1 00:00:05,880 --> 00:00:08,760 Speaker 1: Welcome to Fear and Greed QNA. I'm Sean Aylmer. Fear 2 00:00:08,800 --> 00:00:11,040 Speaker 1: and Greed is working with the team at Vanguard to 3 00:00:11,080 --> 00:00:14,160 Speaker 1: bring you a series of episodes on investing, giving you 4 00:00:14,200 --> 00:00:17,640 Speaker 1: the information you need to help make informed decisions. Today, 5 00:00:17,680 --> 00:00:20,800 Speaker 1: we're looking at how Australians are preparing for retirement and 6 00:00:20,800 --> 00:00:25,320 Speaker 1: how rising housing costs, shifting expectations and financial literacy are 7 00:00:25,360 --> 00:00:27,760 Speaker 1: reshaping that journey and what you can do about it. 8 00:00:27,800 --> 00:00:30,440 Speaker 1: As always, information in this episode is general in nature 9 00:00:30,480 --> 00:00:33,720 Speaker 1: and doesn't take into account your own circumstances. You should 10 00:00:33,760 --> 00:00:35,920 Speaker 1: do your own research and see professional advice before making 11 00:00:35,920 --> 00:00:41,240 Speaker 1: investment decisions. I'm joined by Vanguard Australia's Managing Director, Daniel Shrimsky. Daniel, 12 00:00:41,400 --> 00:00:42,360 Speaker 1: welcome into the studio. 13 00:00:42,640 --> 00:00:44,000 Speaker 2: Good to be here, Thanks for having us. 14 00:00:44,320 --> 00:00:47,400 Speaker 1: So I'll get to the How Australia retireed report in 15 00:00:47,440 --> 00:00:50,199 Speaker 1: a moment. But why do the research to begin with? 16 00:00:51,000 --> 00:00:53,200 Speaker 2: Yeah, Look, I think it starts back when we launched 17 00:00:53,280 --> 00:00:56,080 Speaker 2: Vanguard Super. We launched Vanguard Super two and a half 18 00:00:56,240 --> 00:00:59,720 Speaker 2: years ago and we wanted Vanguard Super to be simple, 19 00:01:00,120 --> 00:01:03,200 Speaker 2: transparent and low cost. And we think over the past 20 00:01:03,200 --> 00:01:05,120 Speaker 2: two and a half years we've delivered on that, but 21 00:01:05,800 --> 00:01:08,520 Speaker 2: we understand when we launched Vanguards Super it was more 22 00:01:08,560 --> 00:01:11,320 Speaker 2: than just about returns. Returns are important, but we wanted 23 00:01:11,319 --> 00:01:15,640 Speaker 2: to help Australians be confident in retirement, have the retirement 24 00:01:15,720 --> 00:01:17,880 Speaker 2: they deserve. We thought we could play a role in that, 25 00:01:18,319 --> 00:01:20,320 Speaker 2: so we did launch Vanguard Super and we also thought 26 00:01:20,319 --> 00:01:22,720 Speaker 2: we'd undertake the work on how Australia retires. And this 27 00:01:22,800 --> 00:01:25,600 Speaker 2: is our third year to try to understand what are 28 00:01:25,640 --> 00:01:29,680 Speaker 2: the hopes of Australians, what are the opportunities, the challenges 29 00:01:30,040 --> 00:01:32,479 Speaker 2: that they have, and how do we help them do better? 30 00:01:32,760 --> 00:01:33,800 Speaker 2: So that's what we've done. 31 00:01:33,959 --> 00:01:36,360 Speaker 1: Okay, So what ask some of the standout findings to you? 32 00:01:36,840 --> 00:01:39,520 Speaker 2: Yeah? Good, great question. Look, I think first and foremost, 33 00:01:39,560 --> 00:01:42,479 Speaker 2: it's that Australians don't have retirement plans. If we look 34 00:01:42,480 --> 00:01:45,160 Speaker 2: at I think almost fifty percent of Australians do not 35 00:01:45,200 --> 00:01:47,440 