Super Simple Chats
Dive into the not-so-scary world of super.
Super Simple Chats is your go-to podcast, where the complex becomes clear.
Whether you’ve just landed your first job or you’re navigating the twists and turns of the workforce, we’re here to make sense of super, plus answer questions you've been too shy to ask. After all, it’s one of the biggest assets you’ll ever have.
Episode 1
Super 101: What is super and how does it work?
Ange and Alex sit down with Matt Balderson from Rest to break down what super is and why young people should care about it. Learn all about how you get paid super, the magic of compound interest, and why starting early might lead to a bigger retirement nest egg - even if it seems like light years away.
You'll also like: Super guarantee rate | YourSuper comparison tool | Super stapling | Consolidating your super
Transcript
Alex
We acknowledge that we are recording this podcast from the lands of the Gadigal people of the Eora nation. We pay our respects to Elders past, present and emerging and celebrate the diversity of Aboriginal and Torres Strait Islander peoples and their ongoing connection to land and waters throughout Australia
Ange
Welcome to super simple chats, Rest’s very first podcast. I’m Ange..
Alex
And I’m Alex
Ange
And we will be speaking to industry experts about all things super.
Matt
Wait, what the hell is contributions as well?
Ange
I didn’t realise until recently, that super is invested, I thought it was like a savings account
Sarah
I’m not sure it’s helpful to talk about specific numbers, but it’s a lot less than a million dollars.
Person
This is actually really important to talk about, because I don’t want to miss out on those things
Ange
Trying to make it understandable and relatable for every day Aussies.
Alex
After all, it’s one of the biggest assets you’ll ever have.
Ange
Now this wouldn’t be a financial podast, if we didn’t start by mentioning that the information discussed is general only and doesn't take into account your own financial situation, needs or objectives. This information and the relevant products are issued by Retail Employees Superannuation Pty Ltd. Before deciding to join or stay, consider the relevant Product Disclosure Statement and Target Market Determination at rest.com.au/pds and whether it is appropriate for you. While we have endeavoured to ensure the accuracy and reliability of the information provided, there may be inadvertent errors or omissions. Before acting on any advice, we recommend you speak with a financial adviser.
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Alex
So for me personally as a finance writer, this was not something that I grew up knowing a lot about: superannuation or personal finance, and I took it upon myself to learn as much as I could. And with that, I realised how little people know, just like me, and how important it is for everyone to know this very simple information.
Ange
You know, I agree with you 100%, Alex. I mean, I've been working in super for about, I'd say close to four years now. And truthfully, I had I had pretty much zero to no knowledge about super other than the fact that I had it until I started working at Rest.
And then I realised just how important it actually is.
Alex
Oh yeah.
Ange
So for me doing this podcast, I'm just hoping that everyday Aussies like us can really get into the nitty gritty of super and understand just how important it actually is for them in their future.
So on that note, we're excited to kick off our very first episode, which, surprise, surprise is super 101. And joining us today is Matt from Rest.
Matt
G’day, thanks for having me.
Ange
Yeh we’re stoked to have you hear, Matt. And Matt is going to be demystifying just what's super is and why it actually matters.
First question, as we were just saying, super feels like a really foreign concept for most people. In fact, most people just assume it is glorified savings account for later.
But we know it's actually a lot more than that. So my first question is, if you were to explain superannuation to someone who is completely new to the idea, how would you explain it?
Matt
Yeah, it's a good question. I think most people it's it is a foreign concept as well. You guys are not alone in not knowing too much. It's not generally a topic taught at school or university TAFE things like that. So I think the message for me to every Australian is you're not alone in not knowing much about super, because it's pretty, it's pretty common. So what is super? I think he sort of did touch on it.
In short, it is savings for retirement. Saying that it's not like a savings account where you can just dip into and sort of, you know, if you're going on a weekend away and sort of take some money out here and there. In a way it is that those for savings for your retirement, and it is important because it's going to be a nest egg come retirement. Right? You know, you've worked hard for 20, 30, 40, 50 years. You want to have that little nest egg tucked away for, for when you do retire.
I think for me as well, a lot of people sort of in a way assume it's not real, it's not their money, which, you know, is, is interesting because, you know, you've been working so hard for this. It is your money. You know, I think people think it's not real is because you can't, you can't touch it. You can't smell it, you can't feel it.
And that probably just comes down to the lack of engagement with super. And it's pretty common across most Australians that they're pretty disengaged with their super, which is a shame, but pretty consistent with most Australians.
So in short, that's a really long winded answer. Sorry you've got me on today. I do talk a lot. A lot. Some of it's nonsense.
Ange
That's actually why we have you here.
Matt
But look, yet at savings for retirement. That's it, in short, the way you're going to achieve this, this retirement balance is through employer contributions. Your employer will make contributions throughout the lifetime of your career. Obviously, there's some certain criteria you need to meet as well. But, I'm sure we'll talk a little bit more about that today in terms of employer contributions and the power of those too.
Ange
Yeah, awesome.
Alex
I think disengagement is a really like the perfect word to describe how a lot of people feel about super, especially young people. Like it's very much seen as a set. And forget one day in the future, I'll think about this concept. So with that in mind, why should young people actually even care about their super?
Matt
Yeah, I look it's I mean, the amount of times I've gone into a workplace, I do a lot of, sort of super education in the workplace. The amount of times I sort of go in there and talk about exactly what we're talking about today. So super 101. Whenever I have these conversations with people, you sort of have those light bulb moments ago. Oh, okay. That's why I should do it. And I think, in short, the earlier you can look at it, there's this thing called compound interest.
And what compound interest is, is basically interest upon interest. So, you know, as contributions go in there earning interest. And over the lifetime of your, you know, your work life, that's just going to compound to hopefully a nice juicier balance. So there's some small things you can do earlier, which we'll touch on at a bit more detail like, you know, potentially adding additional contributions to your super, watching that compound over the lifetime of your work career, looking at different investment options, having a look at your insurances and whether you need them, whether you want to dial them up or increase them, or what have you.
There's this there's plenty of things you can do at an earlier stage in your career, which will be so much more beneficial, you know, by the time you retire, the amount of times is, well, we've I've been into a workplace and I'll be chatting to somebody in their 40s, 50s or 60s and they often say, oh, I wish I'd done this earlier. And you know, you know, ideally you've got somebody a little bit younger.
Ange
It's like super FOMO, right? It's realising it too late.
Matt
Totally. What I will say, if you are in your 40s and 50s is never too late. It's, you know, it's never too late. You know, there's always something you can do there to help you balance. But obviously, you know, I work at Rest and a lot of our members are actually sort of 18, 19, 20.
So I got that really fantastic opportunity to sort of chat with them and help them out, some really, really basic things. That you can do, you know, just to sort of help yourself out that, you know, you know, to get engaged with you, with you super. Which I can't stress enough is really important.
Ange
So what I'm hearing from that is it's never too late. But the earlier you start, the better it could be for your outcome.
Alex
I like the way that you described it as a light bulb moment. So this idea that something like compound interest, someone had that. Oh yes. Now I should..
Ange
Cha-ching!
Alex
Are there any other light bulb moments that you've seen register with people?
Matt
The there's plenty. I mean, I think for me, one of the biggest things is how do people, you know, engage with their super and, you know, most funds I will say have an app.
Ange
Is that a shameless plug there Matt? I think it is.
Matt
A little bit. Look, I'm obviously slightly biased working at Rest. But you know we we have an app and I've worked with other funds in the past and now you'll have apps as well. But, I didn't know there was an app. I didn't know I could see my balance. I didn't know I can see my contributions. There's so many things. It's like one thing will lead to another because, you know, once you get on a bit of a roll and these words start making sense, things you might have heard on TV or, you know, your parents or a mate at a barbecue that knows everything, you know, it starts to resonate a bit more and then naturally, you're more engaged. So I think for me, those light bulb moments are very rewarding for me. And I know most, you know, my team that that works in the same space as well. So
Ange
That was really great to know. So we've actually gone and spoken to everyday Aussies about this topic.
------
Sinem
What do you know about super?
Person 1
I don't know anything at all.
Person 2
A 401K for Australians.
Person 3
It's for the retirement
Person 4
They told me that I will get super
Person 5
Something that you contribute to so that you have something to retire on
Person 6
It's mandatory in Australia.
Person 7
I believe it is a very good thing for everybody in Australia,
Person 8
Investments are made on my behalf
Person 9
And it's for later. You can't have it now.
Sinem
Do you check it often?
Person 2
I tried looking at it once,
Person 5
Yeah, I do, I do.
Person 4
Yeah. Every now and then
Person 7
Not often, as I should.
Person 6
I do keep a tab on the how much I've got.
Person 8
Probably not as often as I should,
Person 9
Sometimes I do, and I get really excited because I'm like, I can't wait to grow old
Sinem
Back to you Ange
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Ange
So you did mention employer contribution. Now I've heard this used interchangeably with the term super guarantee. For those of us at home who are listening and have no idea what super guarantee is they might have seen on a pay slip or something, and gone, what is this 11.5% thing that they're taking out every week? Can you explain to us what super guarantees?
Matt
Yeah, it's basically just the the contributions that your employer has to make on your behalf. So this is the money you've earned and it goes into your, you know, designated super fund. Now at the moment, you're right. It's 11.5%. When I first started working in super, it was around about 9%.
Ange
Is that telling us about how long you've been working in super?
