Super: the great Australian apathy

Alexis George

Deputy Chief Executive Officer & Group Executive Wealth Australia, ANZ

The two biggest investments most Australians will have in their lives are a home and retirement savings.

We take a great interest in our home, its value and our progress towards paying it off. Some of us would even say we ‘love’ our homes and the memories they contain. But we don’t love super. Why not?

In fact, now I’ve mentioned the word ‘super’ I bet your mind has wandered to more immediate issues – what’s for lunch, how you’ll juggle school pick up today, when you should call the plumber….

Interactive: Tom Hounslow

Still here?

Like it or not, Australians should care passionately about super, because that’s where our future resides. It’s our ticket to independence and if you grab hold of it today, your older (and wiser) self will thank you.

" We all have aspirations for life beyond work when we have the time to focus on [what] makes us happy."

Interactive: Tom Hounslow

An Australian apathy

We all have aspirations for life beyond work when we have the time to focus on the people and past-times which make us happy. Nearly three quarters of Australians between 18 and 64 surveyed by ANZ agree their independence is an extremely important priority for their future.

Despite this consensus, more than half of those surveyed significantly underestimate how much super they’ll need to achieve independence. Moreover, approximately a quarter don’t know their super balance and are potentially paying unnecessary fees by having two or more super accounts.

Today the average Australian will be fortunate enough to live well into their 80s. With the average retiree age in 2014-15 being 54.4 years, we could be saving for a retirement spanning a third of our lifetime. It’s essential then we shake off this debilitating apathy and start looking out for our future wellbeing.

Lockout

Of those surveyed by ANZ, 38 per cent believe a super balance of less than $A300,000 will be enough to support them in retirement. But based on the Association of Superannuation Funds of Australia (ASFA) calculations, this would cover their annual budget to live comfortably in retirement for just over seven years. And this figure is dependent on the individual also owning their own home outright.

Retirees however, will likely be increasingly challenged with the demands of rent or continued mortgage debt if we consider data from the CoreLogic Housing Affordability Report (December 2016) which indicates Australian dwelling prices have increased 19 per cent over the past five years, while incomes have risen only 9.2 per cent.

Already property ownership from 2006 census figures of 69.8 per cent owner occupied dwellings has dropped to 67 per cent in 2016.

Our survey found it’s the younger demographic (aged 18 to 34), those most impacted by the recent years’ surge in property prices, who most significantly underestimate their retirement savings goal.

Alarmingly, 44 per cent believe they will need less than $A300,000 to achieve their independence in retirement.

Thirty three per cent believe they will need less than $A100,000.

Based on ASFA’s above criteria, $100,000 will last them less than two and a half years.

Even assuming a partial age pension continues while our population ages increasingly towards retirement age, ASFA estimates the lump sum needed to support a comfortable lifestyle for a single person is $A545,000, or $640,000 for a couple.

With homeownership remaining a great Australian dream for an increasing number of Australians and a growing number of the ‘lucky’ homeowners carrying mortgage debt into retirement, more needs to be done to ensure Australians are equipped with the financial literacy and the sense of urgency, to save for their independent future now.

Reconnecting

Our industry has a responsibility to do what we can to make it easier for customers to engage with their super. The shift to digital technology and communication is one way to achieve this.

For instance, our ANZ Smart Choice Super retail fund features digital functionality allowing customers to manage their super by using our ANZ goMoney and Grow by ANZ apps via a smartphone.

This has been well-received by customers and is a step in the right direction. However, the real challenge lies in making superannuation as real and tangible as investing in a home. It’s a challenge we’re continuing to address.

We need to build a constructive partnership between industry and government to establish firm, consistent rules on super so Australians can understand it, plan for it and feel reassured about our national approach well into the future.

For too long, super has been set aside as a dusty, unknown pay package we land on in later life. By helping customers re-envisage super as their independence, we hope it will gain its deserved recognition as an important wealth goal to seize today.