Speaker 2: have a plan for retirement and we sort of liken 36 00:01:47,520 --> 00:01:49,960 Speaker 2: that to running a marathon without knowing where the finish 37 00:01:50,000 --> 00:01:51,200 Speaker 2: line is an actual fact. 38 00:01:52,080 --> 00:01:55,720 Speaker 1: So a plan for retirement is that something beyond just 39 00:01:55,800 --> 00:01:58,760 Speaker 1: putting your eleven and a half twelve percent super away. Yeah? 40 00:01:58,760 --> 00:02:00,840 Speaker 2: I don't think it doesn't need to be complex. It 41 00:02:00,840 --> 00:02:02,760 Speaker 2: doesn't need to be perfect. It could be a matter 42 00:02:02,840 --> 00:02:06,080 Speaker 2: of just understanding what do you want to achieve in retirement? 43 00:02:06,080 --> 00:02:08,720 Speaker 2: What are your goals, what sort of lifestyle do you 44 00:02:08,760 --> 00:02:11,040 Speaker 2: want to live? How long do you feel like you 45 00:02:11,120 --> 00:02:13,040 Speaker 2: need to budget for in retirement? It could be as 46 00:02:13,080 --> 00:02:16,080 Speaker 2: simple as that, Sean, and we've noticed through the research 47 00:02:16,200 --> 00:02:19,680 Speaker 2: that Australians are almost three times more likely to be 48 00:02:19,760 --> 00:02:22,720 Speaker 2: confident in retirement if they have a plan, a retirement 49 00:02:22,760 --> 00:02:26,880 Speaker 2: plan that's meaningful. I think other outcomes from the research 50 00:02:27,040 --> 00:02:30,720 Speaker 2: was that financial literacy is still a big problem in Australia. 51 00:02:30,840 --> 00:02:34,240 Speaker 2: Basic financial concepts are not understood by many Australians and 52 00:02:35,040 --> 00:02:38,880 Speaker 2: it's really hard to make informed financial decisions without understanding 53 00:02:38,960 --> 00:02:41,880 Speaker 2: some of the basics. And it could be even what 54 00:02:42,080 --> 00:02:44,440 Speaker 2: is the age in which you can access your superannuation? 55 00:02:44,560 --> 00:02:47,120 Speaker 2: Forty percent of Australians aren't aware of that. So how 56 00:02:47,160 --> 00:02:49,359 Speaker 2: do you plan for retirement if you don't know when 57 00:02:49,360 --> 00:02:51,640 Speaker 2: you can access your superannuation? 58 00:02:52,200 --> 00:02:54,440 Speaker 1: How do we solve that? I mean, financial literacy has 59 00:02:54,520 --> 00:02:58,200 Speaker 1: been a problem forever and this report suggests when it 60 00:02:58,240 --> 00:03:02,000 Speaker 1: comes to literacy around time and it remains a problem 61 00:03:02,160 --> 00:03:04,960 Speaker 1: and in some ways outside the house retirement is as 62 00:03:04,960 --> 00:03:07,119 Speaker 1: big a financial decision as you're ever going to make. 63 00:03:07,480 --> 00:03:09,400 Speaker 1: How to improve that literacy. 64 00:03:09,040 --> 00:03:10,840 Speaker 2: Yeah, I mean, I think, just to double down on 65 00:03:10,880 --> 00:03:14,240 Speaker 2: your point, it's really hard to make informed decisions. It's 66 00:03:14,320 --> 00:03:16,880 Speaker 2: really hard to manage your money if you don't have 67 00:03:17,000 --> 00:03:21,400 Speaker 2: financial literacy, and just even concepts like compounding and interest 68 00:03:21,440 --> 00:03:25,400 Speaker 2: in inflation, understanding them will help financial well being. And 69 00:03:25,760 --> 00:03:30,560 Speaker 2: we've seen literacy go back, particularly with younger cohorts of Australians. 