Pete

There's probably no bigger change in your life after 50 years of doing the same thing.

Alex

Yes.

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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 and doesn't take into account your financial situation, needs or objectives. Before acting on any advice or deciding to join or stay, consider its appropriateness and the relevant PDS, FSG and TMD at rest.com.au/pds. Product issued by Retail Employees Superannuation PTY LTD.

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Alex

Picture this. You're in your late 50s, early 60s, and you've been working full time your whole life, and you're starting to wonder, “Do I really need to keep doing this five days a week?” Maybe you want Fridays off. You want to travel, see the grandkids, or, you know, start a new hobby or I mean, let's be honest, maybe cost of living means you need to keep working, but it's getting harder. The good news is you're not alone. My name is Alex, and I'm joined today by my co-host, Andy.

Andy

Hey, Alex. And today we're joined by Pete from Rest.

Pete

Hey, guys. Thanks for having me back.

Alex

Pleasure to have you.

Andy

Mate, so good to see you. Always good to see you.

Pete

Thank you.

Andy

So, here's the lowdown. You don't have to go from full time to full stop. Today we're talking about how to slow down a little by reducing the number of days you work each week without stopping entirely. We'll explain what's called a Transition to Retirement strategy, or TTR, when you can actually start accessing your super while still working. And what this means for your take home pay and retirement savings.

So how can someone slowly transition to retirement? Can you still really access your super while you’re still working?

Pete

You actually can, Andy. The good news is you can. So if someone has reached 60 years of age, which is called Preservation Age, and you are still working, you can use a TTR strategy, a transition to a retirement strategy, to scale back work or downshift.

If you think of a car analogy, you know, when you're driving a manual car and you change from fifth to fourth to third to second, you know, it's a bit like changing from five days a week to four days a week. So, you’re downshifting. But you can use that, that TTR strategy to maintain the same level of income.

Alex

Okay.

Pete

Or even, to boost your super if you wanted to.

You know, of course, there are limits on what people can access.

If you've reached Preservation Age, as I said, if you reach 60 or over and you're between 60 and 64 years of age, there's minimums and maximums that you can take out. So the minimum is 4% of the, of the balance that's in the account and the maximum is 10% of the balance that's in the account a year.

So you've got a fair range there. And for those lucky people who are 65 or older, they've got full access to their full balance.

Andy

Yeah.

Pete

So there's that… 60 to 64 range. That's 4% up to 10%... a year.

Andy and Alex

Yeah.

Pete

And then you've got the 65 and over.

Andy

Yeah.

Pete

Lucky people who’ve got full access to the whole shootin’ match.

Andy

I feel like as well like, just to get things up top really quickly, there is going to be a lot of nitty gritty right, in this stuff. I can imagine that we're talk about like lots of details and stuff like that. Right?

Pete

It is.

Andy

If you're listening to this pod and you're interested in it, and you want to get into that detail, definitely visit our website and we'll pop some links in the show notes to make sure that you can get the details if you want.

Pete

Yeah, exactly. There's plenty of people at Rest to to help talk you through it. So we really want people to reach out so that we can guide them through all the, all the jargon, because there's lots of it.

Alex

Yeah, 100%.

Alright, Pete. I'd love to know, what are some of the reasons that people downshift into retirement.

Pete

Look, first of all is, you know, for financial security or financial stability.

Alex

Yep.

Pete

Okay. So, for some of us, who may still have school fees to pay, you know, or may still have financial obligations like a home loan or debt or whatever it is, then they perhaps just can't afford to drop, you know, a fifth of their wage if they're moving to four days a week. So they know they need to maintain that same level of income. And I probably count myself in that group. That's one reason that someone else might want to do it.

For emotional and social well-being. You know, it's a massive transition.

Andy

Oh huge.

