The moments that count

Shane: Hello. My name is Shane Hancock, and I am the General Manager, Retirement at AustralianSuper. And welcome to our podcast, The moments that count. Before we start, it’s important to note that the information discussed in this podcast is general only and doesn’t take into account your needs or personal objectives. You should assess your own financial situation and needs. Past performance is not a reliable indicator of future returns.

Today, this podcast is being recorded at our head office on the land of the Wurundjeri people of the Kulin Nation. I and AustralianSuper acknowledges the traditional custodians of country throughout Australia. We pay our respects to elders past and present, and extend that respect to all Aboriginal and Torres Strait Islander peoples.

Global financial markets are experiencing heightened volatility, largely due to geopolitical developments. It comes as investors assess the potential impact of the US tariff program and countermeasures by the countries on company earnings and global economic growth. Many super fund members, including AustralianSuper members, are wondering what impact this volatility will have on their retirement savings, and if they should be making any changes to their super.

To provide some insights into this topic, I’m joined today by Alistair Barker, the Head of Asset Allocation at AustralianSuper. Alistair joined Australian Super in 2008 as part of our investment leadership team, and has oversight of the key investment considerations including return objectives, risk, liquidity and cost. Thanks for your time today, Alistair.

Alistair: G’day Shane, good to be here.

Shane: Alistair, to kick us off, can you talk us through what’s been occurring in markets over recent days, and what that might mean to members and their retirement?

Alistair: At the outset, it’s worth noting that difficult periods in share markets occur. And they actually occur a little more frequently than what many people think. If you look back through history, we’ve seen falls in the share market of up to 20% occur once every two to three years. And recessions, if you look at the US economy, occur about once every seven years.

So these events do happen, and it’s important that we design investment strategies knowing that they occur and considering how we manage through them. I guess what’s different about each difficult period in investment markets is that every time they’re a bit unique. To steal a quote from Mark Twain, history doesn’t repeat, but it does rhyme. And what I mean is that the cause of every market crisis is always slightly different.

There are often common dynamics, but in this case, the cause, with some degree of a paradox, is policy. So typically, markets often find a floor through a crisis period when policymakers act. So most recently, during the COVID-2020 incident, governments and central banks stimulated the economy and markets found a bottom not long after.

So, the interesting thing this time is that policy is actually the cause of some of the concerns in markets. So Shane, it’s natural to question the impact of these developments and what impact they can have on your super. And we do tend to see an uptick in members switching to cash or other lower risk options in response to the falls.

But it’s important to keep in mind that the investment options are designed to manage through these periods. And whilst it might be tempting to switch investment options, timing the market is difficult and staying invested in a diversified portfolio may be the best action for you.

Shane: Thanks Alistair. You’ve touched on that volatility in markets has happened previously and many times. And you’ve also touched on members switching. So what does history tell us when members actually do switch? How does that play out?

Alistair: It’s a good question and one I get asked a bit. Our data shows that making decisions based on short-term market movements can often leave members worse off financially in the long term. Why is that? There’s an old saying from a famous investor, Kenneth Fisher, and he said that time in the markets, that is being invested over time, is more important than timing the markets, when you get in or when you’re out.

So, part of the reason is that when you make an investment switch you actually have to get two decisions right. First you have to be able to make the decision of when to be out and second, you have to make the decision when to be back in. They’re complex decisions and what we know from looking through history are that many of the best returning days in share markets are often immediately after markets have fallen. So, if you don’t get back in when you see those days that are periods of substantial appreciation, you may not realise the long-term return of the portfolio that you’re in.

Shane: So superannuation is a long-term investment which you’ve touched on, Alistair, but many of our members are either very close to retirement or in retirement. Do those members take a different approach and are they more likely to switch to cash when markets are volatile?

Alistair: Shane, it’s natural for members in retirement or nearing retirement to be more focused and more concerned about how their portfolio is going and is it helping achieve their return objectives. Now that being said, there’s three questions that I would suggest that members either in or entering retirement consider. The first is where is your income coming from? So, depending on your circumstances, a considerable proportion of your income might be coming from a Government Age Pension.

For members with moderate balances, that consideration of the Age Pension will be really important. Second, what is your investment horizon? So, according to the Australian Institute of Health and Welfare, for a woman retiring at the age of 65, they have a life expectancy of 22.8 years from that point. So that’s a pretty long time. So many members in retirement may still have a long investment horizon, and switching to a cash option in response to market volatility might not necessarily achieve the right long-term investment outcome, given that horizon.

Third, the question I’d ask is, how do you protect yourself against inflation? Being in cash might feel safe, in some respects, but as we’ve seen over the last two to three years, cost of living can increase and it’s important to think not just about how you secure your assets in the short term, but how your income might need to grow over time to keep pace with inflation and cost of living. If you just leave your money in cash, you might find yourself in a situation where you’re drawing down on your super money quickly and switching to cash might have locked in a loss on markets. For more information, I’d encourage you to go to our website, and there’s an article entitled ‘Understanding the risks of switching’.

Shane: I think that last point is really relevant, Alistair, because in your answer, you talked about multi factors. You talked about income drawdown, Centrelink, life expectancy. So all those factors are a consideration on what you actually do. People seeing their balance reducing because of the markets is totally natural, but that’s not the only thing to be thinking about.

Alistair: Yeah, it’s correct. And when we think about investing, a lot of the questions we ask ourselves are similar to what people would ask as individuals. How long is your timeframe? What’s your objective? How much are you looking to grow?

Those are questions we ask ourselves about individual investments within the investment team. I think people would be surprised how some of those common questions that a financial adviser would ask actually translate through to quite simple investment principles that we would apply on a day-to-day basis managing the portfolios.

Shane: We’ve talked a little bit about history, but can you just talk a bit about what impacts have events like Global Financial Crisis, COVID-19 had on member super balances?

Alistair: So there’s a couple of points that I reflect on around this, Shane. The first is a long-term view shows that substantial growth in value for members who stay invested in a diversified portfolio, like our Balanced option, works through market ups and downs.

So for example, if you had $100,000 invested in our Balanced option from the 31st of March 2005, 20 years later, even with no additional contributions, you would have a balance of over $432,000. That’s despite various events during that time, the Global Financial Crisis, the COVID downturn, the European-Greek crisis, if you recall those, various market events. So on the long-term, staying invested has helped members’ balances grow over time.

But there’s a second point I’d add, which is an analogy I use often when we get to periods of drawdowns in markets, and it’s around the concept of bubbles. So many of you might have heard of the concept of a stock market bubble. It’s often used to describe a situation when the valuations of assets are inflated. To labour the analogy, you can’t have a bubble without having too much air in it. And what that really means is that in many cases, markets fall because they’ve risen a lot before.

Or another way, you can’t have a stock market bust without a stock market boom. So, for many members, if you’ve been invested over the long term, you’ve often seen strong returns leading up to a period where you have weaker returns. To use a specific example now, the returns on shares, and in particular the Magnificent Seven, the large US tech companies, the returns on those companies have been extremely strong over the last 10 years. So, that they’ve given up a bit of ground in this recent difficulty presents a short-term challenge. But over the longer term, getting access to those type of investments has been an overwhelmingly good outcome.

Shane: I think again, Alistair, just reiterating the point that we’ve been talking a lot about here, all those examples you gave then about someone who invested $100,000 in 2005 and it’s now worth $432,000, by leaving the money in the investment strategy that they had in place, if they were to switch out to cash, they’d then have to find the right time to switch back in, and we know that’s a really challenging thing to do.

So we’ve talked a bit about AustralianSuper as an investor and the way you guys think and so a member of AustralianSuper has the benefit of hundreds of investment professionals managing their superannuation savings on a daily basis. So does AustralianSuper change its approach to investing in times like this?

Alistair: Well there’s two answers to that question, yes and no. So, the first answer is no, we really don’t change our approach, and what I mean by that is that our aim is to build investment portfolios that have regard to the fact that difficult periods occur in markets, and our role and responsibility is to steward members’ capital through all environments and all policy changes, so our aim is to build an investment approach that has regard to these periods.

We’ve got over 350 global investment professionals inside AustralianSuper with decades of experience managing portfolios. Having decades of experience particularly navigating through difficult periods in markets provides confidence and clarity about what you do. So in that sense we’re not changing our approach because it already had regard to the fact that these periods occur.

The area where we do change our approach is managing liquidity. So our aim during periods of market crisis is to make sure that we have liquidity to take advantage of attractive assets when they turn up. Shane: Can you just explain to our listeners what liquidity means?

Alistair: Yes, so liquidity is about the amount of cash or cash-like instruments that we might hold to allow portfolio flexibility. For example, we will hold a certain amount of cash and liquidity in a portfolio such that if an investment opportunity arises, whether that’s a toll road or it might be a property investment. It might be a credit opportunity and it might be, you know, buying equities when they’ve fallen in value as they are at the moment. Having some liquidity in cash to be able to take advantage of those opportunities is about securing great long-term investments for members. So, liquidity for us is about having the flexibility to respond to environment. So it’s quite a critical enabler of long-term investment performance.