Matt
It’s been a little while now, it was even less a lot, you know, before I started working in super. But, yeah, at the moment, 24/25 financial year, it's 11.5% is actually increasing the 12%, next financial years. So. Right. Which is great. Obviously that's more money going into your little nest egg. That savings for retirement. We talked about
Ange
So I'm going to take us back a little bit, back to when I was 16 years old.
So a bit of a reminiscence, thinking about my very first job was actually younger. I was like almost 15, I think I was 14 to 9 months, like, my parents just straight. Didn't love that. So I worked in retail. That was my first job. And when I first started, they hand me a bunch of paperwork, filled it out, handed it back a few weeks later, got a letter in the mail, and it was from a company called Rest. Never heard of them. No one told me what it was going to be.
Matt
Great fund.
Ange
There was a number on it, and they said I was a member. So I was like, oh, well, this is probably important. And I was one of those teenagers that was really organised. So I had a life admin folder.
Alex
Can’t relate
Matt
That’s so weird. That was not me.
Ange
I don't know how many 15 year olds have a life admin folder. I mean, I put it in there and then just by some magic, okay, it was huge fluke, but I just somehow knew that I had to take it with me every time I start a new job and just fill it in.
Matt
You, you are a miracle.
Ange
Yeah. Miracle, right? And it's really lucky because to this day, I'm still with Rest for that exact reason. But my understanding is most people don't do this yet. So yeah. Which I will probably touch on, but we'll touch on that next. Alex. But can you tell listeners what is it that they need to know about super when they do start their first job and then when they start moving from job to job?
Matt
So you're definitely a freak of nature, keeping that admin in file. That's unbelievable. Yeah, for me, I think back to my first job was working at Hungry Jacks, and I would have been probably around sort of 16, maybe a bit older, I think, as well. And yes, same thing I on-boarded with them and got a piece of paper that said super. And, you know, I had no idea what that meant, and I certainly didn't keep that in my admin folder. That's, that's for sure. But what that bit of paper was, was something that's referred to the Standard Choice Form. So when you start with, with any workplace, you have the option of say it is your first job, you have the option of, of either joining the employer's default fund to default funds is the fund that they've selected to to give to new employees.
Ange
So that's how I ended up in Rest.
Matt
Totally. So that's how you would have came to Rest initially. But, you know, in this day and age, employees have choice. So if you, you know, if you're somebody that you know, has done your research and you wanted to come to this workplace, with your own super fund, you know, there's a lot of comparison tools out there available these days.
Some via the ATO. In fact, you can actually bring your own fund to, to that workplace and say, hey, I want you to pay contributions to this. But if you don't, a lot of people don't. A lot of people would just go, yep I'm just going to tick this box because it's easy. I don't want to, upset my employer, which is weird. You know, you won't be upsetting your employer by, you know, selecting your own super fund. You know, you can. It's your choice.
Ange
Do you reckon it’s because they think that they're going to be like the odd one out, like everyone's default fund, and so I'm going to be the weird one out.
Matt
100% Think about any job that you've ever started your first day. You know, it's it's chaotic. It's mayhem in terms of your mind just rattling around and all these, you know, forms. You got to fill out a thousand OH&S forms that you've got to fill out in this day and age as well, I think you got some of this is super as well. So yeah, I think mostly people would probably just tick that, that default box, which is fine.
So yeah, they, you sort of you sort of options in terms of when you, when you start and the form.
But I think it is really, really important when you do move, from job to job to, to keep track of all of your super details. Technology is our best friend now, you know, it's so much easier now to to keep track of your super funds. I mentioned before about apps probably the easiest way.
Ange
So you don't need a life admin folder, where you carry a piece of paper for 20 years because I only threw it out like a few weeks ago.
Matt
Yes, I know we've printed off a few bits and pieces here today, but realistically, I can't remember the last time I've used a printer myself, you know, so everything's online these days. If if your fund doesn't have an app, I'm sure that will have an online portal. You know, like your online banking type thing so you can keep track of it. There. And it's just a matter of when you move from from one employer to another. Keep a lot of those details and certain details you'll need to share with them and including the form. In saying that if you don't actually know what super fund you were with before by some chance, maybe you, when you're onboarded with them, you use an email address, you don't have access to. And if also any statements or any, you know, information that's, that's gone to an inbox you have no access to.
In this day and age, employers actually have to do what's called a stapled search. They actually have to go out and try and find any existing super funds that you already have out in the super multiverse. I mean, using the multiverse language at the moment, because I'm a bit of a Marvel nerd. But, you know, there's there's tools that the employer can use to to locate any existing super funds that you have out there as well.
Ange
I just have this image of like someone stapling your super fund to your shirt. You're just like taking it around with you.
Matt
Yeah, well that’s it. These were, these were only introduced these laws in in 2020.
So I think 2020.. I'm pretty sure it's
Ange
Someone fact check the man
Alex
Like put the right stat here (motions to a space beside her)
Alex
It was actually 2021
Matt
It was a good change because you know working in super for yeah I think 12 or 13 years now I have seen so many people accumulate so many different super funds because of that. I think just that mindset of you join an employer, you just sign up to their default fund and then before you know it, you got 4 or 5 …
Alex
Guilty
Matt
Is that you? But you know, look, and we can talk about this in a bit more detail later, but so easy to consolidate them these days. There's so many digital tools available to you as well to be able to sort of help you through that process. Yeah.
Ange
I want to know why Alex is guilty.
Alex
Just for this or for all the crimes? Just for super today? It's just so, like, my first job was a waitress. I was maybe about 16 or 17. I wasn't very good, but I gave it a crack. And one of the first things they did was that same process of nominating a super fund and being 16 and not really caring. I just went with the default fund and then completely forgot about it. Few years pass, I eventually get, you know, a big girl job and then I go, okay, super that thing, default fund. And then carried on and it wasn't until, yeah, I was a lot older that I realised that I had multiple funds open. So Matt, if you are like me and you find out that you have multiple super funds, how can you find your lost super?
Matt
Yeah. This day and age it's, it's easier than ever in a sense that you can actually just do this via your MyGov. So where you log in and do your tax every year or if you've got, you know, somebody that helps you do that every year. There's actually a little superannuation portal in there which you can actually locate any lost or other super funds out in that, that super multiverse that we're talking about. So, yeah, really easy to locate them. And you can consolidate them within there if you want to.
The other way you can do it as well is actually just engaging with your, your own super fund. So most super funds will have some sort of online portal or even via an app you might be able to consolidate via there as well. So it's yeah, it's technology's your best friend when it comes to consolidation. You know, all the tools are available at your disposal and yeah, no paper based stuff is required these days, which is even better.
Alex
If it was your own fund and you like, fund A and you want to stay with fund A and you have B and C over, you would go to fund A's website and have them do the hard work of consolidating for you.
Matt
So you if you've got your sort of I suppose your core fund, you'd probably go with that fund and then get them to bring over the other to type thing. So
Alex
Easy peasy.
Matt
It's super, super easy, right.
Ange
But consolidating isn’t right for everyone, so it’s best to seek financial advice, right?
Matt
Yes that's that's right
Ange
Oh, this is really great to know. Honestly, I wish younger Ange knew a whole lot more about this. So thank you so much for joining us today, Matt. It was really great to have you on our first episode.
Matt
Oh, you're very welcome.
Alex
Yes. Thanks for being our very first guest.
Ange
And I'm sure we'll bring you back in for a few more episodes if you're open to it.
Matt
Sounds good. Any time.
Ange
Fantastic.
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Ange
So please make sure to like, follow and subscribe
Alex
For any more information on the things we spoke about today there’ll be some links in the description below.
Ange
And that is..
Ange&Alex
Super Simple!
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Ange (VO)
Before combining your super, consider which fund is right for you. Check out the fees and costs of your funds plus any benefits that would be lost, such as insurance cover. Make sure your other fund(s) knows about any contributions you intend to claim a tax deduction for, before combining your super. If you have any questions, speak to a licensed financial adviser or visit the ASIC MoneySmart website for more information.
We acknowledge that we are recording this podcast from the lands of the Gadigal people of the Eora nation. We pay our respects to Elders past, present and emerging and celebrate the diversity of Aboriginal and Torres Strait Islander peoples and their ongoing connection to land and waters throughout Australia
Ange
Welcome to super simple chats, Rest’s very first podcast. I’m Ange..
Alex
And I’m Alex
Ange
And we will be speaking to industry experts about all things super.
Matt
Wait, what the hell is contributions as well?
Ange
I didn’t realise until recently, that super is invested, I thought it was like a savings account
Sarah
I’m not sure it’s helpful to talk about specific numbers, but it’s a lot less than a million dollars.
Person
This is actually really important to talk about, because I don’t want to miss out on those things
Ange
Trying to make it understandable and relatable for every day Aussies.
Alex
After all, it’s one of the biggest assets you’ll ever have.
Ange
Now this wouldn’t be a financial podast, if we didn’t start by mentioning that the information discussed is general only and doesn't take into account your own financial situation, needs or objectives. This information and the relevant products are issued by Retail Employees Superannuation Pty Ltd. Before deciding to join or stay, consider the relevant Product Disclosure Statement and Target Market Determination at rest.com.au/pds and whether it is appropriate for you. While we have endeavoured to ensure the accuracy and reliability of the information provided, there may be inadvertent errors or omissions. Before acting on any advice, we recommend you speak with a financial adviser.
---------
Alex
So for me personally as a finance writer, this was not something that I grew up knowing a lot about: superannuation or personal finance, and I took it upon myself to learn as much as I could. And with that, I realised how little people know, just like me, and how important it is for everyone to know this very simple information.