Pete

A massive life change moving from, you know, 40, 50, 60 years in the workforce, to life after work, you know, it's a major life change. The purpose and the structure that work gives us isn't easily replaced. And if you, all of a sudden just sort of take that away, like, go from five days a week to nothing and take that whole structure and purpose away then that affects people, not the best way sometimes. So doing it gradually, it can be a much more, a healthier way to do it.

Andy

Yeah.

Pete

I guess it gives more time for, to do the things that you love. You know, spending time with family. You mentioned it before, spending time with family, hobbies.

Alex

Yep.

Pete

We talked about pickleball before the before, the pod, you know. Those things that you dream of, that when you're, you're getting a coffee at work on Wednesday morning at 10 a.m., you know, you're going oh, what else could I be doing today?

It's a bit of try before you buy, because, you know, you might think that. Oh, yeah, I'd like to take up this particular hobby or I'd like to let's, let's use the pickleball example again. You know, so taking that one day extra per week, you know, moving from five days to four days.

Andy

Yeah.

Pete

Gives you that day to maybe try different things, and establish that as either: Yep. I really want to continue doing that or maybe that's just not for me. And I'll try something else.

Andy

Yeah.

Pete

Before you get to that full time life after work, all that full time retirement.

Andy

You might get that chance to try pickleball and then be like, wait, this is a cult.

Pete and Alex laughing.

Andy

I'm not sure this is 100% for me.

Alex

Sounds like something someone from big tennis would say.

Pete

Big tennis.

Andy

Oh, yeah yeah, yeah. Or big, lawn bowls perhaps.

Pete

Nothing wrong with lawn bowls.

Alex

But on that note, do you think that there is a bit of a stigma around retirement?

Like for some people, retiring or retirement is a dirty word?

Pete

Yeah, I, I do feel that way, honestly. Alex, it's, it's a real label. It's almost like it's a.. it's a bit of a sentence.

Alex

Yep.

Pete

And I think maybe some of our friends and family in older generations have, been constricted because of that label. You know, if you think of what the word retirement is, it's it sort of means the end. You retire from cricket, you know, you finish your innings at cricket, it’s over. You retire a racehorse? It's career is over, you know, put it out to pasture, and and that word has those connotations of the end when really, in my personal opinion. And look as I, as I read this, there's, there's some other amazing people in the, in the public space talking about these things, you know, retirement is more of a transition period. You know, it's a period of adjustment, like you're moving from full time life and work to full time life after work. But you’re still living, okay?

I think a lot of people sort of, maybe when they retire, they got a bit of… they feel like they've got a tattoo on their forehead that says I'm retired. And they get pigeonholed into, you know, no longer offering value or being productive or having purpose. And that's just not true. And that's really unfair. Maybe ageism comes into a little bit there where people get labelled.

Alex

Absolutely.

Pete

So, you know, I, I agree, Alex, I do think it's a bit of a dirty word these days. And, and, you know, thinking about it in, in the terms of life, in work and then simply life after work is, is a much more, perhaps positive and optimistic way of looking at it.

Andy

Yeah, for sure.

Alex

It makes sense, though, in that sense that you'd want to transition in some way because I mean, for me personally, I've just come back from parental leave, and if I went from parental leave to full time work, which a lot of people have to do, it can be very challenging. So I've been lucky enough to come back part time to make that transition a little easier. And I, you know, that's the same thing for retirement.

Pete

Yeah. Exactly. Right. Exactly right. And you know, this this this period of life is very near and dear to my heart because I'm about to have a milestone birthday next year and I'll be right in the middle of this cohort. So, you know, adjusting me, you know, thinking about these things and considering what life after work is going to look like and, and how to get there, how to move through this period is, very relevant to me. Let me tell you.

Andy

Yeah your 30th birthday is a big one.

Pete

Whoah, I wish Andy, that's you more than me my friend, you more than me.

Andy

Okay, so let's say I have managed to access to some of my super, right. How does this help me work less, like, why… why do I get to take more time off?

