Super Insider podcast: Episode 18

Anne: Hello and welcome to Super Insider, proudly brought to you by Australian Retirement Trust. My name is Anne Fuchs and I'm the Executive General Manager of Advice, Guidance and Education here at Australian Retirement Trust, for our 2.3 million members.

Now before we begin, I'd like to acknowledge the traditional owners of the lands and waters where we're recording this podcast today and of course remind you that this is general advice only. So, it's really important that you consider whether it's right for you.

Now I'm thrilled to be recording this podcast today because I've got some great sisters in the house on Super Insider, Tara Richards, and Ronda Lewis. Ronda is an Education Specialist and talks to Australians everywhere about all things super and making it simple for them so they can make great decisions and engage with this important asset.

And Tara, Tara speaks to so many Australians thinking and wanting personal advice about retirement and what they should be doing. Tara is a leader in the financial advice team. So, it's wonderful to have you both on the show.

Ronda: Thank you.

Tara: Thanks for having us. Very excited to be here.

Anne: Excellent, on Super Insider, we cover such a broad range of things to do with super and retirement and investing. But today's a very special focus because we believe it deserves it. It's women and superannuation, because we know that women aren't retiring as much with, the same amount of money as men. And so, we believe it's important that the sisters start paying attention, paying attention, and educating yourself. So Super Insider today is for all those women who want to be independent. I know I'm quoting Beyoncé, but it's really important because you've got to live your retirement with financial security, so important. And part of that is paying attention as early as possible. The reality is biology is not our friend when it comes to saving money for retirement. Sadly, because many of us have to stop work, have breaks or even just the nature of caring, carer roles in society.

Tara: Right, very true. We always put ourselves last but should put ourselves first.

Anne: Okay, and so today, this Super Insider is all about empowerment. Whether you're earning $55,000 or $155,000, it doesn't matter. Like have a Beyoncé mindset. I was going to wear, I bought this shirt on holidays, which says Beyoncé wasn't built in a day and this is true. So, if we apply that Beyoncé mindset, it doesn't matter. There are simple, easy things you can do, so you've got more money, isn't that right? So, Ronda I'm going to start with you. Tell me about your job and the type of people you speak to.

Ronda: Okay, so I am, I'm one of those members that took no notice at all of superannuation, joined my current role when I was just under 55. And at that stage I'd never opened an envelope about superannuation. And here I was talking to people about superannuation. So that was a very sudden learning curve, and I realised very quickly that I should have been doing an awful lot more and paying attention. So here I was at 55, had no idea. So yes, I'm very much one of those people, which makes me so passionate about helping everyone I meet because I know there are so many people out there like me.

Anne: And so you were, I guess, putting yourself at the bottom of the list every day that never got completed.

Ronda: That's right.

Anne: And so you had probably a little bit of super. So, what were the steps you took to educate yourself, that you now go out and talk to women about those little steps that you can do to make that make a difference?

Ronda: Absolutely, so when I started in my current role, I suddenly thought, "Oh my gosh, I've got 3 or 4 superannuation funds, why are they sitting separately? Let's put them together." And it's very common for Australians to have more than one super fund. So that was one easy step. A, because different funds charge different fees, but often there's insurance attached to those superannuation funds as well.

Anne: And that eats it away, doesn't it?

Ronda: Absolutely, so that was an easy one. And then another great one is just looking at what's going into your super. So, it doesn't need to be complicated. It's really quite simple, who's paying money in, is it your employer? And for many ladies that I meet, they're putting some money towards these super as well. So that's one area you can look at, that can honestly make a difference.

Anne: Yes, and we were just talking before recording the podcast. Ronda is expecting another grandchild soon. And so, you, with kids off your hands, I guess maybe it is an opportunity to put a bit more money in, if you can afford to.

Ronda: It is, it is. And it tends to be at the other end of your career, often when the children have finished school, and the mortgage has paid down a bit that you might have a bit more disposable income. If you're living by yourself, absolutely you've got the opportunity just as much. But you can look to plan and the ladies I've spoken to, and I've spoken to probably a couple of hundred thousand, the ladies in the couples that actually put a bit of a plan in place and know what they're going to be doing in retirement, and what they're going to be spending that money on, just seem to have that level of satisfaction when we meet them in retirement, that things generally go according to plan.