Shane: That point that you make around having cash available to purchase investment opportunities is the same in any market that is in a down market?

Alistair: Yes, although I think having liquidity in a down market is quite critical. Having it in a market that’s going sideways to up is arguably less critical. The point I’d like to say to members is that we manage liquidity for AustralianSuper as a fund and for each portfolio. Therefore if we have surplus liquidity available it means that we can take advantage of opportunities on their behalf.

Shane: That’s a really good point as I said at the beginning of that question, it’s the benefit of having hundreds of investment professionals whose sole purpose is to ensure that our members’ money is being invested appropriately. So just to finish off Alistair, so we’ve given our listeners a lot of information around what’s happened and things they should consider and the long-term nature of superannuation, but clearly we also encourage members to take an interest in their superannuation at any time. So if anyone listening is still uncertain about how they should respond to this volatility, who can they speak to or where can they go for further information?

Alistair: The first thing I’d say is there’s a number of resources on the Fund’s website. I’d certainly encourage people to access that. There’s a lot of great resources there. The second piece of advice is that a lot of the principles upon which myself and other people who work in investment management operate on are principles that work in any type of investment whether that’s in my capacity running portfolios for members or as an individual member making choices on their own behalf.

And those are, have a clear strategy. So have a sense of what you’re trying to achieve, and if at all possible, stick to it. Understand that there could be ups and downs, and be comfortable with that approach. The second is diversification. Most of our portfolios are diversified and that’s the reason that notwithstanding market falls, the impact on the investment options that we offer to members has been less than what you’ve seen in the share market. The third is to contribute regularly, or if you’re in retirement, to have a regular or staged withdrawal. In investing, we call it dollar cost averaging.

It’s very similar to the analogy of time in the markets. A staged approach to investing into your super and then taking money out over time usually reduces the risk that you withdraw at the wrong point in time in a market cycle. And finally, it’s important to be mindful of what a lot of people call a behavioural bias.

So, it’s a really common emotion to feel that if a market has fallen, or you look at your account balance and it’s fallen, the natural reaction is to want to avoid that pain of seeing your balance decline. Consider speaking to a qualified financial adviser. As an AustralianSuper member, you have access to a number of advice options. We’re here to help.

For more details, please consult our website. For advice, australiansuper.com/advice. And to learn more about market volatility, australiansuper.com/marketvolatility.

Shane: Some really meaningful points for people to consider, and those particular articles that we have on the AustralianSuper website, we’ll continue to update and communicate for our members. One of the points I just wanted to emphasise that you raised about the behavioural side and having maybe a different action to what you’re long-term investing, one of the tools that is available for members on our website is a risk profiling tool where they can actually go in and answer a few questions and it’ll give them an indication of what sort of investor they are. And that might be something really worthwhile to do to give you a response to what sort of investor you are versus how you’re feeling.

It’s really challenging for people to see their balance reduce after working really hard for it. But hopefully today, Alistair has given you some really good insights as to the way we see it and some of the really important things to think about before taking action like switching in your superannuation. So, Alistair, thanks again. Really appreciate it.

Alistair: Cheers, Shane. Good to be here.

Shane: Thank you for joining us today. If you’re an AustralianSuper member and you would like to join us to share your story or have a question or topic you would like us to cover, then click the link in our show notes to get in touch. If you’ve enjoyed this podcast, subscribe and share with your friends and family. See you next time.

Shane: Hello. My name is Shane Hancock, and I am the Head of Member Products, Guidance and Advice at AustralianSuper. And welcome to our podcast, The moments that count. Before we start, it's important to note that the information discussed in this podcast is general only and doesn't take into account your needs or personal objectives. You should assess your own financial situation and needs.

Today, this podcast is being recorded at our head office on the land of the Wurundjeri people of the Kulin Nation. I and AustralianSuper acknowledges the traditional custodians of country throughout Australia. We pay our respects to elders past and present, and extend that respect to all Aboriginal and Torres Strait Islander people.

AustralianSuper has the privilege of 3.4 million members trusting us with their retirement savings. Each of those members has their own story. And today we're going to hear one of those stories. I have the pleasure of being joined by Kathryn Niesche, a member of AustralianSuper. Welcome, Kathryn, and thanks for joining us.

Kathryn: Thank you. Great to be here.

Shane: So to kick off, Kathryn, this is a very broad question. Can you tell our listeners a little bit about yourself?

Kathryn: Last week, I turned 64.

Shane: Congratulations.

Kathryn: Thank you. Not long before that, my mum turned 101.

Shane: Wow.

Kathryn: She's living in residential aged care in Adelaide, which is where I grew up. I'm still working around three days a week in casual work that very thankfully allows me the flexibility of travelling to Adelaide when I want to or need to, to spend time with my mum. My partner and I have been together for 23 years.

We're not married and we don't have kids. We've always been very independent people. So we each have our own houses and finances. My house is in inner city Melbourne and my partner has a house down at Ocean Grove. So we're very lucky to have a city house and a beach house. We both have had very varied working lives, mostly in the performing arts and I have many interests and activities that still keep me involved, principally in circus, physical theatre and dance.

Just recently I paid off my mortgage after 20 years of slog and that was a real struggle, particularly during the GFC and there were lots of times when I was paying about three quarters of my weekly wage in my mortgage repayments. So I had to consider every dollar. At this stage of my life, I can't really say whether I'm semi-retired or semi-working, so somewhere in the middle.

Shane: Well, there's a lot in there. So firstly, 101.

Kathryn: Yeah.

Shane: So congratulations to your mum and I do think we had a conversation with you coming in to join us last year for our podcast, but you were heading to Adelaide for your mum's 100th birthday.

Kathryn: The 100th, yes.

Shane: And now she's kicked over 101. So that's unbelievable.

Kathryn: I'm hoping the longevity genes.

Shane: It's part of the genes. You've got a long retirement or semi-retirement ahead of you.

Kathryn: I know, I know. So that's, yeah, something to think about.

Shane: That is amazing. Well, we'll get into a few things, but before we get into your work history, because I'm really interested to hear about your performing arts career, you did make a comment in your introduction there about paying your mortgage off and the hard slog it was. But what was that feeling like when you actually paid that last payment?

Kathryn: I sort of, it was kind of disbelief really, because I'd been working away at it for so long. And then all of a sudden I kind of realised, oh my goodness, the end is in sight. Yeah, it's quite a thing. Particularly because I did it on my own and having had a crazy career of like short-term contracts and often no payment, because I would often do projects that interested me rather than paid.

Shane: What an achievement, and you should be really proud of what you've done there, because it's a significant thing that many, many people will struggle with. So well done. So, let's go back a little bit to your work career. So it was around 40, you transitioned to circus and physical theatre. What were you doing before then?

Kathryn: Well, after leaving school, I studied drama and modern dance at uni, and I started my performing career with smaller independent theatre companies. So, mainly working in theatre for young people and physical theatre. The longest contract I ever had during this time was five months, so there was no consistency of work and back then no super either really. Turned 40 and got together and bought a house with two other friends. Once we had the mortgage, I obviously needed to have more consistent weekly income.

So when I was offered a job teaching at the new National Institute of Circus Arts, I took it thinking that I would probably last about six months, so I couldn't imagine working anywhere for longer than that and then I would go back to performing. But then my financial circumstances changed due to having to buy the other two friends out and so I was facing some serious mortgage stress, so I kept going and somehow stayed teaching for 20 years.

Shane: A bit longer than six months, yeah?

Kathryn: Just a little bit, but I also really enjoyed teaching. I taught aerials, so that's trapeze and rope and aerial hoop and circus history, which was fascinating. And I feel very privileged to have been able to assist all these amazing young circus artists and see them graduate into professional performers. So 20 years went by very fast.

And towards the end of this time, there were several factors combined. So being offered less teaching hours, and then my hours in one subject were cut due to course restructuring, needing to reaccredit to do the same work that I had been doing.

And then COVID, of course, was a thing. So in combination, this was all just a bit more than I could manage from a mental health point of view. And it sort of all came to an end. Initially, it was very hard to process, but luckily just a few years earlier, I had started doing some extra work, some casual work with two other organisations.

So post COVID, I was able to increase my hours with those two jobs and that certainly saved me. So, currently I have three casual jobs and several active interests that all revolve around the performing arts. I work on stage door for Marriner Theatres, so the Regent and the Princess and the Comedy Theatres. And I also work on events at the State Library of Victoria. So we set up, we run, and then we pack up the events. I've gone back to performing as well.

Shane: The library and the theatres, you're working in some amazingly historic buildings in Melbourne.

Kathryn: I know, I can't believe my luck. And in such inspiring places that bring so much joy and interest to people's lives. So gosh, I'm very lucky.

Shane: Just going back a bit to the teaching career. So it sounds as though the regular income was something that attracted you to that, but then am I right to say that you got so much enjoyment and passion? It sounds as though even when you left, there was achievement, but also this level of leaving something behind that was so important to you?

Kathryn: Yeah, I think there was definitely sort of a grieving process of letting go. But after a while, when I started to switch my focus to going forward and realised that I had a whole lot more time and brain space to follow my own activities and have some me time, it was a very positive thing and I thought, "Oh, that was a wonderful part of my life...", but now I've moved into the next stage and that's very exciting.