Pete

If I use myself as an example and I have a… I have a I've decided, yeah, it's time. Like, I've talked about these things for so many years, it's time for me actually to to walk the talk and stop talking about it and actually put some things into action. So I would, you know, you'd have a chat with your employer, I'd have a chat with my boss and say, look, this is what I'd like to do as of, let's say for argument, the 1st of July next year. Okay. So plan ahead. Plenty of notice. And that means that I might move from five days a week to four days a week. So my income's going to drop by a day.

Andy

Yep.

Pete

So I suppose you know, 20% of my income it's going to drop, which is natural, somewhere around 20%, maybe less if I speak to my boss nicely.

In the meantime, before that date starts, I would, get help to start a Rest, transition to a retirement pension account.

Andy

Yeah.

Pete

So I'd move some of my super, into that new account, so I'd have two separate accounts. And then on, on the particular day after that, that 1st of July, when I go to four days a week, that account would start paying me an income stream to top up my pay.

So you’re just topping it back up again. And using your super or a little bit of your super to do that each year, each year to top that up.

So, with that income stream, your, your transition to retirement account is just, helping you maintain that similar level of income. But you're dropping a day or you're gaining a day on your weekend if you look at it that way as well.

Andy

Can we put it into like, let's just give an example, right? Let's, let's pretend there's a dude named Sam. Can you just tell me how Sam would actually do this?

Pete

All right, so I've got a few details here, so if you’ll excuse me I'm going to refer to the notes so I get this right. But let's say Sam he's working in retail, so he's working as a retail supervisor, and he's on $60,000 a year, okay?

Andy

Yep.

Pete

He's working full time and after 40 years in retail, which is a fantastic career,

he’s feeling the physical toll and wants to move to four days a week. Okay. So that would normally mean that Sam's income would drop from $60,000 a year to $48,000 a year.

Andy

That's that 20%.

Pete

That's the 20%. That's the day, the equivalent of a day's income a week. That's right. Now, let's assume that Sam's got $250,000 in super.

Andy

Yep.

Pete

So a nice healthy balance. And they start a transition to retirement account that pays Sam $10,000 a year. All right, so he takes out that's 4% of that $250,000.

Alex

Yep.

Pete

He's not even using the maximum, he's just using the actual minimum $10,000 a year. So Sam's income now becomes, goes back up to $58,000 a year.

Andy

Yeah right.

Pete

So if you recall he was on 60 drop to 48, and then the pension income is helping him get it back up to $58,000 a year.

Alex

That makes sense.

Pete

So, pretty similar. All right. So pretty close to what they were earning before. But now Sam's got Fridays off.

Alex

Amazing.

Pete

Alright, so Sam's a very happy person. And importantly, the employer is still paying super on that $48,000 income.

Alex

Amazing.

Pete

So his super is still accumulating.

Andy

Yeah.

Pete

Obviously the example with Sam, it's just a general example. Okay, so you really need to speak to an expert for some, some personal advice.

Andy

For sure.

Pete

So yeah, just a general example.

Working in the in the role that I do, I work with a lot of employers, who deal with us at Rest. And I know there's lots of great employers that are happy to have those conversations with their team members these days because they recognise, they recognise that the transition is.. it's a it's a heavy weight to carry for a lot of people who don't know what to do. Now, I'm lucky. I've spent, you know, quite a few years working in super, so I’ve got a bit of a background and have a bit of an idea of what I'm doing. Not everything, but a bit of an idea. But a lot of people don’t, right, it’s a big burden.

So there's a lot of employers out there that are happy to have those great authentic and, you know, kind conversations to try and work together and move people through into into life after work in a in a positive way.

Andy

Yeah. Yeah, I remember that. Like finding out what TTR meant and and just being like, oh my gosh, this is such a sweet thing.

Pete

It's gold. It really is. You know, and I'm super excited because it's.. yeah, it's well, as you said, I'm turning 30 next year.

Andy

Yeah. Yeah. You’ve got a while to go..

Pete

But it's close.

Alex

Well that's why we do these episodes because it's something that I didn't know about before I started working at Rest. And then you hear something like this and you're like, wow, that actually could be something I could do or consider if it works for me.

