The problems we face navigating retirement in Australia

The government has called out the biggest problems we all face when approaching and in retirement in this country and I want to know where you sit on each issue. So I'm polling you today.

In this edition

• Feature story: The problems we face navigating retirement in Australia

• Prime Time Podcast: How you dress matters! And it's not an age thing, it's your attitude with Nikki Parkinson

• From Bec’s Desk

---

But first, a message from our wonderful newsletter sponsor this week: Air Adventure.

Transform the way you see Outback Australia with Air Adventure

Land right in the heart of the outback - by deluxe private aircraft and experience the most beautiful and most hard-to-reach places in this wide open land with Air Adventure. 

Air Adventure runs a selection of all-inclusive outback safaris by private aircraft (or you can design your own) taking you quickly and conveniently into the very heart of Australia with highly experienced guides. They’ve been doing this for over 45 years so they know all the best places to see. Browse all their upcoming outback tours ...

Upcoming Tour - The Outback Explorer - On this 3 day adventure, by private aircraft, you’ll explore ancient landscapes, visit iconic destinations, retrace history and enjoy outback hospitality. Land alongside The Birdsville Hotel and enjoy a cold drink at the bar, stay at the famous Prairie Hotel and visit the iconic Dig Tree. Find out more

The problems we face navigating retirement in Australia

The Treasury Department released a discussion paper about the retirement phase of superannuation yesterday. And I’m excited. This paper shows that the government sees your pain as people approaching and traversing the “big and complicated life change” of retirement and they’re trying to drive change. And, whilst most of you have absolutely no need to read this paper, the highlights, which I will give you today, might make you feel a little more normal. Plus, I’m going to poll you on all their areas of discussion and report back for you to the Treasury Department - so they know what you think as proactive pre-retirees and retirees! So stick with me - let’s have some fun today! But I need to give you a little background first.

The Retirement Income Review back in 2020 started the push by regulators to make retirement easier to understand. They pointed out that it is inherently challenging to navigate the different parts of the retirement income system, combine multiple income sources, consider the needs of your partner and dependents, and manage the numerous risks and changes in circumstances.

“Australians need better access to information, advice, and well-rounded retirement income products to help them navigate these challenges,” the Retirement Income Review report stated bluntly.

Reading the discussion paper about retirement this week, it is clear that the government knows how hard the retirement system is to navigate and they are continuing to call to arms the superannuation industry, trying to make it their job to help you with more financial advice, more financial literacy education and better retirement income products. But they also recognise that funds have been slow to respond, so the Treasury is suggesting a range of ways they could use their big stick to speed things up. 

“While industry is moving in the right direction, there is still a long way to go. Superannuation funds need to do more to understand their members’ retirement needs, set a vision for their members’ retirement outcomes, and provide well-rounded retirement products. There is a role for government and regulators in creating an environment that supports these changes.”

So what are the problems that most Australians face when they are navigating retirement? The government points out a few in their discussion paper that might in fact make you relax and know you’re part of the wide majority wondering how retirement works as you loom toward it. 

I’m going to run through each issue then poll you below so please click your responses on each section - the polls are completely anonymous. And please be honest - don’t tell them what they want to hear - tell them/me the truth about how you really feel. I’m using it to tell the truth about retirement to the powers that be!

Issue 1: Planning a retirement income is really complex

Most of us spend 40-50 years of our life living off a single income stream from working. Then, when we hit retirement, we suddenly have to grapple with multiple sources of income from superannuation, the age pension, and investments outside super - many of which change over time, as markets perform or underperform; we draw down on our superannuation balances and our age pension eligibility shifts. It’s a lot more complicated than most people have ever managed before. And it is super-difficult to know with any level of certainty how much you can afford to draw down from super while leaving enough to fund a lifetime of living expenses, your epic retirement ambitions, and preserving funds for your aged care and health needs too. 

Issue 2: We think of superannuation as our nest egg or legacy not our income source

We spend decades being told that our superannuation is our ‘nest egg’ and our most powerful investment, then when we get to retirement we now have to adjust that way of thinking and start to see our superannuation as a key source of income. This shift is difficult for everyone. It’s hard to start drawing down on your hard-earned income generating assets, beyond the income they generate each year. But you might be able to live a better life if you do. 

“The Retirement Income Review found some retirees held the view that they should only draw on the income earned on their superannuation assets, not the capital. While this mindset is often held when people are saving for retirement, it can lead to lower living standards in retirement,” said the discussion paper. 

