Will your super be enough for retirement? Part 1 | 7.30

Updated : Sep 06, 2019 in Articles

Will your super be enough for retirement? Part 1 | 7.30

As we go about our working lives, many of
us are too busy and distracted to pay much attention to our superannuation. If they’re not in a good performing fund,
then they can be condemned to a poorer retirement. Compulsory super has turned us into a nation
of serious savers, collectively investing $2.7 trillion. The money is pouring into superannuation.
It’s pouring in. That’s more than enough to buy all the companies
on the Australian stock exchange. The question of whether people are getting
value for the money that’s been pouring in is now on the table and you can see that probably
over a couple of decades now they haven’t been getting value, or the value they should
have. This is quite serious in Australia where we
have compulsory superannuation which is itself a very complicated structure and involves
interacting with risky asset markets and a lot of things that people otherwise wouldn’t
be thinking about or taking on. I never really considered life beyond work.
I mean, it was always an illusionary sort of ideal that you hoped would occur one day
but I didn’t give it serious consideration. I didn’t give retirement serious consideration. Tai chi helped 69-year-old retiree, Peter
Bastick, deal with the stress of work and now of retirement. He started paying superannuation about halfway
through his working life as a newspaper journalist and editor. Certainly equilibrium is something that is
very heavily tested. Superannuation just wasn’t on my horizon and
for that I’m personally negligent because I’m now living with the consequences of not
having a larger nest egg. (Nice to meet you.) Like many Australians, Peter has always found
superannuation confusing and it’s a pressing issue now that his health is failing. Accountant, Jennie Lynn has come over to help
him make sense of it. Most people would pull all their super out
and pay off their mortgage and then live on the aged pension. Well, I still have an outstanding mortgage
which would well and truly eat up not only that but also my other assets. Yes, that’s the letter there. Peter’s old paper work reveals that when he
changed super accounts he was asked to pay a one-off advisor fee of more than $2,500. That makes me irate that that’s happened. Well, I have no recollection of meeting an
advisor, financial advisor. And there’s no names of any advisor on any
of these forms. It seems like a huge slug to me. Peter’s situation is quite typical in that
he worked through a period where he wasn’t earning superannuation and then went into
employers, several employers that paid superannuation but he was never interested in his superannuation.
It always just happened. The problem in superannuation is this – for
most people they don’t choose to go in to it. The money is taken out of their wage by
law. They know they can’t get hold of it for 20
or 30 or 40 years. They don’t feel as if it’s theirs. They don’t feel as if they own it. The government concentrated on getting money
into superannuation by law but didn’t show much interest in what happened to it. Basically it said now it’s someone else’s
responsibility. A plan that’s either a multibillion-dollar
blunder or one of the most far-sighted and progressive policies in our nation’s history. It’s a relatively small, affordable, manageable
cost which will give Australian workers a decent standard of living in retirement and
build a pool of national savings. There are going to be literally billions of
dollars spewing forth from superannuation companies every year. The foundation of Australia’s compulsory super
system was the accord struck between the Hawke-Keating government and the union movement in the 1980s. Like many other significant social reforms
of the ’80s and the ’90s, that grand compact between government employers and the union
movement delivered and created the superannuation system. Workers gave up a demand for a 3 per cent
pay rise and put that money into superannuation instead. For an adequate and mature level of contribution
to be established, I suggest that by the year 2000 we reach a national benchmark where each
and every employee has a contribution to superannuation equal to 12 per cent of wage and salary income
paid into his or her superannuation account. Despite determined opposition, compulsory
super began in 1992. I ask the Prime Minister why won’t you have
the decency to admit that your superannuation levy means that workers will either have to
take a pay cut or lose their job? Keating’s plan to increase compulsory contributions
never eventuated. The Howard-Costello government later scrapped
Labor’s deal to deliver tax cuts not as cash, but as increased super. Paul Keating would say you’re partly responsible
because he … He blames a lot of people for a lot of things
and you know what we did? We just left in place the schedule that had been announced. I think it capped out at 9 (per cent) but
that, by stopping that process, that incremental increase that was meant to occur, it’s meant
that we’ve had this unfinished business sitting there with our superannuation system since
and that, I think, was a fundamental error of that government and an error that we’re
still paying for today. Employers currently contribute 9.5 per cent
of workers’ wages to super and the rate’s not legislated to reach 12 per cent before
2025. If it were the case that people actually wanted
to become entirely independent of the aged pension for example, they would probably need
to start contributing to super at a rate of about 18 per cent at the beginning of their
working life and contribute at that rate all the way through their working life. Most of us are, I think, probably realistically
not prepared to do that. If you truly want to become independent of
the government, a self-funded retiree, live off superannuation, you’re going to have to
put your own money in. The occupational superannuation is not going
to do it. 42 per cent of Australian retirees still receive
the full aged pension. Since 1997, the proportion of Australians
receiving full or partial aged pensions has fallen from 79 (per cent) to 70 per cent. I really thought that I would just keep working
and then just one day I would just die but it sort of didn’t work out like that. I didn’t expect to be 81 now and still be
alive and still needing things, still enjoying shopping, everything like that where you need
money. In her 80s, Robin Dougherty lives in Sydney
entirely on the aged pension. Like many women who took time out of the work
force to raise children, she retired with very little super and doesn’t own her own
home. The system, I think, has failed working women
and one of the big flaws in the system was not recognising that inequity in the original
design of the system. Retirement was something I didn’t even really
think about. I’d only been in superannuation for 16 years and I didn’t see it, we were
never shown anything to tell us that this was really for our future, to keep us going
when we retired. So that’s just what happened. Robin’s husband died young, and so when she
retired from her job in hospital administration, she moved to Bali to live with her daughter. Her aged pension was enough to live comfortably
there until her deteriorating health brought her back to Australia. I didn’t realise I was homeless actually.
In my source of looking for somewhere to live, I met a woman from Uniting Care, that’s how
I got on to them and I told them my story and she said you’re homeless and I said, “No,
no, I’m not homeless. I have a good bed every night, I have got children that look after
me, I’m fed well. I’m not homeless.” She said, “Yes, you are.” Public housing in Sydney’s inner west now
keeps a roof over Robin’s head. How is your experience different to those
you know that were better prepared? I think they’re going on more cruises than
I’m going on. I have friends who I’ve known for years and
who did well and they had help over the years. But I enjoyed my life before I got old. So I’m not at all envious of them, maybe sometimes. Compulsory superannuation has been phenomenally
successful at forcing most Australians to save. But how that money is invested and the costs
that incurs can have a dramatic impact on your retirement income. At the moment we have a very unique system,
a very large system, but it’s probably the worst retirement savings system in the world
except for all the others and so the system actually does need a lot of refining. It’s
not perfect and it’s got a long way to go.