Ange
You know, I agree with you 100%, Alex. I mean, I've been working in super for about, I'd say close to four years now. And truthfully, I had I had pretty much zero to no knowledge about super other than the fact that I had it until I started working at Rest.
And then I realised just how important it actually is.
Alex
Oh yeah.
Ange
So for me doing this podcast, I'm just hoping that everyday Aussies like us can really get into the nitty gritty of super and understand just how important it actually is for them in their future.
So on that note, we're excited to kick off our very first episode, which, surprise, surprise is super 101. And joining us today is Matt from Rest.
Matt
G’day, thanks for having me.
Ange
Yeh we’re stoked to have you hear, Matt. And Matt is going to be demystifying just what's super is and why it actually matters.
First question, as we were just saying, super feels like a really foreign concept for most people. In fact, most people just assume it is glorified savings account for later.
But we know it's actually a lot more than that. So my first question is, if you were to explain superannuation to someone who is completely new to the idea, how would you explain it?
Matt
Yeah, it's a good question. I think most people it's it is a foreign concept as well. You guys are not alone in not knowing too much. It's not generally a topic taught at school or university TAFE things like that. So I think the message for me to every Australian is you're not alone in not knowing much about super, because it's pretty, it's pretty common. So what is super? I think he sort of did touch on it.
In short, it is savings for retirement. Saying that it's not like a savings account where you can just dip into and sort of, you know, if you're going on a weekend away and sort of take some money out here and there. In a way it is that those for savings for your retirement, and it is important because it's going to be a nest egg come retirement. Right? You know, you've worked hard for 20, 30, 40, 50 years. You want to have that little nest egg tucked away for, for when you do retire.
I think for me as well, a lot of people sort of in a way assume it's not real, it's not their money, which, you know, is, is interesting because, you know, you've been working so hard for this. It is your money. You know, I think people think it's not real is because you can't, you can't touch it. You can't smell it, you can't feel it.
And that probably just comes down to the lack of engagement with super. And it's pretty common across most Australians that they're pretty disengaged with their super, which is a shame, but pretty consistent with most Australians.
So in short, that's a really long winded answer. Sorry you've got me on today. I do talk a lot. A lot. Some of it's nonsense.
Ange
That's actually why we have you here.
Matt
But look, yet at savings for retirement. That's it, in short, the way you're going to achieve this, this retirement balance is through employer contributions. Your employer will make contributions throughout the lifetime of your career. Obviously, there's some certain criteria you need to meet as well. But, I'm sure we'll talk a little bit more about that today in terms of employer contributions and the power of those too.
Ange
Yeah, awesome.
Alex
I think disengagement is a really like the perfect word to describe how a lot of people feel about super, especially young people. Like it's very much seen as a set. And forget one day in the future, I'll think about this concept. So with that in mind, why should young people actually even care about their super?
Matt
Yeah, I look it's I mean, the amount of times I've gone into a workplace, I do a lot of, sort of super education in the workplace. The amount of times I sort of go in there and talk about exactly what we're talking about today. So super 101. Whenever I have these conversations with people, you sort of have those light bulb moments ago. Oh, okay. That's why I should do it. And I think, in short, the earlier you can look at it, there's this thing called compound interest.
And what compound interest is, is basically interest upon interest. So, you know, as contributions go in there earning interest. And over the lifetime of your, you know, your work life, that's just going to compound to hopefully a nice juicier balance. So there's some small things you can do earlier, which we'll touch on at a bit more detail like, you know, potentially adding additional contributions to your super, watching that compound over the lifetime of your work career, looking at different investment options, having a look at your insurances and whether you need them, whether you want to dial them up or increase them, or what have you.
There's this there's plenty of things you can do at an earlier stage in your career, which will be so much more beneficial, you know, by the time you retire, the amount of times is, well, we've I've been into a workplace and I'll be chatting to somebody in their 40s, 50s or 60s and they often say, oh, I wish I'd done this earlier. And you know, you know, ideally you've got somebody a little bit younger.
Ange
It's like super FOMO, right? It's realising it too late.
Matt
Totally. What I will say, if you are in your 40s and 50s is never too late. It's, you know, it's never too late. You know, there's always something you can do there to help you balance. But obviously, you know, I work at Rest and a lot of our members are actually sort of 18, 19, 20.
So I got that really fantastic opportunity to sort of chat with them and help them out, some really, really basic things. That you can do, you know, just to sort of help yourself out that, you know, you know, to get engaged with you, with you super. Which I can't stress enough is really important.
Ange
So what I'm hearing from that is it's never too late. But the earlier you start, the better it could be for your outcome.
Alex
I like the way that you described it as a light bulb moment. So this idea that something like compound interest, someone had that. Oh yes. Now I should..
Ange
Cha-ching!
Alex
Are there any other light bulb moments that you've seen register with people?
Matt
The there's plenty. I mean, I think for me, one of the biggest things is how do people, you know, engage with their super and, you know, most funds I will say have an app.
Ange
Is that a shameless plug there Matt? I think it is.
Matt
A little bit. Look, I'm obviously slightly biased working at Rest. But you know we we have an app and I've worked with other funds in the past and now you'll have apps as well. But, I didn't know there was an app. I didn't know I could see my balance. I didn't know I can see my contributions. There's so many things. It's like one thing will lead to another because, you know, once you get on a bit of a roll and these words start making sense, things you might have heard on TV or, you know, your parents or a mate at a barbecue that knows everything, you know, it starts to resonate a bit more and then naturally, you're more engaged. So I think for me, those light bulb moments are very rewarding for me. And I know most, you know, my team that that works in the same space as well. So
Ange
That was really great to know. So we've actually gone and spoken to everyday Aussies about this topic.
------
Sinem
What do you know about super?
Person 1
I don't know anything at all.
Person 2
A 401K for Australians.
Person 3
It's for the retirement
Person 4
They told me that I will get super
Person 5
Something that you contribute to so that you have something to retire on
Person 6
It's mandatory in Australia.
Person 7
I believe it is a very good thing for everybody in Australia,
Person 8
Investments are made on my behalf
Person 9
And it's for later. You can't have it now.
Sinem
Do you check it often?
Person 2
I tried looking at it once,
Person 5
Yeah, I do, I do.
Person 4
Yeah. Every now and then
Person 7
Not often, as I should.
Person 6
I do keep a tab on the how much I've got.
Person 8
Probably not as often as I should,
Person 9
Sometimes I do, and I get really excited because I'm like, I can't wait to grow old
Sinem
Back to you Ange
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Ange
So you did mention employer contribution. Now I've heard this used interchangeably with the term super guarantee. For those of us at home who are listening and have no idea what super guarantee is they might have seen on a pay slip or something, and gone, what is this 11.5% thing that they're taking out every week? Can you explain to us what super guarantees?
Matt
Yeah, it's basically just the the contributions that your employer has to make on your behalf. So this is the money you've earned and it goes into your, you know, designated super fund. Now at the moment, you're right. It's 11.5%. When I first started working in super, it was around about 9%.
Ange
Is that telling us about how long you've been working in super?
Matt
It’s been a little while now, it was even less a lot, you know, before I started working in super. But, yeah, at the moment, 24/25 financial year, it's 11.5% is actually increasing the 12%, next financial years. So. Right. Which is great. Obviously that's more money going into your little nest egg. That savings for retirement. We talked about
Ange
So I'm going to take us back a little bit, back to when I was 16 years old.
So a bit of a reminiscence, thinking about my very first job was actually younger. I was like almost 15, I think I was 14 to 9 months, like, my parents just straight. Didn't love that. So I worked in retail. That was my first job. And when I first started, they hand me a bunch of paperwork, filled it out, handed it back a few weeks later, got a letter in the mail, and it was from a company called Rest. Never heard of them. No one told me what it was going to be.
Matt
Great fund.
Ange
There was a number on it, and they said I was a member. So I was like, oh, well, this is probably important. And I was one of those teenagers that was really organised. So I had a life admin folder.
Alex
Can’t relate
Matt
That’s so weird. That was not me.
Ange
I don't know how many 15 year olds have a life admin folder. I mean, I put it in there and then just by some magic, okay, it was huge fluke, but I just somehow knew that I had to take it with me every time I start a new job and just fill it in.
Matt
You, you are a miracle.
Ange
Yeah. Miracle, right? And it's really lucky because to this day, I'm still with Rest for that exact reason. But my understanding is most people don't do this yet. So yeah. Which I will probably touch on, but we'll touch on that next. Alex. But can you tell listeners what is it that they need to know about super when they do start their first job and then when they start moving from job to job?
Matt
So you're definitely a freak of nature, keeping that admin in file. That's unbelievable. Yeah, for me, I think back to my first job was working at Hungry Jacks, and I would have been probably around sort of 16, maybe a bit older, I think, as well. And yes, same thing I on-boarded with them and got a piece of paper that said super. And, you know, I had no idea what that meant, and I certainly didn't keep that in my admin folder. That's, that's for sure. But what that bit of paper was, was something that's referred to the Standard Choice Form. So when you start with, with any workplace, you have the option of say it is your first job, you have the option of, of either joining the employer's default fund to default funds is the fund that they've selected to to give to new employees.
Ange
So that's how I ended up in Rest.
Matt
Totally. So that's how you would have came to Rest initially. But, you know, in this day and age, employees have choice. So if you, you know, if you're somebody that you know, has done your research and you wanted to come to this workplace, with your own super fund, you know, there's a lot of comparison tools out there available these days.
