Monique

But just quickly, what's your most important asset?

(theme music starts)

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Ange

Welcome to Super Simple Chats. Rest's very own podcast. We will be speaking to industry experts about all things super. Trying to make it understandable and relatable for everyday Aussies. After all, it's one of the biggest assets you'll ever have.

Ange (V/O)

We're recording this podcast on Gadigal land. We pay our respects to elders past and present.

Any advice you hear on this podcast is general in nature and doesn't take into account your financial situation, needs or objectives. Issued by Retail Employees Superannuation PTY LTD. Before deciding to join or stay, consider the relevant PDS and TMD at rest.com.au/pds.

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Alex

Have you ever looked at your super balance and thought, is this good? Is this bad? Do I have enough? My name is Alex and I'm here with my co-host, Jo.

Jo

Hi. And we're here with Monique from Rest.

Monique

Hi, Jo. Hi, Alex. Thanks for having me here.

Jo

Pleasure. Thank you for being here. Today we're going to be unpacking a question that probably if you if you've been a bit nervous to Google, which is: “Do I have enough super at my age?”

Alex

I'm definitely too scared to Google that. I mean, I've just come back from parental leave, so who knows? (laughing)

But as you can tell, this is the lowdown. This episode is all about super balances.

Jo

Yeah. And we'll be unpacking some sort of personal factors, like things like what are your retirement lifestyle goals? What's your age at the moment? Do you think you'll own your home by the time you retire? Do you have a home now? Things like that that make it a bit more unique to your situation.

Alex

Absolutely. All right. So let's dive right in, Monique, with that big scary question. How much super should I have at my age if I'm 25? 55? Is there actually a perfect number to have?

Monique

Yeah. Great question, Alex. And I get asked this all the time. And I love this question because it really gets to the heart of why super can feel so confusing.

I mean, asking how much super I should have is like asking how much to save for a holiday. So what kind of holiday are you going have? Are you going to have like a five star resort holiday at the Maldives, or do you prefer backpacking or camping around Australia? Are you going to go yourself with a partner or a big family? And then you're going to consider, how long am I going to go for?

And yeah, a week or even a month. Super is very similar to that. So you got to consider where am I going to retire and how long do I have. And then you've got to look at things such as my goals, my objectives and most importantly, what your retirement lifestyle is when you want to retire.

Jo

Yeah. Okay. So there's quite a lot to unpack there isn't it. Because if it's not about a perfect number, then what are some of the key factors that we should be thinking about?

Monique

Yeah. So it is best not to think of as a perfect number and instead think about when do you want to retire, you know, how old are you now and how long do you have to retirement and how long you've got to save for that retirement?

And then when you retire, you got to think, what's my life expectancy? Because it's got to last you. Sometimes it could be 20 or 30 years. So you need to use that money for and then you got to consider, am I going to do this solo? Which is absolutely fine, and some people prefer that. What am I going to have a partner to share my expenses with?

And then you're going to consider things such as debts, you know, do I have any debts? I mean, the modeling is mostly based on no doubt, but, you know, not everyone can afford that kind of luxury.

So, things that you might consider is I'm going to be supplementing with age pension. Do I have other sources of income like an investment property or shares or, a lot of people go out and do part time and casual work just to supplement that income.

And so finally, it's really your retirement. What you want in your retirement. ASFA has these benchmarks that are a good starting point. But everyone's retirement goals are a bit different. I've got people who've said to me, oh, I want to go travel around the world when I retire, I'm going to spend $100,000 a year doing that. I'm like, great, good for you.

Yeah, most of us, like my parents, just want to stay home, do a bit of cooking, do and gardening. And you know, then you have a look and say, right, if that was the case, then have a look at your baseline. Maybe I don't need that much when I retire, but if you do want to travel and spend $100,000 a year travelling, you will need a lot more in your super.

Alex

It makes a lot of sense. Yeah.

Jo

So it's quite clear then it's like there's no one size fits all when it comes to this is there?

Monique

No, it's different for everybody. That's correct.

Alex

And you mentioned ASFA benchmarks, what actually is ASFA, what are these benchmarks we could think about.

