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.
Australian super has the privilege of 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 David, a member of AustralianSuper. Welcome, David, and thanks for joining us today.
David: Thank you.
Shane: Before we get into retirement and your life to retirement, from what I've read and heard, you've had a very interesting life. So, tell us a bit about David.
David: Well, David came to Australia 60 years ago, at the age of 27, got a job immediately with Ford Motor Company.
David: With superannuation.
David: But it was voluntary then. So, four years later, when I quit and went to another job, a better job, more pay. I collected my super that I'd contributed and I spent it. And I got super in the next job.
And after six years of that, I quit, went back to Ford. I was invited back to Ford. And I got my super in my hand and I spent it. I put it, I was to deposit it on a house, but I spent it. So at the age of 37, I took a look at myself and said, you've wasted about 17 years with no superannuation, and it's not going to be all that long before you retire.
It seemed a long time at the time, but... I needed to start being serious about it. Now, Ford had a very good superannuation scheme, and I was lucky enough to be in senior management, it was very good.
But I retired at 55 because I had been working overseas, and I came back to Australia in 1991 on a very good deal and had put quite a bit in my personal savings account. But my superannuation was not worth very much. In fact, I retired after about 18 years of countable service with Ford with about $350,000.
That was in 1991. Now, that sounds a lot, or it may sound a lot, but it wasn't a lot. Even though the retirement experts said, yeah, you can live on $25,000 a year, I found that to be nonsense because my first year's expenditure in 1991 was something like $55,000.
Shane: Yeah, okay.
David: So it was crazy. So, luckily, I walked out of Ford, an early retirement with a nice package, but not much superannuation, and I went to work for CSIRO.
Shane: Before you did that, had you planned on retiring at that stage at Ford?
David: No, but let me explain. In 1991, when I came back from an overseas assignment, the market was in an absolute mess. It was a bad recession, a bad recession, and I didn't want to stay at Ford and watch all the jobs start drifting away. They had an early retirement scheme.
Shane: Like a redundancy type set-up.
David: Where they were encouraging people to leave. And I had signed a contract to say that I would not leave until three years after coming back from overseas.
David: But I prevailed at the time and said, look, it's pointless my staying here. You haven't got any exciting jobs for me, so why don't you let me get what do they call it, the golden handshake?
Shane: Yeah, yeah.
David: And they said, okay, we'll do that. So that's what I did. And as it happened, CSIRO was just looking for a Chief Executive of the newly opened Australian Automotive Knowledge Centre.
It was right up my alley because it involved trying to persuade the companies who make components for cars, persuade them to do more research, which is what the government wanted, and that's why the thing was funded. So I got into that, and it was supposed to be for three years, but it turned into ten.
So I retired for the second time, and then I was overseas again when I got a phone call asking me to go back to CSIRO for another eight years. So I was something like, what, 73, more when I retired.
Shane: So you retired from CSIRO after ten years, you then went overseas, and then they asked you to come back, so you were holidaying, living overseas?
David: It was a holiday.
Shane: And they brought you back and it's been another eight years, yeah, okay.
David: So that's why I was lucky.
Shane: Yeah. Well, as we talked about earlier, hard work turns into luck sometimes.
David: Well, I was lucky because that enabled me to put as much as I possibly could afford into superannuation. And the superannuation scheme at the time was a lot looser than it is today, so I was able to tuck it away and wound up with a pretty handsome nest egg.
Shane: So let's wind back to the beginning. So you came to Australia in your 20s and you started at Ford. Where did you migrate from?
David: From Zambia.
David: It was Northern Rhodesia when I left there, but it was becoming independent.
David: People were being killed and hassled and I had a wife and two babies and it was impossible to tell, really, I was lucky enough to be able to leave. But people who had been born and bred there and had property there, they found it impossible to leave because they couldn't sell what they had, very difficult for them.
Shane: And was there connection to Australia that made you choose?
David: Well, if you're living in paradise, which is what it was in Africa at that time, and you know you've got to leave, where are you going to go? You want to go from one paradise to another. Somebody told me that Australia was paradise, but don't go there unless you can afford to be unemployed for a couple of years. It might not be easy to get the right kind of job, which was nonsense, because I walked into a job within days of arriving in Australia.
