After last week’s column where I asked for your thoughts on why there’s so little engagement with superannuation, I got a lot of responses, and the clear message that comes through is one of ownership and confidence.
Firstly, because the superannuation guarantee is siphoned off from an employee’s pay packet – into a superannuation account – Australians have little sense of ownership. It feels like a tax; it feels like something the government takes rather than something that employees actually own.
Secondly, those who responded made the emphatic point that it’s hard to have confidence in a system that’s supposed to be our long-term retirement savings but is seen as a short-term proposition by governments. "Stop changing the rules" seems to be the clear signal to governments.
Moreover, there are deeper problems in retirement savings, as I discovered this week when I found myself in a small group of high-achieving people whose ages ran from 25 to 74.
As we spoke it became apparent that superannuation was as hard to engage with in this group as with any. In other words, a general disengagement from super is as prevalent in high achievers as it is for anyone, and in all age groups.
The younger people I was speaking with were embarrassed that they weren’t more interested – none of them felt they had a good grasp on planning for their future. The more mature folks admitted they only became interested on the verge of retirement and urged the youngsters to become interested now. The people in between – in their 40s – were pushing to do the best they could with the time they had left.
Interestingly, among these high earners, the ones who didn’t have an adviser had no little knowledge about how to find one, or more importantly, how to find one who they could trust.
In my mind, the most important part of retirement planning is to take the responsibility and to take action. Responsibility and action.
Once you’ve established these two things, you don’t have to leap further into super if it doesn’t make sense to you. There are other ways to provide for retirement, such as share portfolios, building a business and investing in property.
I happen to think that the tax benefits and security of superannuation is a compelling reason to use this system, especially since the law requires a certain amount of your income is invested in super anyway.
Nevertheless, the important thing is to accept that it’s your responsibility to provide for your retirement, and with life expectancies increasing, you should be looking at providing for 30 years of living rather than 20.
And having taken this responsibility – your money, your retirement, your investments – then you have to take action: find an adviser, establish what you need to do, and do it.
Don’t be embarrassed. Embarrassment makes people duck the obvious questions and avoid making decisions. Embarrassment makes people procrastinate and that’s no way to approach retirement planning.
It’s your retirement, and it’s your money. So, be active, be responsible and take action before it’s too late.Mark Bouris is executive chairman of Yellow Brick Road, a financial services company offering home loans, financial planning, accounting and tax, and insurance.