Podcast

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 that are found 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 am joined by Michelle Kelada, who is an Education Manager at AustralianSuper. Welcome Michelle, and thanks for joining us.

Michelle: Thank you. Great to be here.

Shane: So, Michelle, we're coming up to the end of the financial year, which is a great time to check in on your super. Some people consider adding extra to their super at this time of the year, and there's various things to consider, including tax savings. So, today we thought we'd cover off that topic.

So, before we get into the types of contributions that someone may consider, what are some of the considerations that people need to be aware of when considering adding to their super?

Michelle: I would say the biggest consideration to be aware of is that when you make an additional contribution to your super, these are generally locked away until you meet your preservation age and meet a condition of release, which is when you can start to access your super.

So you do want to be quite certain that what you are choosing to put into your super as an additional contribution, you won't need access to until you meet that preservation age. The other key consideration to be aware of are the contribution limits. So, there are different contribution limits depending on which way you contribute to super.

If you exceed these caps, you may need to pay extra tax. So, it is important to note that. The other key consideration is the timing. If you do want to make an after-tax contribution and claim it as a tax deduction for this financial year, it will need to be contributed by you and received by the fund before the end of the financial year. You will also then need to lodge a notice of intention to claim the tax deduction with your super fund before you lodge your income tax return for that year, and you can choose how much of your contribution you want to claim as a tax deduction.

Shane: Great Michelle, a bit of detail there. One of the things you talked about was the importance to check how much you've already contributed to super. Where would someone find that information?

Michelle: Yeah, the best way to do that is actually by logging into the ATO through your myGov portal. This is where you can view information on your super accounts, including your total super balance and your available contribution limits.

Shane: Obviously the member can contact their super fund directly, but I think one of the points around the ATO myGov website is if you've got multiple accounts and you may have contributed to multiple super funds, then that will pick up all those contributions.

Michelle: Yeah, absolutely. So, if you do log into myGov with multiple super accounts that'll all be totalled up on your myGov account, you'll be able to see what you've contributed so far this financial year. You'll also be able to see any catch up contribution limits you have access to.

So, this is where you can actually go back up to five financial years and have the ability to utilise any of your unused contribution limits for before-tax contributions. There are eligibility criteria, though you do need to have a super balance of below $500,000 on the 1 July of that financial year.

Shane: Excellent. Thank you, Michelle. Now, you talked in that first introduction about different types of contribution types, and we'll go into some of those now. One that you referenced was after-tax contributions, which is sometimes also known as voluntary contributions. What are the tax benefits of adding extra to your super via an after-tax contribution?

Michelle: Yeah. So, an after-tax contribution or a voluntary contribution is money that you contribute to super that you've already paid tax on. So think about savings that you may have accumulated in your bank account, an inheritance you may have received, or even your tax refund. This is all money that's already been considered from a tax perspective.

And you have the ability to put some of that money into your super as a voluntary contribution, there can be potential tax benefits or tax savings. This means that you can claim a tax deduction on some or part of that contribution when you make it into super, and it can help you to save on your personal income tax.

Shane: Great. So, the opposite to an after-tax contribution is a before-tax contribution. So, how can someone save on tax with a before-tax contribution? And how would that work? And what are some of the considerations that people need to consider there?

Michelle: Yeah. When money goes into superannuation before tax, it goes into your super and it's taxed at a flat rate of up to 15%, rather than your personal tax rate, which, based on the average Australian, depending on how much they're earning, they are in a higher tax bracket than the flat rate you'd pay when you go into super.

With members, I'd often use the example of $100. So, if you contributed $100 to your super before tax, it's going to get taxed at a flat rate of 15%. So, you end up with $85 inside of your super. This is compared to getting paid that $100 directly through your employer and having your marginal tax rate applied. You'd usually pay a higher rate of tax if you are in a higher tax bracket than that.