Monique

Yeah. So ASFA is the Association of Superannuation Funds in Australia and they've developed this, retirement standard. So this retirement standard is a benchmark for the annual budget for the average Australian to live either a comfortable or a modest retirement lifestyle. And they do change it accordingly every quarter.

Alex

I assume there's a bunch of caveats to that as well. Like, maybe you need to own your own home or anything like that. Yeah?

Monique

Yeah. There are certain assumptions, like being debt free, owning your own home, and there's different figures if you rent a property or own your own.

Jo

Yeah. Okay. Because I'm kind of have the question in my mind is what do you mean by comfortable or modest in retirement. Like that's quite.. broad.

Monique

Yeah. So comfortable is a good standard of living. So think, you have the top private health insurance cover. You've got money for social activities, hobbies, going out for restaurants. And then you've got money to go on a domestic trip, every year and maybe one overseas trip every seven years.

Jo

Yeah. Okay. Sounds good.

Monique

And then we have a modest retirement, which is a basic standard of living, which is slightly above the government age pension. So you've got basic private health insurance cover. You might not have as much money to go out for social activities or restaurants, and you might have to travel domestically.

Jo

Yeah, okay.

Alex

I mean, the modest lifestyle sounds like me right now. I'm trying to save for a home.

Jo

Exactly.

Alex

And I think we'd all love to have a comfortable lifestyle in retirement. That's probably not that realistic, is it?

Monique

Yeah. And, that's exactly right. So these are just benchmarks. And think of it as benchmarks. And it's okay to be above or below.

Actually, only 30% of Australians are reaching this comfortable lifestyle or above.

Jo

Wow.

Monique

I mean, it's a good starting point, for you to think about what balance you want. And really, life happens. I mean, you've got family, you've got work, you've got kids. You sometimes think, oh, I'm so busy. You put super on your backburner, I mean, not everyone's going to think about what they're going to do with their super in 20, 30 year’s time. So that's normal. But the good news is, yeah, there's a lot of strategies, no matter what age you are, to help with your super. Say, for example, you're thinking you're going on a career break, having a baby, you know, think about the government co contribution. Are you eligible for the government co contribution. Or, you know, get your spouse to put some money into your super, do some spouse contributions if you’re lucky enough.

I don't know if you had that conversation with your husband, Alex, but… yeah so think about that. And if you're nearing retirement and your kids are out of the home finally, and you've got more disposable income, you paid off the mortgage, think about salary sacrificing, or maybe a transition to retirement.

Vox pops ----------------

Ange (V/O)

We went and asked everyday Aussies what they thought about this.

Sinem

When do you want to retire?

Person 1

Now. Now.

Sinem

Do you think you’d have enough?

Person 1

I think I do. But, I'm still young at heart. And I've got so much to give, so it's not going to happen.

Person 2

He's nodding at me, saying, we’re good? So I’m like, okay.

Sinem

Do you compare your balance to other people your age to be like, okay, we're at the benchmark?

Person 3

Yeah, yeah, we're definitely over the benchmark. So yeah, I'm looking 55, I’ll be backing off, considering… we should be definitely tracking towards that.

Sinem

Yeah. Nice.

Sinem

Did you have kind of an ideal age that you wanted to retire by?

Person 4

Well, I had an accident in 2009. I had no idea I was going to retire really early. And it's just the way it is. But you've got to be. You've got to take care. You've got to balance your money because money is tightening. You don't get any more.

End vox pops -----------

Alex

You know, that's very relevant, as you just mentioned for me, because I've come back from parental leave and now I'm working part time, but I'm very conscious that I'm not earning the same amount that I used to. Obviously, and not the same amount is going into my super, and that's probably playing a big factor into my final balance right now, isn't it?

Monique

Yeah, absolutely right. So this the good news is the super and the pay gap is closing. So that's fantastic. But unfortunately there's still a lot of roles and industries where women are paid less than the male counterparts. And it's also because women are seen as a primary caregiver of the family.