Anne: So, Tara, I think Ronda's created a bit of an entree for you to come in, Queen of financial advice. So when, and is there all sorts of members the members who plan, Ronda, they're probably very proud of themselves. But what about those members who haven't done anything, and they've had a life event happen, and they realise they've got to catch up, and work longer, retire with less. Can you talk to me about the types of conversations you'd have for somebody who hasn’t planned? A woman, and the different things they're trying to weigh up in their head.

Tara: Yes, so a lot of the women that I speak to do lack that confidence and they regret not starting sooner.

Anne: Regret is such a bad emotion.

Tara: I know, but it is never too late, is what I would say. So, for people that have made a financial advice appointment, they've taken the first step to start learning about their superannuation and grow their super. Some people feel, with the women that I speak to, a little bit embarrassed because they don't know the type of questions to ask. So, if you do ever make a financial advice appointment, I would say, you could just say to that financial advisor, “What would somebody in my situation ask you?” That could be a really good starting point.

Anne: That's really good, so okay, so tips here, it's around finding all of your super and consolidating it and making sure you're not paying additional fees and insurance and then picking up the phone to your super fund, as quickly as possible, to make sure that you're invested in the, in the right option, but also making ends meet. It's not easy trying to make the budget work. Tara, what are your reflections on budgeting and how it relates to super - the household budget?

Tara: Yes, so, if I think about somebody that I'm speaking to, a female that I'm speaking to, a lot of people don't actually know what their surplus income is. So, there are free resources available. Some people may find that a little bit complex, that's okay. You could look at your bank statement at the start of the year and at the end of the year and you'll know how much money you have left over. So really knowing what that surplus income is to be able to build your wealth. If superannuation was a consideration, you could consider adding some extra money into your superannuation. You could do it in a tax effective way. There are limits involved, that's what we're here for. Or you could do it after tax, where you may be able to get some larger amounts in as well.

Anne: Ronda, do you talk to Australians about this concept of compounding interest? It's like, I always say it's like the earlier you put on sunscreen.

Ronda: Absolutely, and we always say honestly, the earlier you can do this sort of thing, absolutely better.

Anne: How do explain it, though? Like compounding interest because it is a complex concept, I think.

Ronda: It is quite complex. So, what we would normally say is when, when your money goes into superannuation, it is invested and receives returns. Those returns, in time, get reinvested and that whole compounded earnings impact can have a significant difference  on your super in general. But if you're just putting a little bit aside each fortnight, that can have a huge impact over a longer period of time as well.

Anne: Tara, what are the contributions that financial advice strategies that advisors would recommend to an individual that's at the end of their working life? They might be selling a home, they're wanting to get some money into super, they're trying to catch up because they might have had 20 years out of the workforce.

Tara: Yes, so they are what we call downsizer contributions. So, if somebody has sold their principal place of residence that has not been subject to capital gains tax at some time. Keeping that really simple, they've lived in it at some point. If they were to sell that house, they are able to get some money into superannuation, which doesn't count towards any of the other limits.

Anne: Okay, and are there any perks I guess if I could describe it that way for the lower income Australians around getting more money into super to maximise if they are able to budget, and put a little bit aside?

Ronda: Absolutely, so Tara touched on putting money in before tax. So, you can work with the tax strategies and end up with more money going in, and sometimes it doesn't have that bigger impact on your pay. Another great one, and this can be for lower income earners, but it can also be for people who are on a higher income, but they're working part-time. And that's where they put some money into superannuation, and it's got a lovely term called co-contribution. If they make some payments into super, they may well be entitled to a top up from the Australian Tax Office when they do their tax return.

Anne: Is it a life event or what are the triggers that you see when the light finally switches on. It's like money in the bank account, no-one would ignore the money, well, most people don't ignore money in their bank account. But what do you think the sort of the triggers are that then get someone engaged, and how could, how can we create more of that in the community so that more sisters are retiring well, because we know that there's a few getting left behind.

Tara: There's lots of different triggers. One of them I'm just thinking about a lady that I spoke to last year who was in her early 50s, young children, had recently separated from her partner, and some of the things she said to me, which can actually be really common is, "You must be looking at my balance and think I don't have enough." Or "Based on other people within my age group, I think I'm really far behind. I'm going to have to work for the rest of my life." And we discussed the average superannuation balances within Australia in her age group for females and she was sitting on top. So, it's really important that we recognise that and know that she was ahead, so back yourself.