Shane: It's such a common theme like you described it so well, it's a grieving process, you've invested so much of your time and effort into something and then you've got to let it go to an extent, but then the outcome that you've achieved in the meantime, as you describe it, is again, whatever you want to call it, semi-retirement, semi-working.

So when you were working full-time, did superannuation start to be part of your life, so your payments received, and when did you start thinking about super and how it works?

Kathryn: I didn't really think about it at all in my 20s, as it wasn't so much of a thing when I started my freelance work in the 1980s. But then I think the real trigger was when my father passed away, I was 33, and he passed away from cancer at only 68 years of age. I realised that I needed to be responsible for supporting myself for the rest of my life without having to rely on anyone else.

And since I had left my family home, I'd been living in numerous share households and had to move house often because, you know, the house got sold from underneath you or whatever. I was also living a very uncertain life of a freelance performer, so most importantly, I needed the security of having my own place as a base, and to have that sense of control over at least one aspect of my life would be really financially difficult for me to do on my own.

I needed to do it with others to get it to happen. So when I was 40, along with two friends who were a couple, we bought a big run-down weatherboard house and started to renovate it. Unfortunately, not long after that, the couple broke up and two of us bought the other person out.

Then two years later, the other person had met a new partner and also wanted out, so I had to dig deep again and buy that person out. Actually, it was just a bit of luck that I had a lotto windfall of $5,000, which actually made the difference between me being able to keep the house rather than sell it. Took me 15 years to renovate the house and pretty much the day I finished it, I put it on the market and sold it.

Shane: Isn't that always the way?

Kathryn: And then I bought a much smaller and thankfully a renovated house, yeah. My absolute priority was to pay off the mortgage as quickly as I could. I've been very focused on that. And yeah, I can't believe that after 25 years I've actually done it.

And as far as really starting to focus on a proactive approach to my super and savings for the future, over the years I've had several super funds from all my numerous casual jobs and short-term contracts. But I was very shocked when I saw how much of all the small amounts was eaten up in fees. So when I started my job at NICA, I got the consistent pay packet and I started with yet another fund. I rolled all of these little bits and bobs of the old accounts into the new fund.

And then I noticed that my partner who was with AustralianSuper seemed to be doing better with her money than me with my account. So I decided to also switch over to AustralianSuper and I'm very glad I did. I started salary sacrificing and took advantage of the co-contribution, and during that time I also attended a few of the retirement seminars that AustralianSuper ran over the years to try and start thinking about how it might all work, given that finance and financial matters are not really my comfort zone at all.

Since COVID, I must say I haven't actually given it a whole lot of thought because, you know, we've lost a couple of years there and just starting to get back on track, but now I have paid off my mortgage, I'll definitely be contributing more to my super and starting with my tax refund for this year, which always in the past I would have stuck straight into the mortgage.

Shane: Well, Kathryn, you just said that you're not very financial savvy, and I would like to debate that, because you just talked about how you worked hard to save for your home and pay your mortgage off, that you got a permanent super fund and then realised you had a lot of small funds and looked at the fees and consolidated them and moved them across, and then you salary sacrificed. And I think you used the co-contribution strategy as well. So, that's the stories that we try to tell our members to look at and you've done them all so well done.

Don't be so hard on yourself because I think you've ticked a lot of boxes and done it in a sensible way on your own. So, for our listeners, I'm sure they'd all say well done and a lot of people I think would love to have taken the proactive approach that you have and you've really driven yourself to be in the outcome that you're at now. So, you've talked a bit about semi-work slash semi-retirement.

Have you thought about when the semi-retirement becomes more than semi and funding the lifestyle that you want? So you've just talked about salary sacrificing super, but have you got a goal in mind or do you know what you're going to need in retirement and how you're going to fund that?

Kathryn: Yeah, I'd say I'm just starting to wrap my head around retirement and not in any rush at this stage. I don't know if I can ever see myself fully retiring while I'm still able to do what I am doing. I love my stage door and my library jobs. These jobs are casual so I can pretty much work as little or as much as I want so I'm very grateful for that.

I want to go back to performing again. So, starting to work towards other projects and I guess accumulating money hasn't been a huge priority for me. So, I have to admit that I only occasionally check my super balance, but I will definitely now be more proactive and access it more regularly. As far as how I might retire, I probably might not be looking at what would be classed as a comfortable retirement, but I think that modest is quite fine with me.

I have very minimal expenses. I'm not a big consumer. I don't have a car and I'm probably it's just by habit careful with money and both my parents grew up in the depression so I think being careful is in my DNA.

Shane: Well, hopefully you'll live into 101 as well.

Kathryn: Yeah, well, my mum used to tell stories of she had clothes made from curtains and shoes made from car tires.

Shane: Yeah, right.

Kathryn: So yeah, that's doing it tough.

Shane: It is, it is.

Kathryn: So, yeah over the years missed out on things holidays and activities that friends were doing because I was so fixated on the mortgage, so now I will be able to afford to go on holidays and be enjoying more activities and not focusing so much on the money side of it.

Shane: As we say, retirement is individual, and you were talking then about whether it's a comfortable or a modest retirement, but it seems to me that you're very focused on what makes you comfortable, so being comfortable and confident in retirement is core, and it sounds as though you have a pretty good understanding of what that might look like, travel being part of it.

Kathryn: Definitely.

Shane: Am I right to say that the work is not just about financial, there's some personal satisfaction you get out of it?

Kathryn: Absolutely, yeah. I was listening to one of the talks at the State Library once, and it was this successful start-up guy, entrepreneur, and something he said just really stuck with me, and he was talking about how he chose to become involved in new projects by asking himself three questions. Does it pay? Will I learn something? Is it fun?

And if the answer to two of them was yes, then that was enough for him to say yes to becoming involved. And I think what really struck me about that was the fact that for me, answering yes to, does it pay, is now a choice instead of a necessity. And that was like, oh my goodness, that feels so good and such a relief. Yeah, so I'm really looking forward to learning new things and having more fun.

Shane: Kathryn, I normally finish off with, have you got any tips for our listeners? But I reckon you've just nailed it with those three points. So thank you so much for joining us today. It's been great to meet you and hear your story and all the best for whatever comes next.

Kathryn: Thank you very much.

Shane: Thank you for joining us today. If you're an AustralianSuper member and would like to join us and share your story or have a question or topic you'd like us to cover, then click the link in our show notes to get in touch. If you enjoyed this podcast, subscribe and share with your friends and family. My name is Shane Hancock and I look forward to the next episode where we'll hear from another AustralianSuper member. See you next time.

Shane: Hello. My name is Shane Hancock, and I am the Head of Member Products, Guidance and Advice at AustralianSuper. And welcome to our podcast, The moments that count. Before we start, it's important to note that the information discussed in this podcast is general only and doesn't take into account your needs or personal objectives. You should assess your own financial situation and needs.

Today, this podcast is being recorded at our head office on the land of the Wurundjeri people of the Kulin Nation. I and AustralianSuper acknowledges the traditional custodians of country throughout Australia. We pay our respects to elders past and present, and extend that respect to all Aboriginal and Torres Strait Islander people.

Quite often, AustralianSuper members will ask questions of the Fund through various channels. And mostly those questions are relevant for many members, and so we thought it'd be great if we could share some of those questions and answers through this podcast.

To help answer these questions, I'll invite a guest expert to join me on the podcast. When people are thinking about their retirement, money is just one factor to consider. There's a range of things to think about when planning for the next phase of your life to help you achieve the retirement lifestyle that you want.

Now today, we're very fortunate to be joined by Dr. Elizabeth Clancy, a Senior Consultant/Psychologist with Transitioning Well, who has been providing retirement coaching and workshops for several years and has a strong interest in helping individuals to successfully transition into a meaningful retirement.

Transitioning Well is an organisational psychology consultancy which focuses on the messy intersections between work and life. helping individuals, teams and organisations to better negotiate the interfaces. Hi, Elizabeth and welcome.

Elizabeth: Thanks so much Shane, it's a pleasure to be here.

Shane: Before we start, can you tell us a little bit more about Transitioning Well?

Elizabeth: So as you mentioned, Transitioning Well, we're an organisational consultancy firm and we work with a range of organisations and individuals really looking at where life and work intersect.

So, those places in which what we're doing in our personal lives comes into work or equally what we're doing at work comes into our personal lives and how we can get the balance between these different parts of our lives right to get the sort of identity and the sort of life we're all looking for. And whether that's through graduate transition, moving into parenting or up to retirement, right across the lifespan.

Shane: Yeah, I wish I'd have known about you many years ago. More about the transitioning to parenting bit I was referring to. To set the scene, can you give us a bit of a view around the current retirement landscape in Australia?

Elizabeth: Well, as many of your listeners would be aware, I think we know that overall there is an ageing population in Australia. We've got around about 700,000 people who are planning to retire over the next five years. So that's quite a large population boom that we're seeing moving into the retirement kind of lifespan.