If you think about it, you know, 30s and 40s, that's when you really start to see your super balance grow. And that's because you're getting older. You're getting paid more at work, and you're seeing the benefits of the compounding effects over a long period of time. But that's also when we decide to have children.

Alex and Jo

Yeah. Yeah.

Monique

Yeah. I mean, I had my first when I was 35 and my second when I was 37. So that time out of work really impacts my super balance.

Jo

Yeah. And I think it's probably quite familiar feeling for anyone, regardless of whether they're a parent or not. That feeling of am I behind? Because, you know, I'm obviously from the UK where we don't have the same super industry in the UK.

And you know, I came here with nothing essentially. So at 27 I had no super and I had to learn what super was and all these things. And so I've always felt like I'm behind because I think all those years when I was earning money as a younger, you know, kid and a younger adult are gone. So I can understand that feeling of feeling behind. So I guess the people like us worrying about that sort of feeling, what could we do?

Monique

Yeah, and that's so common, Jo. I mean, everyone's a little bit different. The journey is going to be different as well. I mean, you came a bit later and you're super started late. You've got people, I mean, my husband started working when he was 16. I started working when I was 23. So as you can imagine, our super would have been a very different balance when when I first started.

And then we've got a lot of other reasons as well. But, you know, the important thing is to keep track of your super and just to make sure that you've got, you know where it is.

Jo

Yeah.

Monique

A lot of people that I speak to, they don't even know where their super is. And that's because they said, oh, I do know that my employer is putting money into my super, but I don't know where. So, keeping track of it is very important.

Alex

And they could have multiple accounts open. I know when I was young I would have just started a job. They opened a fund, started a job, they opened a fund. You don't have a clue when you're younger.

Monique

Oh, it's so easy to lose track. I mean, if you start on a new job and they open a new fund, I mean, I've seen people five, ten, you know, it could even have 15 super funds. I think the most I've seen was 12.

Jo + Alex

Wow (laughing)

Monique

So it’s quite common. But you consider things such as, you know, the different fees that you are paying. I mean you could be paying multiple fees and costs that you don't need and insurances as well that you won't need as well. So consider consolidating it together.

But before you do that, make sure you tick all the boxes, make sure that you check everything that you've compared with such as the, the fees, and the costs and the insurances that you might lose or any other benefits.

Jo

There's quite a lot in that, isn't there. So it can feel a little bit overwhelming. You know, I know when I first started working at Rest about six years ago, I didn't know very much about super, bit embarrassing to admit, but it's true. And I think most people in Australia would actually say the same.

Alex

Absolutely.

Jo

Really, how much do you know about super, it's so complicated. So one of the things that I found really helpful was that we have an online tool called the Super Health Check for Rest members, where you can log in and answer a few simple questions, and it will give you a checklist. And that for me, I'm a very visual person. So for me that was really useful place to start. But I guess, should we talk about a little bit more of sort of other things, strategies that within that health check or things like that we could think about?

Monique

Yeah. Yeah. Good point. I mean, there's other things that, you know, a lot of people should be considering with their super. Such as, have a look at where your super is invested. If you don't choose where to invest, you're super automatically goes to what's called the default investment option. Every fund has their own default investment option, but a lot of other options available to you as well. They range from being very conservative all the way to high growth.

And depending on your circumstances, such as, you know, how many years before retirement, what your goals are or you know, your risk profile, like how much risk you're willing to take in your investment, is where you should sit in your investing. And it really could make a difference to how much you have in the long term when you retire.

Other things to consider is insurances, as well. I know we've done a podcast previously about that, so I won’t go into too much detail. But just quickly, what's your most important asset?

Alex

My family.

Monique

Yeah that's exactly right. And you want to make sure that they're looked after. So you, yourself and your ability to earn income are the most important assets. Because if something was to happen to you, you want to make sure that you've got money to pay for medical bills, rehabilitation, your mortgage. And then if you do die, you want to make sure your family's looked after as well.

Also, beneficiary nominations is important as well. I know we’ve done a podcast on that as well. So, make sure that's in check.

And finally, consider topping up your super. I mean, I know it is a cost of living crisis at the moment, and people are struggling, but every little bit counts. So when you put say, you know, $5 a week into your super, it can have a compounding effect in the long run.