Andy

Yeah.

Alex

But I mean, that being said, though, I do need to ask, is there anyone that this wouldn't suit? Like, is there a someone that this might not be the best option for?

Pete

You know, those people who, through whatever reason, have very, very low super balances.

Andy

Sure

Pete

Okay? So they're not going to have, you know, looking at Sam's example to, Sam had a balance of $250,000. They might not have anywhere near that. So, you know, by starting a transition to retirement account, that might not work for them. Okay?

I suppose there is people that their lifestyle or their commitments mean they need, they need more than the than the maximum 10% that's allowable under a super legislation to take out of their pension account. In between those, you know, 60 to 64 years.

And then there's those who might be, you know, 65, 66, 67 getting close to full retirement. So they, they, they might feel they just they're not going to transition. They're just going to go straight to full retirement, okay?

Alex

Yep.

Pete

So it might not be worth their time either. But you know it's always great to speak to a specialist. You know we have some great Rest specialists who can talk people through it and help people navigate their way to see if, if it is something that is, is viable for them.

Alex (v/0)

We went out and asked everyday Aussies what they know about this.

----- Vox pops

Sinem

Would you ever consider working even when you're retired? Like having a part time job?

Person 1

Yes. Because, as a nurse, I want to keep stimulated. So I don't want to have the brain just shut off.

Sinem

Do you think that you would just transition to retirement slowly?

Person 2

Yeah, slowly. Yeah, just, just earn a bit of dollars here and there, but I definitely, won’t be working full time. Hopefully after 55, everything keeps tracking the right way.

Person 3

I feel like I get bored, so I feel like I'll still do stuff I like to be doing. Daz is like, nah, I'm gonna ride my jet ski all day. I'm gonna go to the beach every day.

Young Person 4

Well, I haven't even got a job yet, but when I get enough money that I know I'm going to be okay to stop.

Person 5

I wasn't planning to retire ‘til 64. My mother was still running a daycare center when she was 86.

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Andy

So after choosing your strategy, what if I decide I want to fully retire, I can I just, like, stand up and declare it and go, I'm done. I'm… I'm ready to go. Let me let me go home.

Pete

I'm out

Andy

I'm out.

Alex

The ATO is always listening, they just write it down.

Andy

Yeah, just send them an email, CC them all in all staff. You know. Is that how it happens or is it, or is it… what happens?

Pete

You can look, as long as you're over 60. Right. And you have stopped working. Full time, or you've resigned or you've you've told your you've told your employer, you've retired and you've left that work. So you've ceased an employer arrangement. Is the, is the correct jargon in super world. You can access your super fully. All right. But that's, that's very conditional. As I said, you've got to have turned 60 and you've got to have left that employer arrangement. Alright?

Alex

Yep.

Pete

Then you've got full access to your super if you want it. Okay?

Andy

Yeah.

Pete

Then if you are, you can also access super if you're 65 or over, as I said earlier. That's automatic and that's whether you're working or not

Andy and Alex

Yeah.

Pete

Alright. So that's there's a number of numbers in here I know it gets a bit confusing sometimes. And then if you've… you're on your TTR strategy and once you turn 65, it automatically turns into a Rest account based pension.

Andy

Cool.

Pete

All right. And keeps on paying you that income, which you can adjust at any time. That's really important as well. So, you know, some people use the TTR strategy for a few years. Then they fully, fully retire when they're ready. Others might want to keep working part time indefinitely, you know, if you're enjoying what you're doing and it works for you, it gives you that nice balance between, you know, purpose and free time. Keep going.

Andy

Yeah.

Pete

Which is… would be a really nice place to be.

Alex

Absolutely.

Pete

But, you know, others might just want to, enjoy the extra income, from their super… this is it's really important to understand there's no one right way to do it. Because for all three of us in this room, you know, it's going to be different. We're going to do want to do it different ways. In different times.

Andy

Yeah.