And retirement's really changed since what we saw perhaps with our parents. We used to see retirement as being almost sort of a very abrupt change that people would be working full-time till that Friday send-off, they'd get given the watch or whatever else and then come Monday they're fully retired.

But what we're seeing increasingly now is a really broad range of retirement journeys. So, people are looking at whether it's transitions gradually into retirement, reducing their hours, people looking at part-time arrangements, we see people moving into consultancy roles or volunteering.

And we see a really broad range there of career shifts, or even what we call unretirement. So people who move into retirement and they go, "You know what, maybe I wasn't quite ready..." and they step back into work, whether that's in their previous roles. And in fact, we even see around about 10% of people have no explicit plans to ever retire.

They say that one of the most accurate things about the recent Indiana Jones movie was an 80-year-old academic who wasn't planning to retire, and I think that's around about right. So we see these really different journeys, but what we also do see with people approaching retirement is that a lot of them are concerned about, what is this journey going to look like for me?

And that's both in relation to financial security, obviously, that if your income source has been a big part of your life, what's going to replace that? What does that look like? And obviously, that's an area of expertise for you guys. But also, what's life going to look like as we move into this retirement journey?

Shane: Great. You've touched on a couple of the concerns that people have raised with you. What are some other common retirement concerns that people have?

Elizabeth: Well, we see one of the big concerns, obviously, is around finance. And increasingly, with cost of living, we're seeing that coming up a bit more for people at the moment. About 55% of pre-retirees are concerned they're going to run out of money with retirement. And we see some specific gender differences in that. Women typically have lower superannuation balances. Maybe they haven't worked full-time for the length of their career. And those men and women, and those who are gender diverse, who don't have partners are also a bit more concerned about retirement. But some of the other things that they worry about are health and wellbeing, getting a little bit more aware that our bodies aren't quite as young as they used to be once, and what we're going to be doing in terms of our retirement, and social factors. What am I going to be doing with the time that's available to me, not just the money?

Shane: Yeah, we hear that with a lot of the members that we have coming here, a lot of those common themes come true. So, when people are thinking about retirement or in retirement, you've talked about the financial piece and the concerns, but what are some fundamentals for wellbeing in retirement?

Elizabeth: If we think about it, we've got a way that we can think about this, and there's four key areas. And obviously financial aspects of wealth is going to be part of them. And that's where it's really important to get good advice, to understand what's my current situation and what's the sort of lifestyle I want to live in in my retirement.

So, using tools like the income calculators and those sorts of predictors that are going to help you know what situation you've got, what your housing looks like, because often that's one of the biggest aspects of looking at the retirement journey.

And then as people approach retirement, it's also really important to think about not just where we're going to, but what we're leaving from. So we want people to leave work feeling good about that exit process. So, whether that's looking at aspects of things like knowledge transfer. So, many of us have worked in roles for a long period of time, we've developed expertise, we've got a whole lot of knowledge, and some of that may be known, but we often find with individuals there's 80% of your role that everybody knows you do, but there's this kind of weird 20%, it's, I go and talk to Shane about that stuff, and it only comes up occasionally.

And maybe you don't realise you're the expert in that field, that people just come and ask you about something. So, sort of harnessing some of that knowledge, and really being able to give that back means that both organisations do better because they're capturing that knowledge, but also individuals feel valued for the knowledge and the skills that they've been able to acquire.

So, looking at how they can leave well in terms of knowledge transfer, mentoring other people, we get often into this sort of stage of our lives as we move past 50, 60, that we want to mentor people and give back and develop the next generation of our workforce and be able to help them develop their skills.

Shane: Before you move on to the other two, is that a reason you see why people might unretire or delay retirement because the employer is really encouraging to stick around because only that person knows?

Elizabeth: Yeah we certainly see that. I think I've most often seen that particularly around technical roles so where people have particular subject matter expertise it's like the organisation doesn't know how to replace that or they haven't planned around how to replace that particularly where it's quite specialized skills that are going to take time to acquire.

Shane: Excellent thank you, sorry I interrupted your flow of the four things.

Elizabeth: No, I think it's a really important thing to think about though and what this journey can look like for different individuals so that aspect of leaving work well, just to close off there, it's really important to have good conversations with your manager, with your team around what you anticipate and what you want your retirement journey to look like so that you can plan out things like knowledge transfer, talk about what your potential retirement date might be and maybe consider sort of stepping down, using things like long service leave even, to have almost a practice go at retirement.

So, the practice run is useful for the individual themselves to get used to what their retirement lifestyle might look like and also for the organisation to have a go of what's life like when they're not around and how can we solve things on our own. So, looking at that potential retirement role and what skills they can also offer, and organisations can also do a lot of work here around actually recognising somebody who's wanting to move into maybe consulting or volunteering or something else.

So, are there new skills they want to develop as they're moving into this next phase of their lives? And then thinking maybe away from the workplace and the financial aspects, there's two other aspects that are really important to think about. So, when we move into a retirement lifestyle, thinking about what does that look like on a day-to-day basis? There's going to be some essential, fundamental things we need to do the day-to-day, unfortunately, magically, the laundry, the cooking, the shopping. None of that stops. But also what do you want to do with this time? And often for individuals, this is a really great opportunity to tap in and say, "Okay, how do I want to spend this time, what are my values, what's important to me?" And as I said, a lot of people are wanting to give back at this stage of their life.

So, often it can be volunteering, or working with organisations, or mentoring younger people in areas that are important to them. So, we see people moving into situations where they can actually really devote themselves, they've got the energy, they've got the skills, they've got the knowledge, and the time now to pour into things that matter, whether that's environmental concerns or helping out volunteering at Parkrun on a Saturday, or whether it's helping with the local aths club or sports club, there's so many different ways.

We often talk about budgeting in the financial sense, but it's almost like we can budget our time, and suddenly we've got an extra 40 hours in the week that we can budget for if we're fully retired, or maybe we want to spend that in different ways. So, that might be looking at, are there old hobbies that I gave away because I was just too busy with work or kids or other things going on. Life gets pretty busy.

So, are there things I want to pick up? Or maybe there might be new things I want to learn. Languages, sports, new hobbies, things that I want to explore or try out. And it doesn't mean all of them necessarily will be things I want to enjoy, but it's an opportunity to almost have a fresh start.

Shane: Correct, just have a crack.

Elizabeth: Yeah, definitely.

Shane: Different things, yeah.

Elizabeth: And I think that opportunity to kind of almost approach this as, this is a new life stage, I can learn new things, I can travel, I can try out different things that I've just not had the time or the opportunity to do. The fourth fundamental obviously is our health, both our physical and our mental health. As they say, our bodies are fabulous recyclers, use it or lose it, and that applies both physically and mentally.

If we're not using our brains, our synapses don't keep firing in the same way, and physically our bodies are made to move. Health really underpins our wellbeing right through the lifespan and that continues into retirement. So, this might be an opportunity to take yourself to the GP, get yourself put up on the hoist, have a bit of a check-up, see how it's all going.

Maybe there's a bit of a grease and oil change or whatever you want to think about there, but really looking at how you can take ownership of your wellbeing. And again, if that's something that you maybe haven't prioritised in the rest of your life before just due to competing demands and time pressures, this is an opportunity to step back and really look at some of the basics. So, am I staying active? Am I moving most days?

Am I mostly eating well? What's my sleep look like? Have I got social connections and interactions with other people? Because we know that these sorts of fundamentals are really critical for wellbeing, as I said, right through the lifespan.

Shane: Yeah, and we're seeing and we're hearing of people, and you referenced earlier, living longer in retirement and health is obviously the key driver of that. The interesting thing when you're talking then about, particularly the third point about home and lifestyle and people looking to volunteer or do activities that they haven't had the time to do, I was thinking back to all four, wealth, work, home and lifestyle and health are all really important, the ability to do the things you want to do. There is I guess, a bit of a gate opener around having the wealth side taken care of, and so whether that be you've got the wealth that you want, or at least you're understanding where your income is coming from, which frees the mind a little bit about, okay, well, I can do this, but if you haven't really addressed that, that can be difficult to focus on the positives because you're worrying about the wealth. Do you see that come up often?

Elizabeth: Definitely. I think that's a really good point, and it's almost like both the wealth and the health aspect, it's almost like in and of themselves, they don't drive satisfaction or pleasure. But they set us up to be able to do things. If we're generally healthy and if we've got, it's not about being super rich and having the ability to pay for first class flights, but I think those things really set us up.

So, if we can, and this is one of the really important aspects about as we approach this journey, one of the things that we want to do is to plan for this early, to know what our arrangements are, maybe to think about as we start to look towards retirement, do I need to be putting a little bit more away so that I will be able to have the sort of lifestyle I want to have? Is that an opportunity for me?

And I'm not a financial planner, that's not my area of expertise, but certainly we do see clients who, for whatever reason, need to suddenly retire earlier than they'd planned and they're not perhaps set up in the way that they want it to be, and that does restrict their options.

Shane: We talk a lot about how retirement is different for everyone, and we also talk about confidence being a really important factor. So, what are some actions people can take to help them feel more comfortable and confident in retirement?