Alex

That makes a lot of sense.

Jo

It does make a lot of sense.

Alex

I mean, there's so many things that we're all subscribed to that if you just kind of cut one of those out and considered, what would this change my balance if I put this into my soup, I'm like, that probably would be significant.

Jo

Yeah. And you don't necessarily have to be able to afford to do something every week. It could be just every now and then when you have a little bit of extra cash, you think, okay, I'll just tuck that away.

Monique

Yeah, that's right, I mean, we, we buy coffees every day, which is like $5 every day. If you add it up every week that’s quite a bit. I mean, even if you give up one coffee a week and put into your super that could make a difference.

Alex

And you’ve got oat milk, almond milk, it's probably an extra dollar.

Monique

A small one’s, like $6. It's not cheap these days.

Alex

So keeping all that in mind. And now we know there's not a perfect number to have. But if I wanted to know with my current balance, if I am on track for those lifestyle goals, I want to have, my life expectancy, etc., etc. Are there any other tools or calculators we can use? It's like, is there AI software that can do this for me?

Monique

Yeah, I mean that's that's a great question. And it can be so helpful to have these tools available, isn't it? Because you're like, well, what figure should I have? If you go on to the

Rest website under Tools and Advice, we've got these calculators that you can use. And they're fantastic because, I can spend the whole day doing it, to be honest. They look at your current balance, your age, your contributions, and then you can play around the figures. Say you want to retire at 55. What's that going to look like compared to 65?

Jo

Yeah.

Monique

If I change my investment option, how much would I have? Higher or lower? And then that looks at retirement budget as well. So it will show you if you were to retire, what lifestyle you want, how much you need per annum and how long the money's going to last. So it's a real handy and useful tool.

Jo

Yeah. It makes it feel a bit more tangible doesn't it.

Monique

Yeah, yeah. Brings it visually to life.

Alex

I find those so useful. Like, here is your projected balance that the trajectory you're going on. And when I was in my 20s, it really helped me to get my mind around, okay, this is probably something I should care about, and here's how much I could have. And then you could adjust, like, if I paid a little bit more into it, how much would that grow or not? And it's been. Yeah, a really interesting way to kind of understand that super is important.

Monique

Yeah, it's actually really fun, especially for us super nerds.

And then we've got other options as well, such as the ASIC retirement planner, also they're fun to play with as well.

But, most importantly, I can't recommend highly enough. Go and speak to an advisor. We have advisors at Rest but a lot of super funds have their own advisors, and they're real people that speak simple language and you can relate to. Rather than doing it on your own, get someone to help you.

Jo

Yeah. I couldn't agree with that more because when I joined Rest as well, I did speak to an advisor and I was pretty nervous because I was like, oh God, I'm going to sound so stupid. I've just started at this company I don't want to sound like I don't know what I'm talking about, but they just made me feel really comfortable and there were no silly questions. You know? They were really, really human, like you said. So, I always recommend that to people, too.

Alex

Yeah, my mum recently retired, and in the lead up to it, she was asking me so many questions. And even as someone who works at super, I was like, I do not have a clue. Maybe you should speak to someone who can give you some advice. And she found the process incredibly helpful as well. And like you said, it wasn't particularly intimidating and they just helped the average Aussie to just get a bit more of an understanding about retiring.

Jo

Yeah.

Monique

I've only had fantastic feedback about them and there's no stupid questions. I mean, even if I have a small balance, it's not embarrassing because that's the whole goal of seeing them. You need help and that will help you.

Jo

Yeah, yeah.

Alex

Oh, thank you so much for your time today, Monique. I feel like we've really demystified a bit of the legend of needing a specific amount at 25 versus 55. Is it $1 million? Is it nothing like… I feel a little bit more reassured.

Jo

I do too, like knowing that there hasn't got to be a perfect number. And if we are a bit behind, there’s lots of things we can do to catch up.

Alex

Absolutely. And if you like this episode, please like and subscribe. And that's..

Alex + Jo

Super simple.