Shane: Yeah. So you landed in Melbourne.
David: Actually, somebody got me an apartment in Ocean Grove. If you're looking for a job...
Shane: Although Ford is not far from it, I'm assuming you started at Ford Geelong?
David: Precisely. I called Ford in Geelong and said, I've just got here. Have you got any jobs? Thinking they would offer me a job in the factory. But in fact, they said, what do you do? I went for an interview. They said, what do you do? And I told them and they said, oh, I've got just a job for you in the head office.
Shane: What was the role that you started at Ford doing?
David: It was called a purchase analyst.
Shane: And so what did that job do?
David: Well, if you're making a motor car, you might make some of the stuff yourself. The heavy stuff, like the cylinder block and the cylinder head, maybe, and maybe a few other things, but the body stampings, the outside panels, you'll probably make most of those yourself.
But everything else you're going to buy, the wheels, the tires, the steering wheel, the seats, the roof, all that stuff, the glass, battery, you name it, got to buy all that stuff. So there was about 100 and something suppliers around Australia who were selling parts to Ford.
Now, if you're going to buy those things and you're going to buy sort of 50,000 sets of stuff per year, you're going to be a bit choosy about what you buy or how much you pay for it. So you need to understand, you don't just say, look, I want to buy a wheel, and get three quotes and take the best quote, you're going to say, how much you're going to charge for 50,000 wheels? And it'd be 250,000, wouldn't it, five wheels a car. But you want to understand exactly what material it's made from, how they test it and how they design it.
Shane: Yeah, of course.
David: Transport it and all that. And you add all those costs together and you say, well, this is what I reckon it should cost. And the supplier says, well, this is what I think it should cost. And you negotiate and you get the price. That's what the business of purchasing and procurement in a motor company is all about.
Ford just in 1963, had just opened the factory in Broad Meadows, and they were just cranking up the volume, and it got to 50,000 a year. And so my job was the analysis of those costs. A cost analysis job.
Shane: And you progressed significantly through Ford. I would have thought that first role gave you a really good insight of cost drivers of the organization.
David: It did, except they decided that they wanted to train me for something else because automation was just beginning. And so they sent me to IBM for training with computers and I thought that would be magic. So I learned about that. I learned about systems analysis. But by then I decided that there was a better opportunity, more money in a job in Sydney. So, I moved to Sydney.
Shane: Okay, with Ford or?
David: No, no, with another company who happened to make motor car parts, air conditioning, heaters, that sort of stuff.
Shane: It's an industry that obviously was quite significant in Australia that doesn't really exist now does it?
David: It was growing then and it was important to Australia. And it was an important employer. And there were lots of migrants coming in. And they needed jobs. They needed the kind of jobs that Ford was offering.
In the factory at Ford, there were something like 17 different languages spoken, so we can imagine you want to put up a notice saying, warning or don't come to work on Friday, you got to put that up in 17 languages. It's a complex business.
Shane: Absolutely. Yeah. There's a couple of different timings you talked about, so the first I think you talked about your first early retirement from Ford, was that around the '91 period, with the market and high-interest rates? So you had a significant market environment. And then, looking forward, there was obviously the GFC in 2008, which was also a period of time where you might have been making some decisions around your future. Is that right?
David: Yes. Well, at the time, I had my money with a private bank that's supposed to give special service to people who've got a bit of money. But it was all for their benefit, not mine. Their fees were high, and it took me quite a time to realize that there was a better way to do things. And a financial adviser friend of mine said, "Put it in AustralianSuper." Best bit of advice I ever got. I did that, and I stopped paying something like $15,000 to $16,000 a year fees. It went down to less than $1,000 a year, something.
Shane: And so you saw an advisor. Was that at around the GFC period, or is it just a separate time?
David: That was about 2012.
Shane: Yeah, okay. Yeah.
David: I'd suffered by then from the GFC, where I think my super went, it was about half.
Shane: And you were still working then, or you'd retired again, for the second time?
David: I had a third career, I was teaching English to medical people because there was a need for that at the time.
Shane: Tell me about that, because your wife was a teacher, is that right?
Shane: Okay, so tell me about that transition to English teaching.