Some via the ATO. In fact, you can actually bring your own fund to, to that workplace and say, hey, I want you to pay contributions to this. But if you don't, a lot of people don't. A lot of people would just go, yep I'm just going to tick this box because it's easy. I don't want to, upset my employer, which is weird. You know, you won't be upsetting your employer by, you know, selecting your own super fund. You know, you can. It's your choice.
Ange
Do you reckon it’s because they think that they're going to be like the odd one out, like everyone's default fund, and so I'm going to be the weird one out.
Matt
100% Think about any job that you've ever started your first day. You know, it's it's chaotic. It's mayhem in terms of your mind just rattling around and all these, you know, forms. You got to fill out a thousand OH&S forms that you've got to fill out in this day and age as well, I think you got some of this is super as well. So yeah, I think mostly people would probably just tick that, that default box, which is fine.
So yeah, they, you sort of you sort of options in terms of when you, when you start and the form.
But I think it is really, really important when you do move, from job to job to, to keep track of all of your super details. Technology is our best friend now, you know, it's so much easier now to to keep track of your super funds. I mentioned before about apps probably the easiest way.
Ange
So you don't need a life admin folder, where you carry a piece of paper for 20 years because I only threw it out like a few weeks ago.
Matt
Yes, I know we've printed off a few bits and pieces here today, but realistically, I can't remember the last time I've used a printer myself, you know, so everything's online these days. If if your fund doesn't have an app, I'm sure that will have an online portal. You know, like your online banking type thing so you can keep track of it. There. And it's just a matter of when you move from from one employer to another. Keep a lot of those details and certain details you'll need to share with them and including the form. In saying that if you don't actually know what super fund you were with before by some chance, maybe you, when you're onboarded with them, you use an email address, you don't have access to. And if also any statements or any, you know, information that's, that's gone to an inbox you have no access to.
In this day and age, employers actually have to do what's called a stapled search. They actually have to go out and try and find any existing super funds that you already have out in the super multiverse. I mean, using the multiverse language at the moment, because I'm a bit of a Marvel nerd. But, you know, there's there's tools that the employer can use to to locate any existing super funds that you have out there as well.
Ange
I just have this image of like someone stapling your super fund to your shirt. You're just like taking it around with you.
Matt
Yeah, well that’s it. These were, these were only introduced these laws in in 2020.
So I think 2020.. I'm pretty sure it's
Ange
Someone fact check the man
Alex
Like put the right stat here (motions to a space beside her)
Alex
It was actually 2021
Matt
It was a good change because you know working in super for yeah I think 12 or 13 years now I have seen so many people accumulate so many different super funds because of that. I think just that mindset of you join an employer, you just sign up to their default fund and then before you know it, you got 4 or 5 …
Alex
Guilty
Matt
Is that you? But you know, look, and we can talk about this in a bit more detail later, but so easy to consolidate them these days. There's so many digital tools available to you as well to be able to sort of help you through that process. Yeah.
Ange
I want to know why Alex is guilty.
Alex
Just for this or for all the crimes? Just for super today? It's just so, like, my first job was a waitress. I was maybe about 16 or 17. I wasn't very good, but I gave it a crack. And one of the first things they did was that same process of nominating a super fund and being 16 and not really caring. I just went with the default fund and then completely forgot about it. Few years pass, I eventually get, you know, a big girl job and then I go, okay, super that thing, default fund. And then carried on and it wasn't until, yeah, I was a lot older that I realised that I had multiple funds open. So Matt, if you are like me and you find out that you have multiple super funds, how can you find your lost super?
Matt
Yeah. This day and age it's, it's easier than ever in a sense that you can actually just do this via your MyGov. So where you log in and do your tax every year or if you've got, you know, somebody that helps you do that every year. There's actually a little superannuation portal in there which you can actually locate any lost or other super funds out in that, that super multiverse that we're talking about. So, yeah, really easy to locate them. And you can consolidate them within there if you want to.
The other way you can do it as well is actually just engaging with your, your own super fund. So most super funds will have some sort of online portal or even via an app you might be able to consolidate via there as well. So it's yeah, it's technology's your best friend when it comes to consolidation. You know, all the tools are available at your disposal and yeah, no paper based stuff is required these days, which is even better.
Alex
If it was your own fund and you like, fund A and you want to stay with fund A and you have B and C over, you would go to fund A's website and have them do the hard work of consolidating for you.
Matt
So you if you've got your sort of I suppose your core fund, you'd probably go with that fund and then get them to bring over the other to type thing. So
Alex
Easy peasy.
Matt
It's super, super easy, right.
Ange
But consolidating isn’t right for everyone, so it’s best to seek financial advice, right?
Matt
Yes that's that's right
Ange
Oh, this is really great to know. Honestly, I wish younger Ange knew a whole lot more about this. So thank you so much for joining us today, Matt. It was really great to have you on our first episode.
Matt
Oh, you're very welcome.
Alex
Yes. Thanks for being our very first guest.
Ange
And I'm sure we'll bring you back in for a few more episodes if you're open to it.
Matt
Sounds good. Any time.
Ange
Fantastic.
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Ange
So please make sure to like, follow and subscribe
Alex
For any more information on the things we spoke about today there’ll be some links in the description below.
Ange
And that is..
Ange&Alex
Super Simple!
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Ange (VO)
Before combining your super, consider which fund is right for you. Check out the fees and costs of your funds plus any benefits that would be lost, such as insurance cover. Make sure your other fund(s) knows about any contributions you intend to claim a tax deduction for, before combining your super. If you have any questions, speak to a licensed financial adviser or visit the ASIC MoneySmart website for more information.
Episode 2
The myth of $1m in super
Ever wondered where the myth of needing $1 million in super comes from? Join Alex and Ange as they talk to Sarah O'Brien and Matt Balderson from Rest to look at how much everyday Aussies might need to retire.
You'll also like: How much super should I have? | Rest Retirement Budget Calculator | ASFA Retirement Standard | Rest super advice
Transcript
Alex
We acknowledge that we are recording this podcast from the lands of the Gadigal people of the Eora nation. We pay our respects to Elders past, present and emerging and celebrate the diversity of Aboriginal and Torres Strait Islander peoples and their ongoing connection to land and waters throughout Australia
Ange
Welcome to super simple chats, Rest’s very first podcast. I’m Ange..
Alex
And I’m Alex
Ange
And we will be speaking to industry experts about all things super.
Matt
Wait, what the hell is contributions as well?
Ange
I didn’t realise until recently, that super is invested, I thought it was like a savings account
Sarah
I’m not sure it’s helpful to talk about specific numbers, but it’s a lot less than a million dollars.
Person
This is actually really important to talk about, because I don’t want to miss out on those things
Ange
Trying to make it understandable and relatable for every day Aussies.
Alex
After all, it’s one of the biggest assets you’ll ever have.
Ange
Now this wouldn’t be a financial podcast, if we didn’t start by mentioning that the information discussed is general only and doesn't take into account your own financial situation, needs or objectives. This information and the relevant products are issued by Retail Employees Superannuation Pty Ltd. Before deciding to join or stay, consider the relevant Product Disclosure Statement and Target Market Determination at rest.com.au/pds and whether it is appropriate for you. While we have endeavoured to ensure the accuracy and reliability of the information provided, there may be inadvertent errors or omissions. Before acting on any advice, we recommend you speak with a financial adviser.
Ange
It can be really challenging to know just how much super you need to retire. So joining us today are Matt and Sarah from Rest who are going to be talking to us about planning for retirement and whether it really is true that you need $1 million to retire. So, Matt, Sarah, thank you for joining us.
Matt+Sarah
Thanks for having us
Ange
We're really excited to get knee deep in that figure and whether it actually is $1 million.
Alex
Yeah. So $1 million. That is quite an intimidating figure if we're, you know, living a bit more in reality maybe. What is an actual number that people should think about saving?
Matt
Yeah, I think yeah, I think that million dollars is, is something people like to talk about because it's a nice sort of claim number, a big number. But, realistically, it, it probably won't be that amount. It probably won't be $1 million. So, for me, when I was, you know, had this conversation with people, it, it really comes down to I suppose individual needs and wants in retirement. So, I think for me is sort of have a think about what you would like to do in retirement and how you're going to help yourself achieve this.
So, there's some, some friendly calculators available online that you know, with, with most super funds that you can access, and they'll probably give you a good guidance. And, look, if you're if you're not getting the answer out of those retirement calculators that you want, and it's not going to get you to Greece on that holiday that you want to do every year, then maybe have a chat with a financial advisor there to say it's, you know, to help you get along to that, to that retirement balance.
Ange
And I guess to Alex's point, if it's not $1 million, then is there something is there a ballpark figure that we should sort of be aiming for or recommended number.
Sarah
Yeah. So there's a, there's an association ASFA is the Association of Superannuation Funds of Australia. And every year since 2004, they've actually put together an estimate of what they call a retirement standard. And the way that they do that is they look at what's your expected spending or what's your anticipated spending work out therefore what your annual income is kind of likely to need to be.
Ange
So is that like considering cost of living in that period of time.
Sarah
So it looks at increase costs over time. It looks at what's the what's the most common expenses of people in in retirement because there are some that go away when you stop working. And and so it looks at that and it sort of then extrapolates out to, well, about what's the income you need and therefore about how much super do you need to cover that.