  • The government is not responsible for your life, it is not the governments job to tell you how to save. Take responsibility for yourselves.

  • I am 35 in 2019. I honestly don't care how much super I have and what super fund it is with. I just don't believe it will be there when I retire (they will raise the age limit to 70 or 75 by then) . It will be wiped out in several crashes. If anything left, I doubt it can buy anything due to high inflation.

  • If that super is not converted into precious metal or real hard investement inflation will catch up with and will depreciate. 100k nowadays is peanuts compared to 25 years ago.

  • SUPER?? Its Super for Wall Street, thats about it!
    We should be able to get access NOW to help purchase a Home.

  • In 30-40 years when it’s time for mellenials to retire $1million in super will be peanuts after inflation reality is we will need much much more than that in the future. Vast majority of funds make poor return and charge high fees. It needs serious reform.

    Your super is also at risk by future taxation , retirement age changing to 80 years plus (already talks about these changes)


    Union funds are safer than anything provided by bastard's in shiny suits. They will rob us worker's blind given the chance.

  • Always pay yourself 15% from your wage or salary each week or month into your savings account or better still into your super account. Watch magic happen with compounding interest. Start as soon as you start work in your teens or early twenties. Good luck.

  • Less than 47% of the labour force get super. The red tape is so complex that small business cannot afford the employ people any more. They have to treat workers as "independent subcontractors". There is no job security anymore. The super rules are destroying our community with job insecurity. You don't get super working for uber eats. The corporations have taken over now you either invoice for your wages or subject to the labor hire firms, slavers. There is a reason real household income is falling or flat, the unintended consequences of super laws are one of them.