David: It was 2008. I was still working with CSIRO, and my wife was getting more and more people coming to her for help with English, medical people who need to pass a very high-level English exam in order to get registration. So they needed help.
And she was getting more and more clients. So as I wound down from CSIRO, I thought I could be more useful to my wife and help her out if I had the certificate that said you can teach English to professional people. So there happened to be Cambridge University was putting on course for teaching English to adults. I took that course, started another career.
Shane: And how old were you then? You're in your 70s, early 70s?
Shane: And the motivation for that was to help your wife or was it also an element of self-improvement?
David: Also to keep the brain working. At that stage, there was a lot of talk about Alzheimer's, and I became pretty concerned about not wanting Alzheimer's. My father had died from dementia at the age of 78. So I was approaching 78 and I thought, I haven't got long to go, I'd better start taking all the precautions. So keeping the brain active was the most important thing I did.
Shane: Yeah. And so I understand you still do a bit of that. You and your wife have a bit of a daily competition. Tell me about that.
David: That's just over lunch. We do the crosswords. Yeah. She does the Target. I do the Ken Ken, Sudoku. We do the cryptic and the quick crosswords. And we have a competition.
Shane: Who wins?
David: Pretty even, pretty even.
Shane: Yeah, okay.
David: It's amazing. You know, 15 years ago, I would have been quite a bit ahead, but she caught up. She's a smart person.
Shane: Well, does the loser have to do the dishes?
David: We've got a good dishwasher.
Shane: It's interesting because I know, obviously, you've talked about keeping the mind active. You also do a bit of physical activity as well.
David: I bought a contraption, that exercise of the upper body, and I do all that. And we've got a walking machine I just want to keep reasonably fit.
Shane: Yeah. So through the period of your career change, and you said you had two children, is that right?
David: I got four children.
Shane: Four children, right.
David: Two from the first marriage.
David: And two from the second. The youngest is 44, the oldest is 63, I think, and they all live within 10 kilometres of my place.
Shane: Perfect. Lovely. It's a close family. Yeah. So during the period, so your wife now was teaching. Was she in and out of the workforce during that period of time through home duties?
David: No, actually, in the 80s, she had a lovely job. She was really passionately following this job. But I uprooted her and the kids and took them to Taiwan to work with Ford. And that was an interesting place, but it was pretty tough. The culture was totally different, and I was working seven days a week. And it was a tough time for the family.
But we struggled, we got through it, and it was very lucrative. That was important to me because having been divorced and having been at 37 with nothing, absolutely nothing, I needed to put money away. And overseas service was good for that.
Shane: So that life event of the first divorce influenced your decisions around where you wanted to be going forward...
David: Actually I can't pretend that I had a big life plan. I really took what came. I think opportunities presented themselves, and people offered me jobs. I did apply for the CSIRO job, but I was asked to apply. That's the only job I ever applied for. Lucky, I say lucky.
Shane: Well, as I said before, you say lucky, but you've obviously, clearly impressed a lot of people over the journey to have those opportunities.
David: I don't know about impressed. I've annoyed a lot of them.
Shane: They gave you the job to keep you quiet. So, you talked about the financial planner that you saw, which resulted in you changing your superannuation, your wife's superannuation, so generally, when we're looking at retirement, we're looking at it as a household event. So did you both go and see the advisor? Was it a formal conversation, or you said it was a friend?
David: It was a friend.
Shane: Yeah. Okay. And so beyond that guidance, where else have you sort of sought your financial decision-making thoughts from?
David: Well, I know where the money is. I chose the different forms of the different makeup of the funds in superannuation. I made sure that my wife had more in her account than I've got in mine, because she's six years younger than I and therefore I'm likely to go first.
And I wanted to make sure that she was secure. I wanted to make sure there was something to leave for the kids. And that raises the point that currently there's a debate going on about whether people who die and leave their superannuation to the kids, whether that's really moral or fair.
And I can understand how it happens, especially in my position. I don't know how long I've got. I'm 87 now, so there's not all that long to go. And I want to make sure that I'm comfortable for that time. But what happens if I live till I'm 100 and it's not out of the question. As I joke with my GP, he signs the script for pills that keep me alive. And I'm saying to him, how do you feel about world overpopulation? And he laughs, but he still gives me the pills.