And I'm not sure it's helpful to talk about specific numbers, but it's a lot less than $1 million. It does make some assumptions around that. You'll also probably get at least a part pension, in retirement as well, depending on your circumstances. And it does make an assumption about house ownership, but I think we might chat about that a bit later.
Ange
And I mean, look, I would love to retire with $1 million so that I can go and retire on the Greek islands. I just stole your retirement plan Matt, I know you want to retire in the Greek islands too. But how realistic is it that Aussies do retire with $1 million? And where does that number come from?
Matt
Yeah, this is a funny one. And I've had this conversation with so many people, out in the workplace. And I think the million dollar myth probably just comes around because it's a nice round, juicy number. I think $1 million is something that, for a number of years, financial advisors have suggested is that that goal, it's a nice goal to work towards.
But as Sarah just mentioned. Realistically, it's actually not that big of a number that you would need to retire with. But at the same time, there are other assumptions around, you know, you know, owning a house outright and not having mortgage repayments. And, you know, if you are a renter as well, obviously it makes it difficult as well.
So I think for, for me, I can't reiterate enough. It really will come down to your individual circumstances. And you know, what you want to do is if you want to go overseas a lot, you know, make those, those international trips, you probably need a little bit more money. You know, the conversion rate for, for most Aussies is not great right now.
Ange
It’s not great right now is it
Matt
Going to Europe or America or any place like that. Right. So yeah probably have a have a bit of a think earlier is is probably best. I mean look if you, if you're looking at it closer to retirement that that's fine as well. But with anything to do with super, the earlier you can look at you know, your balance, some things that may, you know, incline that to a nice juicy balance come retirement, you know, it's going to be beneficial for you.
Sarah
And I think it's important to remember that… the value of superannuation is actually really high, even at those lower amounts, you know, the ability to hit retirement and actually do things like potentially pay off all you debt is, is a real win, even if it doesn't set you up to be able to go to Greece every year.
Alex
Sarah, you touched on this briefly before, and I'd love to deep dive a little more into this idea that a lot of superannuation models are based on owning property, but if we're being realistic, the dream of owning property does feel more and more out of reach for a lot of young Aussies like myself. And personally, my parents didn't actually buy their first properties until they were, my dad was retired for the first part and my mum was 60 something (age redacted, Sorry mum), but of older than that median age and not the typical situation. So I guess my question would be what does this mean for people who don't own property? Do they need a bigger balance to compensate for not paying a mortgage in that, you know, retirement income?
Matt
Yeah, I think it's it is really it's a really tricky, subject to tackle. To be honest, I don't think there's, a silver bullet answer to this either, if I've got to be honest. You know, I reflect on my own personal circumstances. I only bought my first ever property, a couple of years ago, and I've been working full time for a long time. Same with my wife. So, and, you know, living in Sydney, it's it's pretty tricky as well. So we were able to get an entry level property, but even still, then I've, you know, I've got another 30 odd years of potentially paying down that mortgage and all the rest of it. So I consider myself fortunate to be even getting into the market.
So for people that that are renting, you know, when it gets to retirement age, you may have to be, to be honest, more reliant on the government age pension along with your super balance as well. So there's a combination there… more super in there obviously, it's going to be beneficial for you to be able to do the fun things that you'd like to, but there is a bit of a fall back in the government age pension as well.
So, I don't think it is all doom and gloom, you know, type of thing. If you are, you know, retiring without, you know, a paid off house and you know, a small mortgage and things like that. There are other options. But, at the same time, as I said, if you are concerned about that, that you will be renting come retirement time, as I said, have a look at your super as early as possible. Seek financial advice… having a chat with them would probably one of the best things you can do to give you a little bit more peace of mind, sort of, as you get a bit older.
Ange
I just want to take us one step back. So, Sarah, you did mention that the ASFA models do have some considerations built into them. And that to Alex's point, one of them is property. Can you build on that a little bit.
Sarah
Yeah. So the retirement standard that ASFA put together do does assume that you own your own house and if and outright so you don't have mortgage payments.
Ange
Do you think that's going to change given the current climate that we're in with housing.
Sarah
Yes and no. It's it's definitely the case that fewer people hitting retirement own their home outright. It's that it's that's the trend. But it's it's off a pretty high level, over time, you know, even if people don't feel that they can access the property market as early as we used to be able to. There are still people buying their first homes over the course of their life.
Ange
Alex’s parents
Sarah
Yeah. That's right. So, so it's not it's not like homeownership has fallen off a cliff. But the demographics are changing around with, when people reach retirement, some don't own their own home, some still have a mortgage. And, and I think that actually talks to the value of superannuation to be able to actually contribute to that period of your life as well.
Ange
I might get canceled for saying this, but at least millennials can breathe easy at night now, knowing that they don't have to own their home. They can have all the avocado.
Matt
It's always so much pressure. Millennials.
Ange
Yeah, just okay. So I'm going to speak to a similar point. And Sarah, this is more for you I guess. And this is probably gonna get covered in another episode as well around women and super. But we're talking about people owning their own homes. And typically we're finding that, you know, older women are the ones that are either more homeless or they don't have their own homes. How is this impacting that particular cohort of individuals?
Sarah
Yeah, yeah. I mean, youre right about those statistics in terms of, single women over 55 of the largest, are the fastest growing number of of homeless people in Australia, which is devastating. But, I think there are there are ways in which to sort of produces manage, you know, this over time. So that risk is lower. And that's not to say that, you know, it's it's anybody's fault that they end up in those, those circumstances… and so consideration of a woman's superannuation balance is just as important as her spouse's, and, and so, there are options around to actually look at what you can do to, to even up the superannuation balance over your working life as well.
Ange
Personal anecdote is I was looking at my parents situation and mum took out quite a bit of time to look after us kids, when we were growing up. And now I look at the balance between mum and dad, and it's like the disparity is huge. And their wages weren't that different, both working class. But you kind of do the comparison of, what, 6 or 7 years out of the workforce can do to that final amount… And I guess lucky for mum, they did sell the house so they were able like, you know, a mum put herself in a good financial situation, but that's not the case I don't think, for every Australian.
So if you don't own your own home and you are in this situation, what are some of the things that you might be able to do?
Sarah
Yeah, look, leaning on your super to actually do some of this does actually help, because if you haven't got access to that, at least superannuation gives you an asset. So so the, you know, you've you've got circumstances around things like co contributions or splitting contributions where you can build up that, that balance.
And and also looking at, you know, where you've got broken work patterns during your working life. What can you be looking at to top up your super during those times as well?
Alex
Yeah, I mean, on the flip side of that, my mum was very much a corporate power woman of the 90s and took the least amount of time off, which I love and respect her for.
It was a great model for me, but her super balance, she will say, is a lot higher than those of like any friend that she has. And it just goes to show, like the situation's out of your control, that you can't really help you take time off before supers even compulsory, maybe two. Yeah, it can be a bit challenging for every different Australian. Everyone has a different story,
Ange
We actually took it out and spoke to everyday Aussies about this topic to see what they thought about it.
Sinem
Have you thought about your retirement and what that might look like?
Person 4
No.
Person 5
Think I'm just not worried about it yet.
Person 3
Not too young for that.
Person 4
No. Not really.
Person 5
Yes
Person 6
If I'm working in a job that I really love, then I wouldn't want to retire.
Sinem
How much do you think you need to retire?
Person 4
I have no idea.
Person 6
I do have a number that I'd be comfortable with.
Person 2
I never plan, like, you know how much I need by the time I retire.
Person 1
Probably like a $1 million.
Person 9
Realistically, I don't think that it will be millions. I think it will probably be a lot less,
Sinem
Are you at all worried about what your retirement might look like and whether you might run out?
Person 6
I'm not really worried about that now.
Person 7
Yes. This is exactly what I'm worried about.
Person 8
At this point, I try not to think about it.
Person 9
I am worried. So yeah a plan would be good.
Ange
So Sarah, this next one's for you. I want to ask what is driving the disparity between men and women in retirement at the moment?
Sinem
Back to you Ange.
Ange
So Sarah, this next one's for you. I want to ask what is driving the disparity between men and women in retirement at the moment?
Sarah
Yeah. It's an interesting problem isn't it? And there's a whole range of causes around, you know, what we call the gender super gap and the causes that lead to that. Definitely. Career gaps is a big one where you've got rights to, to work. And, and the higher part time and casual work usually following, having a baby.
You also got women take on a higher proportion of generally unpaid work and caring responsibilities. And you've got on top of all of that, you've got a generalised pay gap across, the whole economy. And all of that leads to what's currently about a 28% difference in men's retirement balances compared to women's. So there are changes that are happening around this.
We've seen recently the removal of the threshold at which you get paid super by an employer. So it used to be that you didn't have to get super on your, on your salary until you hit a $450 threshold a month. That's gone. Awesome news
Ange
Is that $450 combined or from one employer?
Sarah
That was from one employer. So if you were earning a lot more across a number of employers, you weren't getting super.
Ange
Okay. So if you had like 3 or 4 casual jobs and you were working them all and none of them were quite hitting that threshold, then you might not be getting super on any of those.
Sarah
Absolutely. So that that's being fixed, which is fabulous… So, I think we'll start seeing some real differences to women's super balances as a result of that.
Ange
What else could women do?
Sarah
Well, the other thing is, from a government perspective is would we've also in Parliament now, is superannuation going to be paid on the Commonwealth scheme paid Parental Leave Which is awesome as well. But there are other options that you can do yourself in terms of just thinking about your super before you have those breaks and what you know, what can you do to top it up.