Alex

Absolutely. I mean, my mum, when she reached that age retired immediately and was happy days for it. Whereas my dad, I could tell he still wanted to keep pottering about and then ended up filling that time with as many other things he could do, like gardening and taking care of grandkids. And I mean, I know an 80 year old who still running his own business. It's different strokes, for different folks.

Pete

Exactly right, I know exactly right.

Alex

Let's be honest, this sounds almost too good to be true. What is the catch here? Like, is there anything we need to keep in mind? Any mistakes you could make along the way? Like…

Pete

Yeah. Great question, great question. Because, you know, people are naturally, they have a little bit of scepticism. It sounds too good to be true. So it's really important we address that. So I guess it's really important to, to remember that, you know, you start accessing your super at 60. You know, every, every dollar you take out now is a dollar that you don't have in retirement, in full-time retirement. Or as I said before, full time life after work. You know, so it's not growing either, you know, that money is..

Alex

But you did mention that, you're still like, your, your employer is still contributing to your super in some instances. So for some people, they could still be seeing a return.

Pete

Yeah, well, I say that with a disclaimer, you know, assuming the markets are kind to us.

Alex

Of course.

Pete

And our great friends in the investment team keep doing what they've done so well for so many years. But, you know, people will think that way. It is like you say, if they say moving from saving, saving, saving, accumulation, accumulation all our lives, which is…. isn't that true? That's what we're taught. We're told to… look only buy it if you really need it. And I keep saving, keep accumulating. And then it's that massive shift to spending. Right? It's, you know, that's huge.

Andy

Oh, yeah, yeah. I knew a guy, so basically it was a story that came through my, my extended family, but, someone had been putting money in the walls of their house, and they only discovered it after, that person passed away and his wife was, like, walking around the house, just finding wads of cash and things in like biscuit tins and stuff like that. Well, this guy's been saving his whole life. And they were so frustrated because they were like, we could have spent this. But obviously someone who had it ingrained to him just to keep accumulating no matter what.

Pete

Yeah.

Alex

I guess that's a retirement plan for some people buried under the mattress. Yeah.

Pete

Yeah. Well, what are the interesting places that you could have money?

Andy

Yeah, yeah.

Alex

That's a whole other podcast.

Andy

Yeah, yeah, yeah yeah

Pete

That's incredible. Yeah. Look. But you know that that's been conditioned into us to save, you know, prepare for a rainy day. You know, there's there's all those cliches that we've been taught over the years.

Andy

Yeah.

Pete

I guess the other thing to go back to your point, Alex, on, you know, is there a catch? if someone does start a transition to a retirement account, they've got to make sure that the money left in their super account, their accumulation account, which is still going, they've got to make sure there's enough money in there to cover their insurance premiums.

Alex

Yeah.

Pete

If they have insurance. So that's really important. You want to make sure that, you know, if if you've got a demonstrated need to have that insurance cover, then you know, you've got the enough money in that account to cover those premiums. And I suppose as, as we talked about before, some people need more than that 10% limit, like the upper limit of the of the transition to retirement account payment, that 10% can be a bit restrictive for some people and it just yeah, it might not work for them.

Alex & Andy

Yeah.

Pete

Not sure that's a catch. But you know it's..

Alex

Worth considering.

Pete

All things to consider.

Andy

Absolutely.

Alex

So it almost sounds like that this idea of retirement isn't exactly what it's been sold. I mean, growing up, for me, it was this idea of, you know, the nanna’s walking on the beach and and, like, maybe playing a little bit of a bridge, but it doesn't seem like that's the case. Not looking at my parents.

Pete

Yeah, yeah. Well, I hope it doesn't look like that for me. You know, that's that's that's not the the lifestyle that, that I'll be looking forward to is, look as good as bridge is. I'm, I'm sure, and, you know, never stop someone from crocheting a blanket, like, you know, go your hardest. Whatever your… whatever your interest is. But, you know, I'll be, you know, I'll be looking for some to continue enjoying, you know, things like live gigs that we talked before. I've heard of this great concept, you know, where they've started doing, nineties rave parties that start at… start at 2 p.m. in the afternoon.