  • ABC! do a story on why insurance cost per year you have to pay with your super fund are between 500/800 per year and how the insurance company's through up every loophole under the sun to stop you making a claim

  • Yes, we're all too busy trying to survive… AND stupid for continuing to accept the neoliberal system we've been hoodwinked into since the 70s. This "market driven" economy is destroying us! The rich are getting richer off our backs while we get driven further into the ground to pay for their parasitic lifestyles. When are we going to wake and realise we've been screwed by both major parties who continue to look after the big end of town?

  • In July 2005 [i.e. as Soon as I could] I moved my super to a high-risk/growth portfolio [with a major-name-company] : Between then and now my super multiplied by FIVE-Times – and contributions were not very significant in that multiplication.

    I am hoping that retirement is only that far away – i.e. 14 more years and that it will again multiply by 4 or 5 times.

    I will easily have my house paid-off before then – and I only bought it in 2006.

    As you can see I got my shit together, and took responsibility rather late in life, around 2005/2006; and only expect to have to work 28 years from that date, but I think I will be alright.

  • If you are a millennial, don't expect the old age pension or super to exist by the time you are old. Make your own investments, there will be nothing left for you as your parents generation use everything up for themselves.

  • I honestly can't tell if super comes from a principle of neoliberalism or socialism. Obviously it's going to mean how much you live off of in retirement comes down to your individual responsibility but the idea of putting all of our money together seems like a socialist idea.

  • I'm glad we have super but as the video said it needs refining. In the same way we had a royal commission on banks and their practices of gouging clients with immaterial fees so too does the super industry need a smack down on robbing the country of its savings and chance of having a self sustaining ageing population.

  • You mean will you live until you're 67 and eligible to access your hard earned money……I'd rather get that money WHENEVER I want because it's mine, don't know about anyone else.

  • Costello: Keatings plan was stupid, and unnecessary. We just left the schedule as it was.

    next breath

    Costello: Compulsory employer contributions are not enough.

    What a tool. If he’d allowed keatings plan to go through, compulsory employer contributions would have been enough. But that would’ve hurt their donors, wouldn’t it?

  • Simple it's theft and suppresses wages. I've managed to save double my super balance across the last five years yet I'm still forced into this scheme..

  • When i started working at 18 i started thinking about retiring. I want to pay off my house and quit working. I have never gone on a holiday and saved all my money. 🙂 YOLO is a really bad way to think about life. When i retire sometime in my 40s i will be living stress free 🙂

  • Compulsory Super came in after I had been working for a few years as a young lad…nothing there now..all gone in fees,charges,poor investments by the fund. Nothing there. The Govt. changed the contract half way through, the pension was a RIGHT for those who paid into the system…Only Govt. bigwigs deserve a pension now…regardless of the millions they get..for screwing our people and country.

  • So wrong, Australia has one of the best systems in the world. The annual age pension for a single person is about 23K a year, this is very low and has to be supplemented by super. The older generation doesn't benefit from it now because super became compulsory only later in their lives. It totally makes sense that a small portion (9%) of your salary is put away to support you later in life. Nothing in life is free and people need to take some responsibility for their own future. If you spend everything you have during your working life – off course there's not much left at the end.

  • The ABC just continues to come up with ridiculous case studies of people who have never paid off a house way into retirement, how the hell does that have anything to do with Super. I get so frustrated with ABC reporting as they need to cover the rorts of Super companies and how the whole investment strategy is so risky in the first place and not people who at 70/80 don't own a house. That is another story for gods sake!

  • Super is a complete and utter scam, so is working a full time job for 40+ years to make your boss rich whilst you only get enough for a basic existence. I am self employed and have zero super, this government leeches and steals from us our whole lives the least they can do is support us in our final years. You are better off investing your money yourself and trying to escape the rat race by starting your own business than throw it in super. You may not even live past 65 with the way the world is headed. I think it is very important to find your own way in life and fend for yourself as much as possible.

  • there will be no super when you retire.when the system crashes all gone. do you think all this debt is going away. why wont they raise the percentage every year instead of waiting till 2025. Because they know the system will collapse . wake up people. NO SUPER, NO PENSION AFTER SHTF.