There are also options around, contribution splitting where you can actually as a couple, you can divide your superannuation contributions between both of you, and, and possibly get access to the government co-contribution scheme where you actually get government contributions for, the go on top of, of your, your personal ones. So that sort of range of things and I think a lot of it is actually just keeping it in mind.
Ange
Yeah. Great.
Alex
So we've established that that $1 million figure is a bit of a myth, and it's probably more about what you want your retirement to look like with a little a sprinkle of a caveat of it could be, you know, you might have a lower balance if you are a woman on average. So that being said, what are some practical steps you could actually take today? So you're in your 20s to potentially boost your balance if it's not where you think it could be?
Matt
Yeah, I mean, there's quite a few things, but I think what I would suggest to anybody when I, you know, speak to them about super for the first time is, engage with your super fund. And what do I mean by that? It's it's super easy in this day and age to engage with the super, in a sense that most… funds will have an app. So that is the first thing I've always said. Everybody is download the app of your respective super fund. I know most people have a smartphone. So, you know, most people are familiar with apps as well.
So if you download the app of your respective super fund, you know, you can see your balance, you can see your contributions from your employer. Make sure that they're paying the super, which is obviously important to, and then you can see your balance grow as well. So I think when you do that, it makes it a little bit more real, a little bit more tangible.
When I first started working in super, I used to work in a call center, and people used to have to call through to the call center to say, hey, Matt, can you give me my balance as of today? And I would write out a script, and I would read out their balance, and I would write it down, and then they'd read it back to me and I said, no, no, no, that's wrong.
And then we read it out again. And then they would go off on, on, on their day and I would have probably five, six, seven, eight, nine, ten of those calls a day. So, you know, engaging with these super is probably the best thing you can do. And as I said, downloading the app of a respected fund is the probably the first point of call.
The other thing to consider, and I think for me, it's certainly it's a, it's a tricky topic in the current climate because cost of living, is not going anywhere in Australia. It's a global issue at the moment. But one thing we generally like to say from, from people, if they can afford it, is contributing extra to their super, and you can do that through various means, one called salary sacrifice. Where you can sort of, you can sit down with your employer and ask them to forgo some of your salary and put it into your super, either a percentage of your salary or, or a figure amount. But once again, you know, that this is this is only one thing to consider, If you can afford.
I'm very mindful of, how much two bags and shopping still costs. I think for me, I went to (won’t name the grocery store), but I went to one just last night and got two bags in shopping and it was $90.
Ange
We’re all feeling that pain Matt, don’t worry.
Matt
That that that pain is real at the moment. So very conscious of that. But, you know, figures will show and the calculators will show that such a small difference now will make such a big difference over time. And you'll have this friend of ours called Compound interest working away in the background. So if you can contribute
Ange
That sounds like a friend, I'd like to have.
Matt
Oh, yeah. It's a great friend. And, you know, five, $10 a week, over 30, 40 years. You know, can make such a big difference in your retirement. And, you know, if you, if you're going to start to look to contribute more, you super once again, take advantage of the advice that's available to you via your super fund advisors are more than happy to run through what an extra 5 or $10 a week will make in retirement. Because I know at the end, based off their calculations, it'll be a lot more than if you didn't. So I think for me, they're probably the two key things. You know, really basic fundamental things engage with the super via ideally their app. If they don't have an app, have a look online. Most most super funds have an online portal where you can check it just like your bank account. And then the second thing would be, if you can afford it, additional contributions and then the benefits of that too.
Ange
One thing I'd like to speak to, I guess ask the question around, is, I guess, the differences in what retirement looks like for everybody. So my understanding is that there is an age at which you can retire, but there are different ways with with how you can retire. Can you explain this to me a little bit more detail?
Sarah
Yeah. So the official what we call the preservation age for super… that’s a government mandated age looking at, when you can access your superannuation… but what we're seeing now is that people's retirement all looks incredibly different. So the old, the old idea of retiring at 60 or 65 and working full time until you stop is actually really going out the window, is a is a general trend. So you people drop down to part time. They look at, they look at different jobs. One of the biggest, employers of old people in Australia is Bunnings. And these are frequently professionals who retire from their corporate life and go and work at Bunning two days, Bunnings two days a week. It's it's an incredible trend.
Alex
I love it. I think my Dad would like to do that as well.
Sarah
So yeah. So it all looks different
Matt
I think as well. It's it's a good point as well. You know come retirement you know often unfortunately you don't retire with the amount that you, that you'd like to and you do have to work. But I think, in retirement I've got some ex-colleagues that have now retired. And I think for me, they've always said to me, they've got to find that sense of community in retirement, which is, which is really important as well, because I think if you're just doing, what's referred to as a three G’s, which is gardening, grandkids and golf, which sounds amazing.
Ange
I mean, that sounds amazing, right? Where do I sign up?
Matt
That sounds amazing, but I think for me, you know, it's often finding, you know, what else? What else can I do? So if you do have to go back into the workforce and get a two day job, you know, a week at Bunnings, I think a lot of people enjoy it. You know, it's not like, you know that you have to be in the office five days a week or, you know, digging holes five days a week type thing. You're able to work in a workplace which is fun, vibrant. You've got, you know, some some new colleagues and, you know, with that becomes more of a social network too.
So there are obviously some, some, some upsides to, you know, going back, it's I wouldn't say it's the worst thing having to go back and work a couple of days a week.
Ange
So actually just before this episode, Sarah, we were talking about your mum and how retirement looks a little bit different for her as well. Can you tell us a bit more about mum's story?
Sarah
Yeah, absolutely. My mum, was an academic, and a nurse before that and then an academic in, in nursing. And, and she continued working well after 70, but it, it staged down. So she went from teaching a lot of a lot of classes, to, you know, working with the university on research to and then dropping, down again to just supervising a couple of students. And really, she only fully retired, I think, when she was 72.
So it's it's, it's absolutely, available in lots of different workplaces that there is this pattern of not fully letting go over the course of, of the end of your career.
Alex
I feel like we've established then not only have we busted the myth of a perfect round figure, but the idea of a perfect retirement plan that everyone's looks different.
Matt
Yeah, everyone. Everyone. Certainly is different. So I think, hopefully that gives people listening to this some somewhat peace of mind in terms of, you know, not having to reach that big, juicy million dollars or even more. I think a lot of people might think you might need a more than $1 million, but it's, you know, certainly not the case. And it'll come down to the individual. Right.
Alex
And also the idea that if you can't afford right now to contribute to your super, because that tends to be the one silver bullet answer that it's okay that we're all feeling a bit of the crunch at the moment, and maybe instead just start from step one, which is engaging with your super.
Matt
Yeah, correct. There. There's there's plenty of things you can look at with your super and most super funds will have. So, you know, so many tools and calculators and things available for you at your disposal. So, look, I know it's probably not the first thing people think of when they get home from work is to jump online and have a look.
Ange
No, really?
Matt
I mean, that's what I do, right? Okay. But look at, as I said, if you want to help yourself, you know, I'd certainly have a play around with it and, and speak with your super fund. If you don't want to speak to somebody on the phone, you don't have to do this so many ways. You can do it digitally now as well. There's even things like digital advice services available these days. So, you know, please take advantage of it.
Ange
Thank you again to both of you for coming and joining today's episode.
Matt
You're welcome. It's been awesome.
Ange
Thank you. And, Sarah, I'd love to dive dive in a little bit deeper into that. Women and super topics. That'd be great to have you back. Oh, yeah. For another episode.
Sarah
Okay, let's do it.
Ange
Amazing. Lock that in, guys. You heard it here first.
Ange
So please make sure to like, follow and subscribe
Alex
For any more information on the things we spoke about today there’ll be some links in the description below.
Ange
And that is..
Ange&Alex
Super Simple!
We acknowledge that we are recording this podcast from the lands of the Gadigal people of the Eora nation. We pay our respects to Elders past, present and emerging and celebrate the diversity of Aboriginal and Torres Strait Islander peoples and their ongoing connection to land and waters throughout Australia
Ange
Welcome to super simple chats, Rest’s very first podcast. I’m Ange..
Alex
And I’m Alex
Ange
And we will be speaking to industry experts about all things super.
Matt
Wait, what the hell is contributions as well?
Ange
I didn’t realise until recently, that super is invested, I thought it was like a savings account
Sarah
I’m not sure it’s helpful to talk about specific numbers, but it’s a lot less than a million dollars.
Person
This is actually really important to talk about, because I don’t want to miss out on those things
Ange
Trying to make it understandable and relatable for every day Aussies.
Alex
After all, it’s one of the biggest assets you’ll ever have.
Ange
Now this wouldn’t be a financial podcast, if we didn’t start by mentioning that the information discussed is general only and doesn't take into account your own financial situation, needs or objectives. This information and the relevant products are issued by Retail Employees Superannuation Pty Ltd. Before deciding to join or stay, consider the relevant Product Disclosure Statement and Target Market Determination at rest.com.au/pds and whether it is appropriate for you. While we have endeavoured to ensure the accuracy and reliability of the information provided, there may be inadvertent errors or omissions. Before acting on any advice, we recommend you speak with a financial adviser.
Ange
It can be really challenging to know just how much super you need to retire. So joining us today are Matt and Sarah from Rest who are going to be talking to us about planning for retirement and whether it really is true that you need $1 million to retire. So, Matt, Sarah, thank you for joining us.
Matt+Sarah
Thanks for having us
Ange
We're really excited to get knee deep in that figure and whether it actually is $1 million.