Elizabeth: I think it's really important to think about planning for this earlier, and we do see people tend to retire perhaps earlier than they thought they were going to. On average, we see people retiring maybe five to ten years earlier than they anticipated.

So, planning early, I mean I don't think there's any life stage in which planning is not a good idea, but certainly in this regard, thinking about planning and really what does that look like across those different domains. So, it's not just the financial planning that's there as a key underpinning, but also those other aspects.

So, health, your lifestyle, your home situation, and how you're leaving work well. So taking control over those decisions and really having them informed by your values, what's important to you, how you're going to use this opportunity. We say that being able to make those decisions as much as possible is associated with more satisfaction, more confidence. Also, really engaging your own decision-making here so that you have control over it.

We say that autonomy, that ability to make the decisions rather than having them made for you by other people, by other organisations, is certainly a positive. And thinking about setting goals for yourself, it's not necessarily about those being I'm going to be the best at something or I'm going to exceed here or create a new world record. But setting simple SMART goals, we've all heard of that phrase, specific things about how we're going to use our time in retirement. So I'm going to try something new every week.

And that can be as simple as I'm going to drive a different way to get to the golf course, I'm going to cook a new recipe, or I'm going to try something I haven't done before. Because often we get stuck in a rut. And again, that's true across the lifespan, but trying different things and exploring those different aspects of wellbeing across those four dimensions.

But I think one of the things that we can get a little bit stuck with here is that we think this is, and I agree it's an entirely personal journey, but it's a journey that has, if you like to use an overworked phrase, stakeholders. And we've got lots of people that we really need to talk to about our plans. That old phrase, "When you assume, you make..." And you can complete the rest of that for yourself. But it's really, really true.

I've worked with one client who, I had a session with them on a Tuesday, they were retiring, the party was all booked at work on a Friday, they still hadn't told their partner.

Shane: Oh wow. Monday morning would have been interesting.

Elizabeth: Monday morning, see you darling. No, I'm not leaving.

Shane: I'm not going anywhere.

Elizabeth: Yeah, so I think really it's important, and obviously that's an extreme example, but talking to other people about what your plans are and how that's going to impact on them. And I often think about my father retired at 65, compulsory retirement back in the day, and he was an engineer, loved tinkering with bits and pieces, and we had a top-loading washing machine. He decided that was the ideal place to do his soldering and tinkering.

Four kids, top-loading washing machine, across the weekend he had it tied up with equipment on it. You can imagine the conversations that happened there. That wasn't necessarily the best idea. So it can be as simple as, how am I using the space?

Shane: So did he use his retirement money to buy a front-loading washing machine or a workbench?

Elizabeth: He actually returned to work nine days later and ended up working another 18 years.

Shane: Wow, there you go.

Elizabeth: But I think thinking about, well, what are my plans and how are they going to impact on the other people around me? And whether that's partners, parents who have assumptions, like if we've got roles caring for older parents or relatives, importantly, talking to kids. So, my kids are teenagers at the moment, 17 and 20, but they recently were discussing all sorts of things, and they said something about, "Oh, well, when we have kids, you'll be looking after them."

Wait a minute. Let's just back up a second here. Maybe we need to have a conversation because I might not be retired. I might not be in the same city that you're in. These things can become assumptions and they can really trip us up if we don't explicitly talk about it.

So, if other people are relying on you or expecting certain things from you, it's important to think about whether you're able to take those on, whether you want to take those on, whether that's going to align with what you're looking for. So, being clear about what your goals and expectations are, finding out what other people want from you and really planning around what your boundaries and non-negotiables are.

So, it's important to have those conversations with other people to avoid maybe any resentment later on. And then the fourth thing, I'd say this is a general thing, often we're not good at seeking support. We're not good at getting help. And this is a tricky transition because there's a lot of stuff involved.

So, whether that support looks like financial advice or going to the GP and getting advice on what you're doing there in your health or talking to your family about what that looks like, there's different people we can involve. But who do you need to get in contact with? Who's got the expertise that's going to help you have the knowledge you need to make those decisions about your own transition? And maybe as simple as starting with, I need to book an appointment with the GP and find out, as I said, get myself up on the hoist and have a look and see what's going on there.

Shane: So, the last two points are really interesting about sharing and seeking. The example you gave was someone hadn't even shared it with their partner and I think people might be reluctant to have those conversations. So firstly, what are the reasons you're seeing people might be reluctant? And also, how might someone go about having those conversations if they're not sure how to do it?

Elizabeth: We do see some people are reluctant to have the conversations. They're a little bit scared, am I going to lock myself into something? Making decisions is hard. I mean, I have friends who can't make decisions about what they're having for breakfast. And this one feels like higher stakes than whether it's scrambled or poached eggs.

So, certainly, the decision-making is hard, and it can feel like a very final step. I think we can have this perception that once I say I'm retiring then, and I'm doing that, I'm locked into this. So, exploring options, as I said earlier, things like take a period of long service leave, if you've got that available to you.

Take a break, see what it feels like, sort of try before you buy almost kind of idea, can be ways that can reduce that anxiety around making these decisions. Just try all the different things, but I think accepting that not every decision you make will be right. Not everything will work out well. And that's okay. I mean, has every decision I've made up to this point in my life been perfect?

Shane: Probably not.

Elizabeth: Unfortunately, I'd like to think so, but other people might have other opinions on that. Really trying to reduce the anxiety, this is not a one time... We know as we go through our lives, there are so many different pathways and different ways you can get into careers and new opportunities. Equally, there are different ways you can leave and move into this next phase of your life. So, I think not feeling like I've got to get this right at the first point is really useful.

But then also, many of us aren't good at asking for help. We've got to this point where I've got it all together, I'm fine, I'm doing okay here. And accepting that I haven't done this particular transition before. I've done lots of changes in my life, but I haven't done this one. So I need to actually get some expertise, talk to some people and think about what I'm feeling here and what feels right for me.

Shane: Yeah, and you referenced earlier about how many people retire earlier than what they'd planned if they've even planned. So, sometimes it comes as a shock. And so that ability then to have a conversation with loved ones or others is actually just another thing to process, I would have thought.

Elizabeth: Exactly. I mean, particularly we see early retirement can happen often from factors outside our control. So, whether that's health and illness, or whether that's redundancies or workplace changes, which can mean that something's suddenly brought forward and perhaps they don't have all of the choices I might have anticipated having.

And so processing that both personally, and then talking to other people can, unfortunately, some people can really struggle with almost a shame aspect in that, like, I wasn't planning for this to happen this way, and I thought I'd have it together. And I think it's interesting to think about how much we value the idea of a corporate role, or we have an answer to the question, what do you do?

It's often what we ask in social situations, so being able to kind of say, I'm moving into retirement, and that planning aspect of thinking about, well, what do I do now? I volunteer here, or I go there, or I look after my kids three days a week. Thinking about, well how am I going to answer some of those questions, helps us be less ambushed by them when they do turn up.

Shane: It's a really good point, something I was going to ask you and you've just alluded to it is we see or hear, but I'm sure you see or hear a lot more than we do, people who have invested so much of themselves in their career and in effect are identified as XYZ professional or otherwise and they've got a lot of personal gratification out of that. Is that another reason why people sometimes will either delay retirement or it has such an impact on them when it's forced upon them?

Elizabeth: Definitely and if you think about any social situation you go into, people say oh hi what's your name? Shane. And what do you do? I work for AustralianSuper. Exactly, it's almost always like the second question you'll get asked in a social situation. In the world we live in it's often a really core part of our identity and so just kind of being able to hand some of that knowledge over, I'm moving into retirement so I'm planning to do whatever it is that that journey looks like for you, can be important to mentally transition your own identity.

Shane: It's an amazing topic and probably could go on forever but the actions that you've given our listeners are fantastic. Before we talk a little bit about what other actions may be available, can you just let our listeners know if they were interested in hearing more about Transitioning Well or be in contact with you, how would that happen?

Elizabeth: So, you can follow us on our social media, we're on Facebook, LinkedIn. We often post information through our LinkedIn, we've got a blog and a newsletter. So, as I said before, we work right across the career lifespan, so everything from grads moving into the workplace, through parents moving into parental leave, people relocating, moving through menopause right up to retirement transitions. So, love to have you get in touch and if people have got questions, more than happy to deal with them.

Shane: Fantastic. And AustralianSuper is trying to understand and communicate better to our members and Australians about the different elements of retirement. So we've launched an Elements of Retirement Guide, which is available on our website, which touches on many of the topics that we have covered today. So, Dr. Elizabeth Clancy from Transitioning Well, thank you so much for joining us and we'd love to have you back again sometime.

Elizabeth: Absolute pleasure.

Shane: Thank you.

Thank you for joining us today. If you're an AustralianSuper member and you would like to join us to share your story or have a question or topic you would like us to cover, then click the link in our show notes to get in touch. If you've enjoyed this podcast, subscribe and share with your friends and family. See you next time.

Shane: Hello. My name is Shane Hancock, and I am the Head of Member Products, Guidance and Advice at AustralianSuper. And welcome to our podcast, The moments that count. Before we start, it's important to note that the information discussed in this podcast is general only and doesn't take into account your needs or personal objectives. You should assess your own financial situation and needs.