  • I don’t think people have enough money now to do things they enjoy what use will it be when you get to retire

  • Superannuation is for the financially stupid the financially intelligent go and invest themselves in shares and in stocks directly through brokers , super returns are a joke not worth the money because they are largely run by incompetent people in super funds that couldn’t care less about your money

  • Speaking for my generation- we don’t care what money we get at possibly 65 or 70 when we can’t buy a house or property now.

  • Trillions of dollars which is promised but will never ever be delivered.
    Because there just isn’t that much actual real money anywhere in the world.
    How is that so hard to understand?

  • The truth is, you would need to contribute 18% of your wages for the whole of your working life with no interruptions and no early payouts for hardship if you are really going to support yourself in retirement without additional government pensions and support.
    A complete and utter pipe dream we have all been sleep walked into with absolutely no “Plan B”.

  • Superannuation simply assumes that you have also paid off your own home by the tine you reach retirement age. This simply hasn’t happened for most.

  • Save with an industry fund, never let a shareholder grab your super, simple! That aside, remember as long as we don't let corporate govt rule our society we have pensions and public housing. Save a million, that's OK if you own a home, but if not, as long as the greedy corps are kept at bay every generation of Australians will have a safety net. Don't listen to naysayers, there's always a path as long as we keep the ethos of fairness.

  • Trust me, I was a senior govt finance officer, I know about ways and means, unless there is a major catastrophe, life is safe in Aus. Govt politicians maybe self serving but your public service is not. We always have ways and means to put a stop to their brilliant ideas, yes minister.

  • People shouldn't be relying on their super, it's a fiat product and will revert back to its true value of zero.

  • It's a rip off, no one can safe enough money with saving only 10% a year to get 20 or 30 years with a full salary in your retirement

  • The true failure is the education system. It bores most people stupid. TV numbs people’s brains. And the finance industry is incentivised to make crooks out the operatives. No! The biggest problem is government. They screw up literally everything they touch. WITHOUT EXCEPTION

  • As the guy from KPMG said at the end of the video it is possibly one of the worst super scheme in the world.If this whole scheme is compulsory then it should be governments responsibility to take care of it not so called numerous super funds leeching on peoples retirement income by charging ridiculous fees and charges.When my super balance was around $100000 I was getting charges around $1300 by the superfund and $65 every month by the financial adviser for doing nothing.I had enough of putting more compulsory super contributions and see hardly any increase in my super balance especially after those couple of market crashes we had.Long story short being self employed I decided to set up my SMSF so that I don't have to rely on government pension when the time comes.After two years since establishing my own fund and making extra payments as salary sacrifice I now have about $230000 in my super as cash and the interest it brings goes towards accounting,auditing fees.I have decided it's best to buy a commercial property and rented out but the banks are reluctant to give SMSF loans even though I have over 50% of the purchase price and the interest rates around 6% which is ridiculously high.The reason being they don't want to be responsible for people not being able to pay and loose it all.So after all this where am I in same shit before I set up my own SMSF.I'm 56 years old now and can't see how my super is going to fund my retirement.

  • I remember some years ago, Peter Costello, in an extremely rare moment of frankness, says unless you have done very well during your working life, you are unlikely to enjoy the same living standard in retirement compared to while you are in employment. I suspect a lot of people has come under the illusion that financial planning can do magic. It cannot. The amount of pension you get in retirement is always proportional to what you earn during your working life, at best. This is because pension comes from investments. Investment return, quality investment return, is just a scarce resource like any other. As more and more savings chase after quality investments, their return will become less and less. I was working in the UK in the 1980s before coming to Australia. In 1989, the UK government decided state pension is no longer viable. In that year, the UK government refunded half the balance on our national insurance contribution to be put into a private pension account. That was the beginning of the end of state pension. I knew then that was the beginning of ever decreasing investment return.

  • So Labor set up compulsory superannuation (I think it was a great idea) but now Bill shorten and labor want to dip into the super nest eggs people have…. sounds like double dipping to me. Happy for people to explain if this isn’t the case.

  • To younger generation – that is your solution : DO SMSF. Learn how to invest while working. Dont listen to doomsayers. You need balance of 20 X yearly budget. If you slightly talented in investing this number drops to 15 X and can be done even with 10 X.