Shane: Yeah. So, that point then, about funding your retirement, so I understand that you're a self-funded retiree, so your superannuation is your primary source of income. Is that right?
David: Only source of income.
Shane: Okay. And so you draw an income stream, a monthly or fortnightly payment, and your wife does the same thing?
Shane: Okay. And so your draw down amount that you take on a monthly basis or fortnightly basis, you said you're a little bit concerned about whether that will last as long as you?
David: Well, no, it's a consideration. I've made sure because I'm pretty insecure underneath it all, having been, having lived through the World War II, there's something insecure about me. I've got to make sure that I've got enough money to do what I want to do.
So I've made sure that I've got enough. She's got enough. We've both got enough. And in fact, on the way, I was lucky enough to be able to afford to lend each kid the money to buy a house and interest-free, and they paid it back, and that got lent to the next one and the next one.
Shane: Yeah, right, okay. But clearly you've had a pathway of what's important to you and ensured that your financial situation supported that the best you could.
David: And I feel so sorry for the people, the younger people today who are not able to get into their own home. I think it's terribly important for people to have their own home, and I'm terribly sorry for the people who can't do that.
Shane: Yeah. It's difficult. And I think you mentioned earlier about how you regretted accessing your super, but also the reason you did it was to buy a home back then.
David: Well, yeah, that's true.
Shane: And so, beyond the things that you and your wife do to keep yourself active, what else do you do in retirement? Are you travelling?
David: I'm a bit of a handyman.
Shane: Yeah, okay.
David: I take a pride in making sure that anything that goes wrong in the house, I can fix. I have a good tool set. Ford still provides me with a car, so I don't tinker with cars.
Shane: Yeah, okay.
David: And really, to tell the truth, I'm not all that interested in cars as cars. My formal studies have been in logistics, and I'm interested in the role that cars played in helping society get where it is today.
Shane: And so you said you're very handy, and you've also got your family very close. Does that mean you're called upon to do handyman duties?
David: No, I don't think they'd trust me.
Shane: But is it true that you actually built the house that you're in now?
David: Oh, no, I didn't build it, but I influenced the design. I got a proper designer to design the thing. But saying I want this thing or this thing. Or I'd say I and my wife said we want this here, this there...
Shane: Of course, of course. Are you doing any travel in retirement?
David: Yes, we've been sort of away every year.
Shane: Okay, good on you.
David: And we belong to an Institute of International Affairs, and that meets pretty much every week. We have lectures and talks, an ambassador that's visiting, we try to capture them, and they talk to us, and we have talks from experts on international affairs. Keeps us active, keeps us interesting.
And we've been to most of the places anyway, and we've been to lots and lots of interesting places. We've been to a lot of the historical Rome places and all that. We've had a very, very lucky life.
Shane: You keep saying the word lucky. It sounds like it's...
David: Well, the more you say how lucky you are, the better the luck gets.
Shane: And the more appreciative maybe you are. So just to finish up, David, what's some tips that you might want to give some of our listeners about thinking about retirement?
David: Well, it's funny, it was just a couple of days ago, I was talking to the person who cut my hair, and I said, have you got superannuation? She said yes. I've had superannuation. She said, "But, I was in my mid 30s and became a single mother with three kids." She said, "But I had superannuation." Now, she hasn't taken much care over managing her super.
She just says, "Oh, I just leave it alone." I did what I could to encourage her to take more interest in what kind of super, what the mix is, how it's performing, go to the meetings to learn about what the superannuation fund is doing. She talked about her first fund with high fees.
So, I encouraged her to take more interest, and I would encourage anybody to take a real interest in where their superannuation is and how it performs and what the opportunities are and what the risks are and what the rules are.
Shane: I think that tip that you provided there to take interest in the super, the really key point there for me and something we try to educate our members on, is whilst some people don't see the money coming out of their pay and going into this, it is their money. It is your money, and you should take interest.
David: The money that the company is putting in is your money.
Shane: A 100%. It's all your money. And if you had X thousand dollars under the couch or in the bank, you would take ownership of it. That's what people should do with their super. I think that's a really good tip. So, David, thank you so much for joining us. It's been really enjoyable talking to you. You’ve had a fascinating life. All the best for what comes next and thanks again for coming in!
David: My pleasure.
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.