Alex
Yeah. So $1 million. That is quite an intimidating figure if we're, you know, living a bit more in reality maybe. What is an actual number that people should think about saving?
Matt
Yeah, I think yeah, I think that million dollars is, is something people like to talk about because it's a nice sort of claim number, a big number. But, realistically, it, it probably won't be that amount. It probably won't be $1 million. So, for me, when I was, you know, had this conversation with people, it, it really comes down to I suppose individual needs and wants in retirement. So, I think for me is sort of have a think about what you would like to do in retirement and how you're going to help yourself achieve this.
So, there's some, some friendly calculators available online that you know, with, with most super funds that you can access, and they'll probably give you a good guidance. And, look, if you're if you're not getting the answer out of those retirement calculators that you want, and it's not going to get you to Greece on that holiday that you want to do every year, then maybe have a chat with a financial advisor there to say it's, you know, to help you get along to that, to that retirement balance.
Ange
And I guess to Alex's point, if it's not $1 million, then is there something is there a ballpark figure that we should sort of be aiming for or recommended number.
Sarah
Yeah. So there's a, there's an association ASFA is the Association of Superannuation Funds of Australia. And every year since 2004, they've actually put together an estimate of what they call a retirement standard. And the way that they do that is they look at what's your expected spending or what's your anticipated spending work out therefore what your annual income is kind of likely to need to be.
Ange
So is that like considering cost of living in that period of time.
Sarah
So it looks at increase costs over time. It looks at what's the what's the most common expenses of people in in retirement because there are some that go away when you stop working. And and so it looks at that and it sort of then extrapolates out to, well, about what's the income you need and therefore about how much super do you need to cover that.
And I'm not sure it's helpful to talk about specific numbers, but it's a lot less than $1 million. It does make some assumptions around that. You'll also probably get at least a part pension, in retirement as well, depending on your circumstances. And it does make an assumption about house ownership, but I think we might chat about that a bit later.
Ange
And I mean, look, I would love to retire with $1 million so that I can go and retire on the Greek islands. I just stole your retirement plan Matt, I know you want to retire in the Greek islands too. But how realistic is it that Aussies do retire with $1 million? And where does that number come from?
Matt
Yeah, this is a funny one. And I've had this conversation with so many people, out in the workplace. And I think the million dollar myth probably just comes around because it's a nice round, juicy number. I think $1 million is something that, for a number of years, financial advisors have suggested is that that goal, it's a nice goal to work towards.
But as Sarah just mentioned. Realistically, it's actually not that big of a number that you would need to retire with. But at the same time, there are other assumptions around, you know, you know, owning a house outright and not having mortgage repayments. And, you know, if you are a renter as well, obviously it makes it difficult as well.
So I think for, for me, I can't reiterate enough. It really will come down to your individual circumstances. And you know, what you want to do is if you want to go overseas a lot, you know, make those, those international trips, you probably need a little bit more money. You know, the conversion rate for, for most Aussies is not great right now.
Ange
It’s not great right now is it
Matt
Going to Europe or America or any place like that. Right. So yeah probably have a have a bit of a think earlier is is probably best. I mean look if you, if you're looking at it closer to retirement that that's fine as well. But with anything to do with super, the earlier you can look at you know, your balance, some things that may, you know, incline that to a nice juicy balance come retirement, you know, it's going to be beneficial for you.
Sarah
And I think it's important to remember that… the value of superannuation is actually really high, even at those lower amounts, you know, the ability to hit retirement and actually do things like potentially pay off all you debt is, is a real win, even if it doesn't set you up to be able to go to Greece every year.
Alex
Sarah, you touched on this briefly before, and I'd love to deep dive a little more into this idea that a lot of superannuation models are based on owning property, but if we're being realistic, the dream of owning property does feel more and more out of reach for a lot of young Aussies like myself. And personally, my parents didn't actually buy their first properties until they were, my dad was retired for the first part and my mum was 60 something (age redacted, Sorry mum), but of older than that median age and not the typical situation. So I guess my question would be what does this mean for people who don't own property? Do they need a bigger balance to compensate for not paying a mortgage in that, you know, retirement income?
Matt
Yeah, I think it's it is really it's a really tricky, subject to tackle. To be honest, I don't think there's, a silver bullet answer to this either, if I've got to be honest. You know, I reflect on my own personal circumstances. I only bought my first ever property, a couple of years ago, and I've been working full time for a long time. Same with my wife. So, and, you know, living in Sydney, it's it's pretty tricky as well. So we were able to get an entry level property, but even still, then I've, you know, I've got another 30 odd years of potentially paying down that mortgage and all the rest of it. So I consider myself fortunate to be even getting into the market.
So for people that that are renting, you know, when it gets to retirement age, you may have to be, to be honest, more reliant on the government age pension along with your super balance as well. So there's a combination there… more super in there obviously, it's going to be beneficial for you to be able to do the fun things that you'd like to, but there is a bit of a fall back in the government age pension as well.
So, I don't think it is all doom and gloom, you know, type of thing. If you are, you know, retiring without, you know, a paid off house and you know, a small mortgage and things like that. There are other options. But, at the same time, as I said, if you are concerned about that, that you will be renting come retirement time, as I said, have a look at your super as early as possible. Seek financial advice… having a chat with them would probably one of the best things you can do to give you a little bit more peace of mind, sort of, as you get a bit older.
Ange
I just want to take us one step back. So, Sarah, you did mention that the ASFA models do have some considerations built into them. And that to Alex's point, one of them is property. Can you build on that a little bit.
Sarah
Yeah. So the retirement standard that ASFA put together do does assume that you own your own house and if and outright so you don't have mortgage payments.
Ange
Do you think that's going to change given the current climate that we're in with housing.
Sarah
Yes and no. It's it's definitely the case that fewer people hitting retirement own their home outright. It's that it's that's the trend. But it's it's off a pretty high level, over time, you know, even if people don't feel that they can access the property market as early as we used to be able to. There are still people buying their first homes over the course of their life.
Ange
Alex’s parents
Sarah
Yeah. That's right. So, so it's not it's not like homeownership has fallen off a cliff. But the demographics are changing around with, when people reach retirement, some don't own their own home, some still have a mortgage. And, and I think that actually talks to the value of superannuation to be able to actually contribute to that period of your life as well.
Ange
I might get canceled for saying this, but at least millennials can breathe easy at night now, knowing that they don't have to own their home. They can have all the avocado.
Matt
It's always so much pressure. Millennials.
Ange
Yeah, just okay. So I'm going to speak to a similar point. And Sarah, this is more for you I guess. And this is probably gonna get covered in another episode as well around women and super. But we're talking about people owning their own homes. And typically we're finding that, you know, older women are the ones that are either more homeless or they don't have their own homes. How is this impacting that particular cohort of individuals?
Sarah
Yeah, yeah. I mean, youre right about those statistics in terms of, single women over 55 of the largest, are the fastest growing number of of homeless people in Australia, which is devastating. But, I think there are there are ways in which to sort of produces manage, you know, this over time. So that risk is lower. And that's not to say that, you know, it's it's anybody's fault that they end up in those, those circumstances… and so consideration of a woman's superannuation balance is just as important as her spouse's, and, and so, there are options around to actually look at what you can do to, to even up the superannuation balance over your working life as well.
Ange
Personal anecdote is I was looking at my parents situation and mum took out quite a bit of time to look after us kids, when we were growing up. And now I look at the balance between mum and dad, and it's like the disparity is huge. And their wages weren't that different, both working class. But you kind of do the comparison of, what, 6 or 7 years out of the workforce can do to that final amount… And I guess lucky for mum, they did sell the house so they were able like, you know, a mum put herself in a good financial situation, but that's not the case I don't think, for every Australian.
So if you don't own your own home and you are in this situation, what are some of the things that you might be able to do?
Sarah
Yeah, look, leaning on your super to actually do some of this does actually help, because if you haven't got access to that, at least superannuation gives you an asset. So so the, you know, you've you've got circumstances around things like co contributions or splitting contributions where you can build up that, that balance.
And and also looking at, you know, where you've got broken work patterns during your working life. What can you be looking at to top up your super during those times as well?
Alex
Yeah, I mean, on the flip side of that, my mum was very much a corporate power woman of the 90s and took the least amount of time off, which I love and respect her for.
It was a great model for me, but her super balance, she will say, is a lot higher than those of like any friend that she has. And it just goes to show, like the situation's out of your control, that you can't really help you take time off before supers even compulsory, maybe two. Yeah, it can be a bit challenging for every different Australian. Everyone has a different story,
Ange
We actually took it out and spoke to everyday Aussies about this topic to see what they thought about it.
Sinem
Have you thought about your retirement and what that might look like?
Person 4
No.
Person 5
Think I'm just not worried about it yet.
Person 3
Not too young for that.
Person 4
No. Not really.
Person 5
Yes
Person 6
If I'm working in a job that I really love, then I wouldn't want to retire.
Sinem
How much do you think you need to retire?
Person 4
I have no idea.
Person 6
I do have a number that I'd be comfortable with.
Person 2
I never plan, like, you know how much I need by the time I retire.
Person 1
Probably like a $1 million.
Person 9
Realistically, I don't think that it will be millions. I think it will probably be a lot less,
Sinem
Are you at all worried about what your retirement might look like and whether you might run out?
Person 6
I'm not really worried about that now.
Person 7
Yes. This is exactly what I'm worried about.
Person 8
At this point, I try not to think about it.
