming. Keeping track of contributions, investment performance, and insurance cover across multiple accounts can be challenging.
Consolidating Your Super Accounts
Given the pros and cons of having multiple super accounts, many financial experts recommend consolidating your super into a single account. Consolidation involves transferring the balances of your existing super accounts into one account of your choice. Here are some benefits of consolidating your super:
Benefits of Consolidation:
- Cost Savings: By consolidating your super accounts, you can eliminate duplicate fees and potentially save money on administration and investment costs.
- Easier Management: Having all your super in one account makes it easier to keep track of your balance, contributions, and investment performance. This can simplify your financial life and reduce the risk of lost super.
- Improved Investment Strategy: Consolidating your super allows you to review your investment options and choose a fund that aligns with your risk tolerance and retirement goals.
Before consolidating your super accounts, it’s important to consider any Insurance cover you may lose by closing certain accounts. You should also compare the fees, Investment Options, and performance of your existing super funds to ensure you’re making the right choice for your financial future.
Conclusion
While having multiple super accounts has its advantages, the drawbacks often outweigh the benefits. Consolidating your super into a single account can lead to cost savings, easier management, and improved investment outcomes. Before making any decisions, it’s advisable to seek advice from a Financial Advisor to ensure consolidation is the right choice for your individual circumstances. By taking control of your super and making informed decisions, you can set yourself up for a more secure retirement.