70 00:03:30,840 --> 00:03:33,760 Speaker 2: We think it's great that the government has got it 71 00:03:33,800 --> 00:03:36,600 Speaker 2: on its agenda. We think industry also needs to play 72 00:03:36,600 --> 00:03:40,040 Speaker 2: a role in improving financial literacy. We think investments going 73 00:03:40,120 --> 00:03:45,280 Speaker 2: to be required from policymakers, but also just at people's homes. 74 00:03:45,440 --> 00:03:48,520 Speaker 2: Parents can play a role in terms of increasing financial 75 00:03:48,520 --> 00:03:53,880 Speaker 2: literacy and younger astrands budgeting with pocket money, helping kids 76 00:03:53,920 --> 00:03:56,200 Speaker 2: save the goals or things that they want to say, 77 00:03:56,360 --> 00:03:58,960 Speaker 2: or just even those basics can help move the needle 78 00:03:59,000 --> 00:04:01,720 Speaker 2: for younger Austrands. But it's going to require industry to 79 00:04:01,840 --> 00:04:03,440 Speaker 2: lean in, and it's also, as I said, going to 80 00:04:03,480 --> 00:04:05,800 Speaker 2: require the government to really put it as a top 81 00:04:05,840 --> 00:04:06,880 Speaker 2: priority on the agenda. 82 00:04:07,080 --> 00:04:09,760 Speaker 1: What are the things that surprised me talking about younger 83 00:04:09,800 --> 00:04:12,680 Speaker 1: Australians is just the fact that a third of millennials 84 00:04:12,680 --> 00:04:17,080 Speaker 1: and one quarter of boomers expect to retire with a mortgage. Now, 85 00:04:17,120 --> 00:04:21,080 Speaker 1: as a gen XA, I always just knew i'd retire 86 00:04:21,120 --> 00:04:23,599 Speaker 1: without a mortgage, and I think all my cohorts are 87 00:04:23,640 --> 00:04:25,760 Speaker 1: pretty much in the same bit. It surprises me that 88 00:04:25,800 --> 00:04:28,359 Speaker 1: so many people think, oh, having a mortgage when you 89 00:04:28,440 --> 00:04:29,599 Speaker 1: retire is a thing. 90 00:04:30,080 --> 00:04:31,960 Speaker 2: Yeah. I mean if you go back as you'd knowtion 91 00:04:32,040 --> 00:04:33,520 Speaker 2: and you go back to the nineteen nineties, I think 92 00:04:33,520 --> 00:04:36,680 Speaker 2: the research shows ninety percent of Australia is retired without 93 00:04:36,720 --> 00:04:40,320 Speaker 2: a mortgage and it's going to be a challenge. And 94 00:04:40,320 --> 00:04:43,720 Speaker 2: if you think of Australian the average age which someone 95 00:04:43,800 --> 00:04:46,240 Speaker 2: buys their first home is in the late thirties. You 96 00:04:46,279 --> 00:04:48,920 Speaker 2: take out a thirty year mortgage, it's not surprising into 97 00:04:48,960 --> 00:04:52,520 Speaker 2: your sixties and seventies people anticipate having to having to 98 00:04:52,920 --> 00:04:55,719 Speaker 2: pay for a mortgage. But it's going to mean Australians 99 00:04:55,720 --> 00:04:58,600 Speaker 2: are going to need to retire with higher superannuation balances 100 00:04:58,600 --> 00:05:01,000 Speaker 2: because they're going to need to either make those one 101 00:05:01,040 --> 00:05:04,360 Speaker 2: off payments to pay down the mortgage or make those 102 00:05:04,480 --> 00:05:09,279 Speaker 2: regular payments to consistently meet the mortgage requirements. But I 103 00:05:09,279 --> 00:05:13,400 Speaker 2: think interestingly, it's not just financial, it's emotional as well. 104 00:05:13,480 --> 00:05:18,080 Speaker 2: Retiring with a mortgage creates anxiety and it is a burden, 105 00:05:18,360 --> 00:05:21,680 Speaker 2: and it's something that you know, we're concerned about as 106 00:05:21,720 --> 00:05:23,360 Speaker 2: we think about how things are going to play out 107 00:05:23,400 --> 00:05:24,080 Speaker 2: over the years to come. 108 00:05:24,279 --> 00:05:32,039 Speaker 1: Stay with me. Daniel will be back in a minute. 