Today, this podcast is being recorded at our head office on the land of the Wurundjeri people of the Kulin Nation. I and AustralianSuper acknowledges the traditional custodians of country throughout Australia. We pay our respects to elders past and present, and extend that respect to all Aboriginal and Torres Strait Islander people.

AustralianSuper has the privilege of 3.3 million members trusting us with their retirement savings. Each of those members has their own story. And today we're going to hear one of those stories. I have the pleasure of being joined by Peggy Bampton, a member of AustralianSuper. Welcome, Peggy, and thanks for joining us.

Peggy: No problem.

Shane: Peggy, could you start off by just telling our audience a little bit about yourself?

Peggy: I grew up in the northern suburbs, then I moved over to the southern suburbs when I was old enough. Lived there ever since. I live near the beach, which I love because I cycle, walk, do all those sort of active things. I started life as a graphic designer professionally, ended up as a chef. And have recently sort of semi or probably retired, actually. Yeah, just picking up work here and there, but, you know, nothing regular.

Shane: Great. So, graphic designer to a chef. So, tell us about that work experience. Did you study as a graphic designer?

Peggy: Yes, I graduated from RMIT in 1983, I think it was, and worked for close to 22 years as a graphic designer. Always loved cooking. So, then I took some time off, did a cookery course, ended up in a kitchen and never left.

Shane: Right. And so that was just through a desire, looking for a change, something you really enjoyed more than maybe the design piece?

Peggy: Well, I've always loved cooking. I think I've started making my own birthday cakes when I was about eight or nine.

Shane: Impressive.

Peggy: And so I just thought, oh, wouldn't it be nice to, you know, see what it was like working in a professional kitchen?

Shane: Yeah.

Peggy: And it was a bit of a shock. And my pay kind of halved for the same amount of hours I was doing as a designer. But I was still working. I had my own home-based business and I'd still pick up a few clients here and there to make up the money because I had a mortgage.

And, yeah, it was just a bit of a ride, a fun ride, but it was very hard on my body because I entered the industry quite late in life and I think I did it for close to 13 or 14 years and then my body kind of just said no.

Shane: Had enough? Yeah, and how long ago was that, did you stop working?

Peggy: About five or six years ago, but I was just doing casual work and then my my mum, unfortunately, she was in aged care, so I spent a lot of time running around with her and doctor's appointments, et cetera. So I couldn't really have a full time job at that stage.

Peggy: And since that time from your mum and finishing cooking, what have you been doing with yourself?

Peggy: Gardening.

Shane: So, that's a labour of love?

Peggy: It is. You just can't have enough plants, no matter how many plants you have.

Shane: Excellent. Going back to the time in the graphic designs, you started that in the mid 80s?

Peggy: Yes.

Shane: Obviously there's different things happening at that stage of your life. Were you thinking about superannuation back then? Was that something that was prevalent to you? Was it through the workplace?

Peggy: It didn't cross my mind at all. But my second job, we all were enrolled in a super fund and I think my employer, I can't remember how much the percentage, but that was with a commercial super fund. Which didn't do anything really, because the fees just ate up whatever was in there.

And then in my third job, we started with Superannuation Trust of Australia, and then eventually I rolled whatever little money that was still left in the other fund over and I've just been with the company ever since.

Shane: So, Superannuation Trust of Australia was obviously one of the predecessor funds with Australian Retirement Fund, which merged to become AustralianSuper. So, you've been with the fund for quite a while. So, the default mechanism got you into superannuation. You made that rollover, which is quite an important decision because it means you're showing some interest in your superannuation. But do you remember when you really started to show some interest in it?

Peggy: I think probably when I was in my 30s, not that I was thinking about retirement, but I was starting to think about saving for the future. And then I bought my first house. So, things went backwards for a little while, but then I started to salary sacrifice and it wasn't too much. I think at that time it was like $50 a week. But I was just trying to make some sort of difference because I know that over the years, your super will go up and down according to what's going on in the world. You know, it's probably one of the best investments you'll make in your life.

Shane: And how do you feel about that? Do you feel like that's come to fruition?

Peggy: Yes, I think so. I think, you know, I often sort of forget about it for a while and then I'll go and check my balance and then I'm usually quite surprised.

Shane: You just mentioned it was only $50. That's a lot of money for anyone. And the fact that you are putting into superannuation clearly is something that all of us say we'd like to do. So, you know, good on you for taking that action. So you're working for someone else when you were doing the graphic design, so superannuation was being paid by your employer?

Peggy: Yes.

Shane: When you moved into cooking, you said you were casual?

Peggy: Yes.

Shane: And so was super still part of that arrangement?

Peggy: Yes, but it wasn't as much as I was putting away. But because my wage went down and I had a mortgage, I didn't end up contributing extra at that stage, so it was just what it was.

Shane: Which is, again, quite common. You know, everyone's got lifestyles, particularly at the moment, and cost of living pressures and things like mortgage and other things. So, you know, you had the advantage of contributing to super at some stage. So you were doing that. You talked a bit about bike riding being an interest. Now, I understand you might have had a bit of an accident prior to COVID, is that right?

Peggy: Yes. I had someone open a car door on me, slammed into it. And, yeah, that didn't affect me straight away, but I already had a bit of an issue with the hip and after a few weeks, that issue kind of recurred after I'd had an arthroscope. And yeah, that was another reason I left cooking, because I couldn't really stand up for 10-hour shifts on a concrete floor. My hips were just deteriorating at a rate that I was just limping everywhere. So that was one of the reasons I couldn't do the hospitality work for more than 30 hours a week, I just couldn't do. So I was kind of gone down to about 10.

Shane: And at that time, you obviously had the injury, reduced your workload. What decisions were you going through your mind around, okay, what does the future look like? Should I work part time? Can I self-fund myself? What process did you go through?

Peggy: Yeah, it was a bit of a stressful time, actually. I don't think I even thought about it. I was just trying to make enough money for day-to-day expenses at that stage. I managed to get a contract at another graphic design studio for a few months and during that time, my mum's partner died. So, it's just been a few years of a lot of people getting sick and dying, and I just had my whole work life interrupted in spasms. So, I guess at that stage, I wasn't really thinking about the future. I was just thinking about the present.

Shane: Which makes perfect sense. And you obviously had a lot of responsibilities on your plate, so now you're still doing a little bit of casual work that you said.

Peggy: Yeah, if it pops up. But I'm kind of lucky because I ended up having a house that I inherited, and I've sold that. So I have had money to invest, and I have been putting some lump sums into my super over the last couple of years, and I'm not financially stressed anymore, so I'm sort of starting to enjoy life now.

Shane: Yeah, well, by the sounds of it, you've put a lot of time and effort into helping other people, so you probably deserve to have a time of relaxation. So you talked about cycling. Now, I did read that maybe you do a bit of taekwondo, is that right?

Peggy: Yes, I do.

Shane: Yeah. That's why you notice I've been very polite with my questioning because I'm a little bit fearful. So, taekwondo, gardening, riding your bike, is that how you're spending your time?

Peggy: Most of the time, yeah. Just catching up with friends, lots of coffee. When you work in hospitality, you often have five to ten cups of coffee a day. I've managed to reduce that to two.

Shane: Oh, excellent. You might have some tips for me.

Peggy: And yeah, so I just try and keep busy. I think I've never been busier in my life. I thought retirement was going to be boring, but I'm just extremely active and I like engaging with other people, so I often know every owner of every cafe that I go to, so have a nice chat with them when I go in.

It's an interesting change in my life, where before I was just working to live, but now I don't have to think like that and I know that I've got to buffer with my super when I eventually get to that age where I can access it.

Shane: So I suppose based on what you've explained here, and you changed your career, but also the care and responsibilities that you've had and sicknesses and others, am I right to say you probably didn't have a view around what retirement might look like?

Peggy: No. No idea at all. Yeah, there was just too much going on. I think I was suffering a little bit of anxiety at the time and also when COVID hit, mum was just in aged care, so I ended up bringing her home because they were locking all the residents in their rooms and so then she was at home with me. And then my hip issues got quite bad.

But because there was no elective surgery, I just had to wait and wasn't even sure how long it was going to be before I could get my hip fixed. And, yes, I think I had all those things on my mind at the time and didn't even think about the future.

Shane: Yeah. And now you're there, and obviously there's some hardships you went through. Do you feel like that's making the now even more a positive environment?

Peggy: Yeah, it is, I guess, you know, losing your parents, no matter how old you are, if you've got a good relationship with them, you never stop missing them. So, that's the downside. But the upside is you can just sort of start to slow down or speed up whatever you want to do. And I seem to have sped up rather than slowed down. I do taekwondo three nights a week.

Shane: Wow.

Peggy: I cycle three to four days a week, depending on the weather. I'll walk everywhere rather than drive. Yeah, I do hours and hours in the garden and the days just disappear. I've no idea what day it is when I wake up, what date it is. I often miss birthdays now because there's no structure, so it's kind of a weird feeling. But I must say I am enjoying it. But the lack of structure is a little bit difficult to deal with. It's a really different way of coping with day to day.