    So after 30 years working & having family & living good life you are free.

    thats how i have done it.

  • NO – Because nobody is going to get anything….obsessed with super like its everything….yet few see what is coming.

  • Add fees even for lower cost industry funds to so called low taxes in super and the effective annual impost would make investing outside of super more worthwhile for average income workers.
    Any pot of money sitting around for 30 or 40 years is going to be gouged by opportunists and many people will not live to collect their super.

  • Yeah Government. Put the retirement age up so we can’t enjoy our retirement. Work to you drop dead!!!

  • The simple reality is that super in one form or another is here to stay. People can moan, bury their heads in the sand, delude themselves that super will suddenly vanish, but, those same people will probably be the ones on a current affair program in the future complaining about eating cat food during their retirement.

  • At least half of the super is exposed to stock markets because people leave the default investment options.

  • I have less than ten years before I retire and get the aged pension. I don't have any assets so I will have to survive on the pension rate.

  • I’m 33 and I pay a lot of attention to my super. Already changed the investment option percentage of my super and looking into voluntary self-contributing to my superannuation. I’m also saving for a house deposit and still considering if I should also save for my first home within my super. I’m paying a lot of attention into saving because I started my career quite late as I spent years getting my postgraduate degrees. I’m living at home with my parents to help boost my saving and will likely rent out my first house, when I do buy, to help pay off the mortgage ASAP.

  • It's all a scam. Had to use my super for medical after Workcover completely failed me. If I wasn't self managed it would have been near impossible.

  • Superannuation, is "GAMBLED", at the hornet nest of the "333 Collins Exchange",… head quarters.
    The "Foreign " Government of Australia, is a Fraudulent Government. Its powers, assumed by Fraud AND FORGERY.

  • In the 1980s, the experts said worker's, needed to salary sacrifice at least $170.00, a week, that was more than half my weekly wage, considering that my yearly income was $16,000, before tax, just another scam, set up by the government, for their rich mates.

  • The government can take your super anytime it pleases thanks to the bail in laws. I don’t see any super for anyone in the future.

  • They will just continue with globil financial crisis's so we all continue losing our money. If i were able to access m super i could buy my own property. Superannuation is a scam !
    End of discussion!!!

  • Peter Costello …. if I do not hold and control my personal super funds then I don't own it, simple. … This is because … if the banks go belly up then there will be no super left, for anyone. Not to mention the 'BAIL-IN' money grab legislation Turnbull bought in under the radar, one friday evening in early 2018. Most Aussies don't know about how the Banks intend to steal your bank deposits if the banks don't do so well in their casino/betting/ponzi scheme called fractional reserve banking. The finacial services industry is drowning in their own salivation at all those Super contributions. No Gov and especially no BANK can be trusted to do the right thing with our Super dollars.

  • If I had all the money I have given to CPP over 48 years, I would certainly be able to retire with a lot more than I can now!!!!!!!

  • I am an unemployed millennial, I have University education but no job, I have health issues and I guess will not live to an old age.

  • Super is the best retirement scheme we have available. Personal savings over a working life is the only realistic hope of retirement. But we need government to be less restrictive – less tax, no limits, simpler rules.

  • Hi people I’m 19. Should I even bother about superannuation or is it not worth it? (forget about super and invest with the money that would have gone to super?).
    Any opinion is welcome.

  • Costello- "they can't access their superannuation for 20 or 30 or 40 years "…. unless of course you're a politician.  I wonder when the next GFC hits if retired politicians super will take a hit like ordinary Aussies did in 07/08…..hahah…. I doubt it.

  • why the hell did they interview costello about super when he never even brought the policy in, it was brought in under Keating

  • Pretty clear you're all planning for us to be dead or homeless before we ever live long enough to see any super.

  • the whole idea that i LEGALLY have to entrust some rando corporation to "invest" in my money is completely ridiculous

  • Super is the government telling people they are too stupid to save, similar to a parent keep a portion of their pocket money for saving. I'm not a child and I want my super back, so I can invest it how I see fit.

  • And I never had a full time job and still can't get one…. it's just impossible to think of sustainable retirement.

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