Alex

Oh, fun.

Pete

And it says, you know, start at 2 p.m., you're in bed by ten. You know,

Alex

Can I do that now? I don't need to be retired to do it, right?

Andy

Yeah. Yeah, yeah.

Alex

And I think if people knew that it wasn't just this, like, boring old fuddy idea of retirement, they might be more interested in thinking about it and actually planning ahead for it.

Pete

Exactly, exactly. And the more we talk about it, and this is a great, great vehicle to do that with. You know, the more conversations we have with our family and friends, you know, more gets out there. So exactly right.

Andy

I've noticed with you Pete, every time we talk about this, there's something that lights you up and you get really passionate about it. And what I'm curious about is like, what is it that that makes you so passionate about? Why are you so eager to get people across this?

Pete

Okay, so, I guess for me personally, it starts with my dad. My late dad. He retired. Sort of. His role was made redundant, I suppose, and he retired at 57. Okay? And back in my early 50s, so long ago, you know, that really worried me. I was really super anxious about that. Because, you know, I saw what that did to him. Now, he didn't go off the rails or do anything silly. He was a lovely man. And, we miss him dearly, but he lost all his purpose at 57.

Andy & Alex

Yeah.

Pete

And, you know, that's not old, right? And he wasn't ready to retire. So, fortuitously, I, attended a conference one day that was facilitated by a lady, who with her, along with her husband. And we were sitting in the back of a cab heading to Sydney Airport, and she's sort of, you know, swapping stories. She'd facilitated the conference and and she sort of… what do you do? What do you do? You know what what sort of things are you up to?

She said, oh, I've got this program that we're sort of launching through the local council network in South Australia. So I said, tell me more, tell me more. And, she told me about mindset for life. And it was all about speaking to people who are getting ready to retire or had just retired and want to make the most of it from a, from a, a physical and mental wellbeing perspective.

Alex

Wow. Okay.

Pete

Nothing to do with the money. All right. And that really sort of flicked a switch in my head, because I knew that my transition to retirement, you know, after going a hundred miles an hour for 45 years or whatever the number is for 50 years, I knew that was going to be a massive, massive challenge for me mentally.

Andy

Yeah, yeah.

Pete

And so, I did the course. So I enrolled, and I did it through my local council and, where some volunteers from that group presented. And I came out of it a changed person. It really opened my eyes to think I can, I can sort of intentionally make this happen my way. Yeah. By you know, being aware of the seven ways to wellbeing by being aware of of things called, you know, fixed versus growth mindset, how you approach these things mentally. And it's really benefited me personally, all my way through for the next move, my working life now, because I did this course seven years ago. And I loved it so much, I got involved, I started volunteering and supporting this group as a volunteer. And we, and to this day, still doing that.

And it's, you know, not long after I've finished doing this course, it clicked to go, oh my God, there are hundreds of thousands of our members. Right, in in my, in my professional life at Rest that would benefit from this message.

Andy

Yeah.

Pete

Because we talk to them all about the money side of things. Yeah. The financial side of things. But nobody's talking about the physical and mental wellness side of retirement.

Andy

Yeah, scary.

Pete

Because this transition, this change in your life is probably, a bit hard to say, but there's probably no bigger change in your life after 50 years of doing the same thing.

Andy

Yeah.

Alex

Well thank you again for being here today Pete.

Pete

Thank you so much for having me I really enjoyed it.

Andy

I feel like every time I get you on it's just like gold, all the way through.

Alex

100%

Andy

So stoked that you've come back. Always great stuff.

Pete

Thanks, Andy. Thanks. Thanks, Alex.

Andy

As always, don’t forget to like and subscribe, and make sure you check the show notes for any stuff we’ve discussed today.

Alex

And that’s…

Andy & Alex

Super simple.