Person 9
I am worried. So yeah a plan would be good.
Ange
So Sarah, this next one's for you. I want to ask what is driving the disparity between men and women in retirement at the moment?
Sinem
Back to you Ange.
Ange
So Sarah, this next one's for you. I want to ask what is driving the disparity between men and women in retirement at the moment?
Sarah
Yeah. It's an interesting problem isn't it? And there's a whole range of causes around, you know, what we call the gender super gap and the causes that lead to that. Definitely. Career gaps is a big one where you've got rights to, to work. And, and the higher part time and casual work usually following, having a baby.
You also got women take on a higher proportion of generally unpaid work and caring responsibilities. And you've got on top of all of that, you've got a generalised pay gap across, the whole economy. And all of that leads to what's currently about a 28% difference in men's retirement balances compared to women's. So there are changes that are happening around this.
We've seen recently the removal of the threshold at which you get paid super by an employer. So it used to be that you didn't have to get super on your, on your salary until you hit a $450 threshold a month. That's gone. Awesome news
Ange
Is that $450 combined or from one employer?
Sarah
That was from one employer. So if you were earning a lot more across a number of employers, you weren't getting super.
Ange
Okay. So if you had like 3 or 4 casual jobs and you were working them all and none of them were quite hitting that threshold, then you might not be getting super on any of those.
Sarah
Absolutely. So that that's being fixed, which is fabulous… So, I think we'll start seeing some real differences to women's super balances as a result of that.
Ange
What else could women do?
Sarah
Well, the other thing is, from a government perspective is would we've also in Parliament now, is superannuation going to be paid on the Commonwealth scheme paid Parental Leave Which is awesome as well. But there are other options that you can do yourself in terms of just thinking about your super before you have those breaks and what you know, what can you do to top it up.
There are also options around, contribution splitting where you can actually as a couple, you can divide your superannuation contributions between both of you, and, and possibly get access to the government co-contribution scheme where you actually get government contributions for, the go on top of, of your, your personal ones. So that sort of range of things and I think a lot of it is actually just keeping it in mind.
Ange
Yeah. Great.
Alex
So we've established that that $1 million figure is a bit of a myth, and it's probably more about what you want your retirement to look like with a little a sprinkle of a caveat of it could be, you know, you might have a lower balance if you are a woman on average. So that being said, what are some practical steps you could actually take today? So you're in your 20s to potentially boost your balance if it's not where you think it could be?
Matt
Yeah, I mean, there's quite a few things, but I think what I would suggest to anybody when I, you know, speak to them about super for the first time is, engage with your super fund. And what do I mean by that? It's it's super easy in this day and age to engage with the super, in a sense that most… funds will have an app. So that is the first thing I've always said. Everybody is download the app of your respective super fund. I know most people have a smartphone. So, you know, most people are familiar with apps as well.
So if you download the app of your respective super fund, you know, you can see your balance, you can see your contributions from your employer. Make sure that they're paying the super, which is obviously important to, and then you can see your balance grow as well. So I think when you do that, it makes it a little bit more real, a little bit more tangible.
When I first started working in super, I used to work in a call center, and people used to have to call through to the call center to say, hey, Matt, can you give me my balance as of today? And I would write out a script, and I would read out their balance, and I would write it down, and then they'd read it back to me and I said, no, no, no, that's wrong.
And then we read it out again. And then they would go off on, on, on their day and I would have probably five, six, seven, eight, nine, ten of those calls a day. So, you know, engaging with these super is probably the best thing you can do. And as I said, downloading the app of a respected fund is the probably the first point of call.
The other thing to consider, and I think for me, it's certainly it's a, it's a tricky topic in the current climate because cost of living, is not going anywhere in Australia. It's a global issue at the moment. But one thing we generally like to say from, from people, if they can afford it, is contributing extra to their super, and you can do that through various means, one called salary sacrifice. Where you can sort of, you can sit down with your employer and ask them to forgo some of your salary and put it into your super, either a percentage of your salary or, or a figure amount. But once again, you know, that this is this is only one thing to consider, If you can afford.
I'm very mindful of, how much two bags and shopping still costs. I think for me, I went to (won’t name the grocery store), but I went to one just last night and got two bags in shopping and it was $90.
Ange
We’re all feeling that pain Matt, don’t worry.
Matt
That that that pain is real at the moment. So very conscious of that. But, you know, figures will show and the calculators will show that such a small difference now will make such a big difference over time. And you'll have this friend of ours called Compound interest working away in the background. So if you can contribute
Ange
That sounds like a friend, I'd like to have.
Matt
Oh, yeah. It's a great friend. And, you know, five, $10 a week, over 30, 40 years. You know, can make such a big difference in your retirement. And, you know, if you, if you're going to start to look to contribute more, you super once again, take advantage of the advice that's available to you via your super fund advisors are more than happy to run through what an extra 5 or $10 a week will make in retirement. Because I know at the end, based off their calculations, it'll be a lot more than if you didn't. So I think for me, they're probably the two key things. You know, really basic fundamental things engage with the super via ideally their app. If they don't have an app, have a look online. Most most super funds have an online portal where you can check it just like your bank account. And then the second thing would be, if you can afford it, additional contributions and then the benefits of that too.
Ange
One thing I'd like to speak to, I guess ask the question around, is, I guess, the differences in what retirement looks like for everybody. So my understanding is that there is an age at which you can retire, but there are different ways with with how you can retire. Can you explain this to me a little bit more detail?
Sarah
Yeah. So the official what we call the preservation age for super… that’s a government mandated age looking at, when you can access your superannuation… but what we're seeing now is that people's retirement all looks incredibly different. So the old, the old idea of retiring at 60 or 65 and working full time until you stop is actually really going out the window, is a is a general trend. So you people drop down to part time. They look at, they look at different jobs. One of the biggest, employers of old people in Australia is Bunnings. And these are frequently professionals who retire from their corporate life and go and work at Bunning two days, Bunnings two days a week. It's it's an incredible trend.
Alex
I love it. I think my Dad would like to do that as well.
Sarah
So yeah. So it all looks different
Matt
I think as well. It's it's a good point as well. You know come retirement you know often unfortunately you don't retire with the amount that you, that you'd like to and you do have to work. But I think, in retirement I've got some ex-colleagues that have now retired. And I think for me, they've always said to me, they've got to find that sense of community in retirement, which is, which is really important as well, because I think if you're just doing, what's referred to as a three G’s, which is gardening, grandkids and golf, which sounds amazing.
Ange
I mean, that sounds amazing, right? Where do I sign up?
Matt
That sounds amazing, but I think for me, you know, it's often finding, you know, what else? What else can I do? So if you do have to go back into the workforce and get a two day job, you know, a week at Bunnings, I think a lot of people enjoy it. You know, it's not like, you know that you have to be in the office five days a week or, you know, digging holes five days a week type thing. You're able to work in a workplace which is fun, vibrant. You've got, you know, some some new colleagues and, you know, with that becomes more of a social network too.
So there are obviously some, some, some upsides to, you know, going back, it's I wouldn't say it's the worst thing having to go back and work a couple of days a week.
Ange
So actually just before this episode, Sarah, we were talking about your mum and how retirement looks a little bit different for her as well. Can you tell us a bit more about mum's story?
Sarah
Yeah, absolutely. My mum, was an academic, and a nurse before that and then an academic in, in nursing. And, and she continued working well after 70, but it, it staged down. So she went from teaching a lot of a lot of classes, to, you know, working with the university on research to and then dropping, down again to just supervising a couple of students. And really, she only fully retired, I think, when she was 72.
So it's it's, it's absolutely, available in lots of different workplaces that there is this pattern of not fully letting go over the course of, of the end of your career.
Alex
I feel like we've established then not only have we busted the myth of a perfect round figure, but the idea of a perfect retirement plan that everyone's looks different.
Matt
Yeah, everyone. Everyone. Certainly is different. So I think, hopefully that gives people listening to this some somewhat peace of mind in terms of, you know, not having to reach that big, juicy million dollars or even more. I think a lot of people might think you might need a more than $1 million, but it's, you know, certainly not the case. And it'll come down to the individual. Right.
Alex
And also the idea that if you can't afford right now to contribute to your super, because that tends to be the one silver bullet answer that it's okay that we're all feeling a bit of the crunch at the moment, and maybe instead just start from step one, which is engaging with your super.
Matt
Yeah, correct. There. There's there's plenty of things you can look at with your super and most super funds will have. So, you know, so many tools and calculators and things available for you at your disposal. So, look, I know it's probably not the first thing people think of when they get home from work is to jump online and have a look.
Ange
No, really?
Matt
I mean, that's what I do, right? Okay. But look at, as I said, if you want to help yourself, you know, I'd certainly have a play around with it and, and speak with your super fund. If you don't want to speak to somebody on the phone, you don't have to do this so many ways. You can do it digitally now as well. There's even things like digital advice services available these days. So, you know, please take advantage of it.
Ange
Thank you again to both of you for coming and joining today's episode.
Matt
You're welcome. It's been awesome.
Ange
Thank you. And, Sarah, I'd love to dive dive in a little bit deeper into that. Women and super topics. That'd be great to have you back. Oh, yeah. For another episode.
Sarah
Okay, let's do it.
Ange
Amazing. Lock that in, guys. You heard it here first.
Ange
So please make sure to like, follow and subscribe
Alex
For any more information on the things we spoke about today there’ll be some links in the description below.
Ange
And that is..
Ange&Alex
Super Simple!
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