Issue 3: We are withdrawing only the default amounts or the minimums from superannuation

Most Australians currently rely on an account based pension product for their superannuation income in retirement, which is actually a pretty simple retirement investment account with no guaranteed income streams. The government has set minimum drawdown rates for the retirement phase of superannuation and most people only draw down this amount, which starts at 4% for under 65s and grows as you get older. Most people don’t draw more, perhaps out of fear, or potentially out of a lack of understanding of the intent of superannuation the product that was designed to fund your retirement - not be a legacy for future generations.

The reality is that for most people, the minimum drawdowns are not enough to live in comfort, even when added to the pension. And it is really hard for average Australians with super balances of $150-250,000 to choose an amount to draw down that will eat into their capital saved, impacting their longer term need for a safety net. 

Increasingly, the government wants people to have greater certainty about how much they could afford to draw down, and they want super funds to provide this by pushing them to offer a new type of product which offers a guaranteed income for the rest of your life. This space is still not very advanced, so it will take some time for people and their advisers to understand it - but it’s coming. 

“Life expectancy at birth in Australia is 83, however this translates to a female retiree at age 65 having a 45 per cent chance of living to 90, and 33 per cent for a male retiree. In effect, the likelihood is even higher as improvements in health and medicine will further increase life expectancy during a person’s retirement. As a result of increased life expectancy, more retirees need to rely on retirement incomes that are sustainable into their late 80s and 90s.”

There’s more to the paper - and I’ll cover that another time. But today, I hope in knowing the big issues, you can feel a little more ‘normal’ as you approach retirement and try to navigate it successfully. I’ll be doing my best to advocate for you with Treasury so they know how they can help you. If you want to email me with your thoughts, I welcome it! Just reply to this email or email me here.

It's no secret that our clothing style changes as we age. The trick is working out how to dress, and present yourself to the world when everything ELSE in life changes.

In episode 7 of Prime Time, I chat with fashion designer and stylist for people of all shapes and sizes, Nikki Parkinson, and we discuss dressing for your life, not your age. Nikki has been a voice of empowerment in style with her social media powerhouse brand Styling You for more than ten years. And today she shares her best Prime Time advice, as a Primetimer herself! Remember you can sign up for the podcast newsletter to receive the highlights when it comes out weekly at Primetimers.net. And don’t forget to leave us a review and a rating. It helps people find us.

Listen now

LISTEN HERE - LATEST EDITION (S1E7) - OMNY

or listen on APPLE PODCASTS or SPOTIFY PODCASTS 

Well things quieten down for me from this week. I waved one adult child off to work in the snow of Whistler for a few months so have one less person to tidy up after. And my last column for the year is in this weekend’s newspapers, before the money columns shut down for a break. We’ll keep podcasting and sending this newsletter all the way through the season though - so keep looking for me.

I got some big news this morning! Our fresh new podcast called Prime Time has hit 25,000 downloads on it’s seventh episode! For those of you not in the world of podcasts (hey - I’m new to it too!) that’s really good news. It means LOTS of people are listening. It’s exciting to see you all embracing it. And that gets me up every morning to dream up new topics. Gosh we’re having some fun. I have this wonderful Producer from 9Podcasts Genevieve, who makes the show with me and together we’re loving your ideas and feedback. I’m interviewing the author of “Mrs Winterbottom takes a Gap Year” next week - the episode will come out after Christmas. It’s a hoot of a book. I’ve been reading it all week. It feels like the fiction companion to Epic Retirement.

Those of you following along since I started this newsletter know I really care about everyone learning how to have an epic retirement. And I really feel like I’m really helping you with all the beautiful emails you are sending me. Thank you! As I mentioned I have a few big projects in front of me that I really could use your help on:

1. I am writing my next book which is all about the life we might live if we don’t have to retire fully - but we start living our best life now.

   I’d like to invite you to be a part of my insight gathering. Please, if you would be keen to have a chat, fill out this form and I will call you personally for an interview. There’s nothing like a book built from real, at-the-coal-face insights.

2. I am releasing our retirement education program via superannuation funds and employers

   I have almost finished developing a really well-made Epic Retirement Education Program which I am offering next year for you to do, or even better, I am hoping that employers and superannuation funds will actually offer it to you. If you work for a company and know the right people for me to speak to to make it part of their education offerings - please hook me up. I just want people to better understand and navigate the journey into retirement. And if you just want to register to hear about it when it’s released, you can register your interest here.

Finally, I am receiving some great ideas and titbits from so many people for the podcast, articles and the newsletter - thanks! I try to reply to everyone and I certainly am keeping a little juicy ideas file - so that everytime I get a moment to research for books and podcasts and columns, I have good places to start. If you have some - email them in to bec@epicretirement.com.au. I love hearing from you.

Until next week… make it epic!

Many thanks! Bec Wilson

Author, podcast host, columnist, retirement educator, and guest speaker

Or you can order a book in our online shop and I’ll sign and inscribe it for you.