Shane: It's a very common theme we hear from our members where you're going from this routine life to actually, I've got some choices here. When I was listening to you talk about your taekwondo and your bike riding and your gardening, it sounds like a very good advertisement for your hip surgeon because they have obviously done a very good job because you're more active than I am and I haven't had hip surgery, touch wood.

So, just taking it back to super for a minute. You talked about how you were contributing to super when you were working in the graphic design, and then obviously lifestyle changed and you weren't able to do that, which is, as I said, very common. Were you still showing interest in your superannuation even though you weren't contributing to it?

Peggy: I mostly check my balance a couple of times a year, just when I think of it, but I don't know if it's like at the forefront of my thinking. I just check up on it basically every now and again. Even though I'm kind of semi-retired, I sort of still don't think that I am. I don't feel like I'm getting older. I feel like I'm actually regressing sometimes.

Shane: Well, based on the activity you do, it's not surprising. So you've talked about the way in which you're funding your lifestyle through investments and in the future superannuation. Have you sought any form of help or advice during that period?

Peggy: Yes, I've used a financial adviser and I've got some funds after we sold the house in an ethical investment fund, because I'm quite adamant about supporting ethical enterprises and renewables, all of that sort of thing. So I'm very, very passionate about it.

Shane: Great. Well, it's good you're able to assist in that stage of your life as well as invest appropriately. When you went and saw the adviser, how did you find them? Was it a recommendation?

Peggy: It's interesting because I used to drive past them every time I'd go visit my mum and I just rang them up one day and had a chat and went in and spoke to one of the guys who's still my financial adviser, even though he's moved to Queensland and he's just really helpful and he always tells me to ring him whenever I need any advice and that's what he's there for, so... But one of the things he said was to keep contributing to your super.

I talk to him at least once a year. He told me that I should be ringing him more, but, you know, the year just disappears and you sort of suddenly think, oh, gosh, I really need to call him and he'll explain anything to me that I am not sure about. And it's quite a nice encounter, really. He's one of those people that makes you feel assured that he's actually looking out for you. He's not just telling you things you want to hear.

Shane: We talk about with any sort of advice, you know, trust is really important. One of the things that we do hear a lot from our members is how confident they're feeling about their future. Is he assisting you with your confidence around when you can do stuff and how you can do things?

Peggy: Yes, I think I do feel quite confident. I had another investment prior to that and I wasn't very happy at all. And even when the person that I was in contact with left, I wasn't even told. And then suddenly when I was trying to contact her, I was told she'd left. And then I didn't even know who my new point of contact was. And then I just thought, oh, this isn't making me feel good. So that's when I withdrew all that money, which actually was a lot.

There was a lot of problems with closing that account, and it was just the fact that I had a friend who knew someone high up in that company that I managed to get my money out. And then I transferred it over to the ethical investment. And the fact that they didn't even tell you that your manager that looked after you had left, I felt a little bit betrayed by that.

Shane: Well, it sounds as though the opposite is now happening with your current adviser where he's saying to you, you're not calling me enough, Peggy.

Peggy: That's right. Yeah, he's quite proactive. And sometimes I'll just get an email from him and then he'll just say, any questions, please give me a call. He's in my diary to call, but sometimes...

Shane: You don't know what day it is most of the time.

Peggy: Exactly!

Shane: That makes it difficult. Peggy, one question we always ask our guests just before we finish up, is any guidance for people when they're thinking about retirement from your own experience?

Peggy: Yeah. Look, I know that everyone's struggling at the moment. People have got huge mortgages. Their cost of living is high. But I think that if you can just scrape together that little bit to just keep contributing to your super, to top it up in the long run, it's going to help you. But it depends on the times we live in. And at the moment, it's going to be very, very hard for people to find that little bit extra.

But I think when times get better, maybe just start putting $20 a week in, $30 a week in. And it is a bit of a tax incentive, too. So, I would suggest doing that because I know that it did definitely boost my balance.

Shane: I think it's a good tip, Peggy. And I think for your experience, there was times where you could do it and times where you couldn't do it. So for everyone, that can change. And every little bit does help. Peggy, thank you for joining us. I'm really pleased to hear how much you're enjoying, I'm not even going to call it retirement, because you haven't even determined that at this stage.

It sounds like you spent a lot of your time caring and worrying about others, and it's now your time. And it's really awesome to hear about the positive time you're having and the future you've got ahead. So thank you for joining us. And all the best.

Peggy: Thank you.

Shane: Thank you for joining us today. If you're an AustralianSuper member and would like to join us and share your story or have a question or topic we'd like us to cover, then click the link in our show notes to get in touch. If you enjoyed this podcast, subscribe and share with your friends and family. My name is Shane Hancock and I look forward to the next episode where we'll hear from another AustralianSuper member. See you next time.

Shane: Hello. My name is Shane Hancock, and I am the Head of Member Products, Guidance and Advice at AustralianSuper. And welcome to our podcast, The moments that count. Before we start, it's important to note that the information discussed in this podcast is general only and doesn't take into account your needs or personal objectives. You should assess your own financial situation and needs.

Today, this podcast is being recorded at our head office on the land of the Wurundjeri people of the Kulin Nation. I and AustralianSuper acknowledges the traditional custodians of country throughout Australia. We pay our respects to elders past and present, and extend that respect to all Aboriginal and Torres Strait Islander people.

Quite often, AustralianSuper members will ask questions of the Fund through various channels. And mostly those questions are relevant for many members, and so we thought it'd be great if we could share some of those questions and answers through this podcast.

To help answer these questions, I'll invite a guest expert to join me on the podcast. And today I have a pleasure of welcoming back Peter Treseder, who is an Education Manager at AustralianSuper. Welcome Peter, and thanks for joining me.

Peter: G'day, Shane, thanks for bringing me back. Good to be here.

Shane: So, superannuation can be one of someone's biggest assets that they'll accumulate over their lifetime. It's always a good idea for people to show some interest and not look at it as a set-and-forget investment. So today I thought we'd cover off some key points that people should consider when managing their super.

So, we're going to cover off five key topics and you're going to be the expert that's going to tell our listeners all about those. The first thing we wanted to kick off to talk about is consolidating super and lost super.

Peter: Yeah. Shane, a lot of people have super. They know it's there, it's in the back of their mind somewhere, but they don't connect with it and they tend to sometimes forget about it. They don't find super as exciting as I do.

So, it's always good to make sure you know where all your super is. And one way of doing that is going to your myGov account. Your myGov account has a record of all your super accounts based on your tax file number. So, you can go to your myGov account, check through the tax section of it, click the super section, and then you can find how many accounts you've got.

We had a member up in Brisbane, oh, about three years ago that went through this process and she found a lost or forgotten account that had $46,000 in it. So it might well be worthwhile. I'm not guaranteeing people will go away and find $46,000 today. I must admit, you might not even find $46. But people do tend to forget super.

They might have changed their name, they might have got married, they might have moved house, not updated their address. So there's a number of reasons why super can be lost or forgotten. And if you do find multiple accounts, it's then a matter of, is it right to consolidate them all into one place? Now, it's not a rule. It's more a guideline to have all your super in one place. It's only one set of fees.

But to do that, you should always check to see if consolidating super is in your best interest. And there's some information on the AustralianSuper website about what to think about when consolidating accounts.

Shane: It's a really interesting point, Pete, that you raise about people losing their superannuation. All the reasons you suggested that people may lose track, but not too often, people would lose cash or money in the bank. And so we talk to people about super is actually their money, so you need to keep on top of it.

Peter: And also you can search through AustralianSuper through your account for lost super accounts as well. It hooks up to the ATO database.

Shane: People may not know, but you have the ability to look at how your money is invested within your super account. So, understanding people's investment options that they have, can you talk a little bit about that?

Peter: When contributions are paid into your super account by an employer or by you, they need to be invested. Now with AustralianSuper, the default investment option is our Balanced option and it's got a mix of assets that AustralianSuper thinks suits the average person. Because investing is all about risk versus return.

You take a level of risk to get a level of return. The higher the level of risk, generally the higher the potential return, the lower the level of risk, the lower level of return. All super funds have a default option. That default option is designed to give a level of return that is acceptable for most members in its risk level, but also to provide a level of return that is above inflation over the longer term.

So, majority of people are in the default option but as you said Shane yes, you can choose your own option. And how you choose your own option really comes down to you. How hands on do you want to be? Are you an investor or are you not? Because that'll dictate whether you want to make an investment choice either. More risk, less risk. We have a number of different options that you can choose from what we call Pre-mix.

So the mix between shares, fixed interest, property, infrastructure as designed by the Fund, or you can make your own mix and you can combine those any way you want. But it is something you can do depending on whether you want to be really hands on.

Shane: When people are looking to make those decisions around how they invest their money, there's obviously a lot of different factors that you've touched on. One thing that people can do is you can go to the AustralianSuper website. We have a risk profiling tool where people can see what risk profile might be appropriate to them.

Peter: And I strongly recommend that to people, because most people don't know what their risk profile is. And it comes down to a number of things. How long is your money going to be invested? Again, generally speaking, the longer you're going to be invested or the longer it is before you need the money, the more risk you can take. But that's not the same for everyone. So this is a good way of finding out what options may be best for you.