So, this is where the tax saving can be beneficial when it comes to contributing to your super before tax. But again, I'd come back to that point of just being aware that when money does go into super, it's going to be locked away. So, while the tax saving is great, you do want to be certain that you won't need access to that money until you meet your preservation age.

Shane: And you also talked before about contribution tax limits. So, any before-tax contribution that an individual makes goes on top of their superannuation guarantee payments their employer makes, which is still that maximum contribution amount you talked about before.

Michelle: Yeah, that's right. And the main thing here to be aware of is it includes the compulsory contribution that your employer is putting in on your behalf. So, what's left between what your employers put in and the contribution limit is how much you'd be able to claim as a tax deduction.

Shane: So, in super, we quite often have technical terms or jargon that we try to avoid. So, for our listeners, before-tax contributions are sometimes also known as salary sacrifice contributions as well. So, if you hear those different terminologies, that's what they mean. So, we've talked about how you can add to your own super. So, before-tax, after-tax, there are some opportunities for you to make contributions in different ways. One other is a government co-contribution. Can you explain what that is, Michelle?

Michelle: The government co-contribution is a fantastic, probably underutilised way to contribute to your superannuation, and it relates to the after-tax contributions you make. So, you can't receive a government co-contribution on contributions that you've claimed as a tax deduction, but only those that you put into super yourself after taxes.

The first thing I'll mention about government co-contribution is there is eligibility criteria, and the main one being that it is mostly targeted or aimed towards lower-income earners.

And the way it essentially works under the scheme is that the government matches up to 50 cents for every dollar you contribute to your super from that after-tax money up to $1,000. So what this means is that the maximum benefit you can receive from the government is $500 if you have that full eligibility.

Shane: So, just so I'm clear, if you meet the criteria and you put $1,000 of your own money in, the government will give you an extra $500. So, in effect, you're getting $1,500 added to your superannuation account.

Michelle: That's right. It's a guaranteed 50% return, which is pretty hard to find.

Shane: It is. And as you said at the beginning of that answer, it is underutilised. So that is something that if people meet the criteria they should really look into. So, quite often we'll get questions from members about how they could help contribute to their spouse’s account.

So, quite often we see particularly situations of mothers leaving the workforce for parental care, or even quite often now we're seeing fathers do that, which is fantastic. So can you talk to us a little bit about how someone can boost their spouse's super balance and also save on tax?

Michelle: Adding to the super of someone you're married to or in a de facto relationship with can be a great way to save on tax at the end of the financial year. And one of the ways you can do that is by making what's called spouse contributions and by making a contribution to a partner or spouse's super account, you can claim a tax offset of up to $540.

There are some eligibility criteria for this, and the main one is around the receiving partner having to earn less than $40,000 a year to be eligible to get that tax offset. So, this is really targeted towards couples where one member of the couple may be, as you've already suggested, taking time out of the workforce, whether it's to raise a family or taking time out of the workforce to perhaps do some studying, or maybe they're working part-time, this can be a great way to boost their super but at the same time, the contributing member can claim a tax offset of up to $540.

Another way you can contribute to your spouse's super account is by contribution splitting. So, contribution splitting essentially refers to splitting part of the contributions made into your super account with your spouse, and you can split up to 85% of those before-tax contributions. This essentially means that some of your contributions to super end up going into your spouse or partner's super account.

The main thing to be aware of here is that any before-tax contributions that you do split with your partner continue to count towards your concessional contribution cap, which includes, as I've already mentioned, your super guarantee contributions and anything that you've salary sacrificed or put additionally into your super and claimed as a tax deduction.

Shane: Thanks, Michelle. I think there's a couple of really good strategies there. In many of these cases, we would always recommend that someone were to seek some guidance or advice. So, before you were to go ahead and make any additional contributions, we believe it's important to reach out to your super fund or your financial adviser to receive some guidance and advice on how to maximise those opportunities for yourself and your family. So, Michelle, thank you for joining us today.

Michelle: Thanks for having me. It's been a 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.

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.