Anne: Don't assume the worst.

Tara: Don't assume the worst, definitely.

Anne: What about you, Ronda?

Ronda: Look, a lot of people do assume the worst and I've met a lot of ladies that think they're never going to be able to retire at all, no matter how much superannuation they've got. So, again, it's getting in, making it easy for yourselves, finding out how much you've got, how much you may need to retire with.

For me, one of the most common triggers is someone turning 50. The amount of people that I talk to that have just turned 50 or they’re 51 because they suddenly think, “Oh my gosh, that next birthday that next zero birthday is 60, I better start taking notice. So that's honestly one of the biggest ones for us is age.

Anne: So TTR, transition to retirement, which just sounds again like corporate jargon. How do you explain transition to retirement if you're sitting in a room full of women and finally engaging, how would you break down a concept like transition to retirement, Ronda?

Ronda: Transition to retirement, I always say it's a bit like try before you buy and just explain you must get to a certain age if you're looking to use your super and that strategy. But really, there's a couple of ways that people use transition to retirement. One maybe they absolutely love their job, but they don't want to be doing it 5 days a week, and they also don't want to have any less income coming in, so they might cut down to 3 or 4 days a week and then draw some from their super to top up their take-home pay.

But other people use it as a way to boost their super, as well. And in some ways, you can do it as a bit of a combination of the two. So, it's a great one where people really love what they do, they don't really want to finish completely, but just reducing their hours down gives them that lovely work-life balance, but also doesn't necessarily penalise them financially.

Anne: What do you see in terms of strategies that we're talking to members, the women who've planned and they're high fiving themselves? What are the things they've done that a lot of people haven't done, and you go, "Good on you, you stuck to the plan and that's why you are where you are.

Tara: I think they have got in early, and they've really educated themselves. So, some of the women that I speak to may have taken the first step today, they've listened to a podcast.

Anne: Yes, you can pat yourself on the back.

Tara: They've invested in themselves through education, working on their careers. Or another example is looking at how their superannuation is invested, because some people may not have a lot of surplus income, but if you look at how your superannuation is invested, keeping that really simple, the less risk you take, the more exposure you have to things like cash, people understand what cash is. And then the more risk that you take, the more money you would have invested in things like shares, property, infrastructure. So, if you're able or willing to take on more risk, you will see more ups and downs along the way, but you would expect to have more money for your retirement.

Some other ones, we think about our income, it can be our biggest asset, people that really look into the insurances they hold. If you think, if something were to happen to you, and you couldn't work, you have lost your income, so income protection could also be a big consideration. And regular contributions to your superannuation, getting in, dollar cost averaging, every fortnight, week, whatever is available to you, if you have surplus funds, it can really help you get a good outcome for your retirement.

Anne: And you're right around the insurance, do you have it inside or outside, if you have pre-existing conditions, how do you get it underwritten, the cost of it all. Because it's, as Ronda said at the beginning, it can erode the balance enormously.

Do you see from an estate planning point of view, Ronda, people paying attention to whose name is on their super account when they depart the earth? And how important is that?

Ronda: For me, it's very important. And again, it's a little bit like I touch a few topics every time I speak to people, and that is one of them. And it's an option that people may choose to do that. And again, we meet people on both sides of the fence where they may have had an unexpected bereavement in the family and they'll say, "Oh my gosh, I haven't set one of these in place, how do I do it? And how does it work?” And then we have the odd member, or odd lady on the other side who may say, "You know what? I've got a lot of super, but I'm not going to be there, they can fight about it when I'm gone."

But mainly, people are really keen to know that the people that they really want the money to go to, it will get there, and there are certainly steps that they can take.

Anne: Okay, so I'm going to throw to you for the empowerment question. You are sitting talking to the young version of you. What would you say to yourself, Ronda, if you were 18, you're starting out your working life, what would you have said to the younger version of you?

Ronda: I think I'd just say don't doubt your ability to learn, don't leave it too long, don't be like Ronda and leave it until you're 55. There's so much information there, but your superannuation funds are there to help you, they're there to make it simple for you, it's honestly not that hard, it's just putting that one foot through the door, and you'll be away. And I guess keeping your finger on the pulse, too, if your plans change at all, or just to see how you're going as you're progressing towards retirement.