Shane: Great, Pete. Now, you mentioned at the very beginning about people showing that little bit of interest in their super or staying engaged with their super. So, when you talk to members, and you talk to members every day, do members quite often know what their balance is?

Peter: I think it's changing, Shane. As people's balances are getting higher, people are taking more notice as the money gets bigger. Oh, hang on, I've got something here. I should take an interest in it. But still, the majority of people don't contribute to super on top of what is legislated. So it's a matter of saying, well, if I want to contribute, how am I going to contribute? And then it's a matter of finding out what's the best method of getting it into super.

Generally it's either before tax or after tax if your marginal tax rate is greater than 15%, generally, a before-tax contribution is better as you're only taxed on 15%. Or you might want to make after-tax contributions, in which case the money goes into super after-tax. So first of all, work out if you've got spare money.

If you have, what's the best way to get it in? And there's a calculator again on the website that shows the effect of putting an extra $5 or $10 in a week and the impact that's going to have on your balance in 20, 30, maybe 40 years.

Shane: It's also probably worth mentioning that the calculator that's available on the website's also useful for people that may not be in a position to currently contribute to superannuation. At least it'll give them a projection on where their current investment strategy and their current contribution levels will allow their super to get to. And so a lot of the time you talk about that engagement piece, even knowing where you're currently going, irrelevant of the ability to invest more, is really important to understand.

Peter: Oh, exactly, the wonders of compounding your money. And the earlier you get it in, the better off those projections are going to be. So again, have a look at it, see what the difference $5 or $10 is going to make, and you'll be pleasantly surprised that you may be on track to a better retirement.

Shane: Now, we know that the primary purpose of superannuation is for people to save for their retirement. But sometimes things happen in people's life that impacts that. And so there is the ability for members to have insurance through their superannuation. So if you can talk a bit about that, please.

Peter: You mentioned before that super is there. It's not in the front of mind for most people, but most people know they have super, but many aren't aware that they might have insurance tied to that super. So part of the contribution that's going in, part of that pays a premium for insurance.

And with AustralianSuper it could be death, total and permanent disablement or income protection. So, three different types of insurances and a super fund will provide a default level of cover. Now when the default level of cover kicks in, generally you have to be over the age of 25 and have at least $6,000 in your account for the insurance to start.

So, members can raise that insurance, lower it, get rid of it if they don't want it. Pick and choose between the various insurances I spoke about before to adapt to the situation they may be in and life events occur. You might be buying a house, that might change your need for insurance.

You might have your first child or your seventh child, that's going to change your insurance arrangement. So, it's important to know what your needs are. And we've spoken about a number of calculators, but it is a way that members can help themselves. We have an insurance calculator on the website that people can put in their details and we will give them an approximate idea of how much insurance they may need and what the cost of that insurance might be coming out of their super account.

Shane: So, just talking about costs, obviously there are different factors that influence the cost of someone's insurance through superannuation. Obviously, one of those being the amount you're covered for. What else can influence the cost of someone's insurance?

Peter: Well, there's two main things that affect the cost of the cover. One is how old you are. And unfortunately, as we get older, insurance starts to get higher and higher because statistically, it's more likely something's going to happen to you. It is the level of cover. At AustralianSuper, we also have a third factor called a Work Rating. We have three different Work Ratings: Blue collar, White collar and Professional.

Blue collar is the default. So that's where we start everyone, but you can apply for White collar or Professional at any time, and it's a matter of filling out a form. There's a few health questions. To be White collar, you need to tick a box that says you work in an office environment at least 80% of your time.

That means, from our insurer's point of view, they're fairly confident that you're not going to be, say, hit by a forklift working in an office. So therefore the insurance risk is lower. So therefore the insurance cost is lower to you, and depending on your age, it could be 20-30% cheaper. Professional kicks in again, if you're earning more than $100,000 a year, you've got a tertiary qualification, or you're in a managerial position.

So, I know there are many members out there I speak to are probably White collar or Professional, but they've never gone into that depth to find out what it can save them. So it doesn't change the level of cover, it just changes the insurance costs.

Shane: It's a good point you make there about engaging in your superannuation allows that superannuation insurance to be tailored to what's appropriate for you. So finally, we quite often get asked by people, what does happen with my superannuation or my retirement income stream if I were to pass away before the balance is depleted? So can you just talk a bit about nomination of beneficiaries and how that works?

Peter: Yeah, this is a common one we see all the time. The key factor is that a superannuation death benefit. So whether it's in that build-up phase or the drawdown phase, that death benefit from super doesn't form part of your estate. So your will, if you have one, doesn't dictate where your super might go.

So in my will, I can nominate anyone, anything, friends, families, football clubs, charities, whatever I might want to. In super, it's the superannuation trustees' responsibility to distribute that death benefit to beneficiaries. And the beneficiaries are a tight group that is legislated and that can be a spouse, married, de facto, same-sex partner, a child.

Now a child's a child, regardless of age. Doesn't matter when they're 17 or 70, they're still a child. Includes adopted children, stepchildren. It can be someone that's financially dependent on the member who passed away. Now, financial dependency means a financial dependency on a regular basis. So, if I was paying my grandmother's gas, electricity and rates and insurance, and she lived the other side of the country or the other side of the world, she could still be seen as a financial dependent.

An interdependent, someone you're living with, not as a couple, but you're living with someone and you have a reliance on day to day living on each other, as well as a financial dependency. So it could be two friends, a brother and sister, in that arrangement.

And the fifth one is your legal personal representative, generally the executor of your estate, in which the superfund pays the benefit into the estate and then lets the estate sort out where it goes from there.

Shane: And so how would someone let AustralianSuper know who they would like their superannuation to be paid to?

Peter: By nominating a beneficiary, it does give us a heads up. Now, we may refer to a will as guidance, not so much how much, but more the who, because our job, as I said, is to find those five groups of people. Now that nomination, whether it's accumulation or Choice Income, it can be binding or non-binding. Non-binding is a guide to the superfund, "I would like it to go to A, B and C."

The superannuation fund takes that as a start point and is still going to look for other potential beneficiaries and the superfund might find D, E and F. A binding nomination, as the name suggests, binds the fund to who you've nominated, as long as those nominations form part of the five. So if I've nominated A, B and C and they're beneficiaries under the super legislation and I've nominated the percentages, that's who it's going to go to.

The third option is only if you've got an account-based pension or Choice Income at AustralianSuper and you can make what's called a reversionary nomination. In that case, the pension payments go to the nominated reversionary beneficiary. So, generally it might be a husband and wife. The husband passes away, has nominated the wife as a reversionary beneficiary.

The advantage of that is that it stays in the superannuation system. It's not paid out as a cash benefit into a bank account, it stays in superannuation. That does have a number of tax concessions ongoing in retirement.

Shane: And when someone nominates a beneficiary, can they change it?

Peter: Look, they can change it any time. With our binding nominations, AustralianSuper has chosen to have what's called a lapsing binding nomination, which means it needs to be updated every three years and we remind members when that nomination period's coming up. But you can change it any time.

And again, it's one of those things that may not be set and forget, because you might have nominated people 5, 6 or 10 years ago that are now no longer eligible or you may not want that money to go to them when you pass away.

Shane: And again, another good reason to stay engaged with your super. So, Peter, that's our five tips. If you could just highlight what those five areas of consideration that members should be thinking about to stay engaged with their super.

Peter: So we started off with making sure you know where all your super is. Lost super, forgotten super, identifying it all, and then, if appropriate, consolidating it into the one place. We spoke about investing your money. So a superannuation fund has a default investment option where your money's invested if you don't make a choice.

But you do have the ability to make a choice. So, have a look at the different options available to you. And again, you may want to try the calculator we spoke about. It's about making additional contributions if you can, and putting those additional contributions into super in the most tax-effective way.

We also spoke about insurance, the level of insurance, how you can change that level of insurance, and also the cost of insurance. And finally, we wrapped up on nominating beneficiaries, advising the super fund who the death benefit should go to should you pass away.

And as you said, Shane, many times, there's a number of different calculators on the website to help you through these choices, as well as a lot more information about the topics we've discussed. And finally, you might need to get some advice. You can get advice through AustralianSuper. That process starts with our 1300 number. So, 1300 300 273. And from there they can help you and direct you to the area of advice that you may need.

Shane: So, checking your super regularly can actually help set you up for the future, as we've talked about today. So this is why AustralianSuper has created Super Snapshot, which is an interactive question and answer experience which you can use to see if you're on top of your super account and what steps you could take to make the most of your super.

In addition to the action we've highlighted today, you can find out what steps you could consider taking with your superannuation. So, check out AustralianSuper's Super Snapshot, you can visit australiansuper.com/supersnapshot to take your Snapshot. Peter, thanks for joining us today.

Peter: No worries, thanks, Shane.

Shane: Thank you for joining us today. If you're an Australian Super member and you would like to join us to share your story or have a question or topic you would like us to cover, then click the link in our show notes to get in touch. If you've enjoyed this podcast, subscribe and share with your friends and family. See you next time.