Anne: Okay, what about you, Tara?

Tara: I think it’s, knowledge is power. So, really starting to understand what superannuation is and how important it is. When I speak to younger women, they quite often say I'm never going to get my superannuation. But, in the role of a financial adviser, we are speaking to older women all the time and they're at the end, and they're about to start drawing on their superannuation and say they regret they didn't act sooner. So, for me, it's start looking into your superannuation now and take the first step.

Anne: I agree. I started as a graduate at Bankers Trust, as it was, and I don't think I really started paying attention to my super until I was in my early 30s. And I've got 3 kids, all of that downtime and whatever else. But I think the young generation these days have got there's a whole lot of reasons why it's going to be easier for them. They can download an app, back in the old days, superannuation, you get a paper form. It was easy to ignore it.

Ronda: Once a year.

Anne: Once a year, it was pretty dry content where there's so much focus now with super funds to make the content interesting, engaging, easy to understand. You can get it on the apps. And I know super, superannuation is taught in schools now too, isn't it? They talk about it as part of Economics and Business.

Tara: Yes.

Anne: Ronda, if your somebody listening and is motivated and has decided, “I need some help,” where do they start?

Ronda: There are so many different places you can go to. It's just as simple as getting onto their website, for starters, there'll be lots of things like podcasts, seminars. I know for my superannuation fund that we go to workplaces, we have large presentations to the public, so there's so much information there for you, it just depends how much you want.

Anne: Yes, and a lot of super funds will offer financial advice over the phone, as well as an option to if you're really, really, really motivated and you've ready to take that next step.

Tara, if you're thinking about whether you can afford to retire, where do you start trying to answer that sort of that big, big question, do I have enough money?

Tara: Yes, so it does come up in a lot of our advice meetings where people are asking us, do I have enough money to retire? And we all have different...

Anne: Expectations for life, someone's happy with a Hyundai, someone wants a VW fancy, I don't know.

Tara: That's right. Yes, we all have different tastes of champagne as well, so it all depends on which one you like to drink.

Anne: I vote Verve. I vote Verve. Special occasion, yep.

Tara: So, there are some free tools available online. So, there is a really handy one called the ASFA Retirement Standard. And what they have done is they've surveyed a whole heap of people in retirement. They look at singles, they look at people that are in a couple. It looks at a couple or a single that would like a basic retirement or somebody that would like all the bells and whistles. So, it's a good handy website that you can go to. We can include it as part of this podcast as a link, and there's also a budget that you can use on there, and you can also compare yourself to other people as well.

Anne: So, in other words, you can say, "All right, well, I'll go and look and see how much you actually need to live just for this type of lifestyle." And then you could go onto your super fund like we've certainly at Australian Retirement Trust got some excellent calculators and digital resources.

Tara: That's right, yes. And you can also book in for a financial advice meeting if your superannuation allows it and we can do the calculations for you.

Anne: Yes, there you go. So yes, I'm optimistic for the future, but I guess the message that you're both saying is, it's never too late, as that great Kylie Minogue song goes. It's never too late. First album, Gotta be certain, I should be so lucky. Great songs, it's never too late.

Ronda: Exactly, and that's exactly my story, never too late, and I've absolutely made a difference in the last 12 years.

Anne: And are you proud of yourself?

Ronda: I am proud, but I also realise there are so many people in my boat, and that's why I'm so passionate that people just pick up the phone, have a look online, read the content, because they really can make a difference.

Anne: Yes, stop putting yourself last. You deserve it, there's a whole thing in there, psychology about self-worth, really, which we're not going to unpack, because we're...

But I do love, I do love Oprah Winfrey's expression, "When you know better, you do better."

Tara: Very true.

Anne: Know better, do better. So, if you don't, so sticking your head in the sand is not, I'd say, it's not an excuse. People are getting better around health - know better do better. And so, health and money are foundational aspects to just living a happy life. So, look after your health, look after your financial wellbeing and paying attention to your super, know better, do better. Yay, that was a great episode, I loved having you both on.

Ronda: Really good, thank you.

Tara: Thoroughly enjoyed it.

Anne: Thank you so much. All right, thank you, to our viewers listeners of Super Insider, make sure you subscribe and tell your family and friends and let's go sisters, let's make some money in superannuation and engage and retire well with confidence.