109 00:05:33,320 --> 00:05:36,680 Speaker 1: I guess this morning is Daniel Shrimsky from Vanguard Australia. 110 00:05:36,720 --> 00:05:38,839 Speaker 1: Ahead of the break, we were talking about mortgages. What 111 00:05:38,880 --> 00:05:41,720 Speaker 1: about renters. How does renting affect retirement? 112 00:05:41,880 --> 00:05:44,960 Speaker 2: Yeah? Interesting, Sean, I mean, I think it adds another 113 00:05:45,040 --> 00:05:49,839 Speaker 2: layer of complexity. Almost one in five retirees today are renters. 114 00:05:50,800 --> 00:05:53,839 Speaker 2: And if you think of retirement confidence, ten percent of 115 00:05:53,839 --> 00:05:56,960 Speaker 2: them are highly confident as it relates to their retirement, 116 00:05:56,960 --> 00:05:59,359 Speaker 2: which is way less than ten percent. Ten percent of 117 00:05:59,400 --> 00:06:02,960 Speaker 2: them feel high confident about their retirement. And yeah, I 118 00:06:02,960 --> 00:06:06,720 Speaker 2: think it just shows that owning a home and retirement 119 00:06:06,839 --> 00:06:10,520 Speaker 2: confidence is so closely linked. But it is obviously becoming harder. 120 00:06:10,560 --> 00:06:12,320 Speaker 2: We know that you don't have to look too far 121 00:06:12,400 --> 00:06:14,240 Speaker 2: to know how hard it is to get into the 122 00:06:14,240 --> 00:06:18,880 Speaker 2: property market, but renting certainly provides an additional challenge. 123 00:06:19,200 --> 00:06:21,320 Speaker 1: What about downsizing. So, you know, I think of my 124 00:06:21,360 --> 00:06:24,920 Speaker 1: own circumstances. I'm ten years from retirement. Downsizing to me 125 00:06:25,160 --> 00:06:27,480 Speaker 1: is a big part of the plan. Yeah, Is that 126 00:06:27,560 --> 00:06:29,600 Speaker 1: how it works? Or do the kids never run away? 127 00:06:29,720 --> 00:06:31,799 Speaker 2: I think there is a perception out there that people 128 00:06:31,800 --> 00:06:36,360 Speaker 2: will downsize, but the research suggests otherwise. Less than thirty 129 00:06:36,400 --> 00:06:41,799 Speaker 2: percent of retirees plan to or have moved home since retiring, 130 00:06:42,080 --> 00:06:44,960 Speaker 2: which is, you know, pretty small, less than thirty percent. 131 00:06:45,000 --> 00:06:48,560 Speaker 2: And if you think of how retirees think about the home, 132 00:06:48,680 --> 00:06:51,440 Speaker 2: the family home, I think just a little over sixty 133 00:06:51,440 --> 00:06:54,039 Speaker 2: percent of them plan to stay in their home for 134 00:06:54,120 --> 00:06:57,080 Speaker 2: the rest of their life or leave it through an inheritance. 135 00:06:57,160 --> 00:07:01,400 Speaker 2: And that's compared with nine percent of australiallions that plan 136 00:07:01,480 --> 00:07:04,320 Speaker 2: to liquid eate or sell the family home to fund 137 00:07:04,600 --> 00:07:07,240 Speaker 2: a retirement income. So I think that is a little 138 00:07:07,240 --> 00:07:09,479 Speaker 2: different to the perception out there in terms of people's 139 00:07:09,520 --> 00:07:10,840 Speaker 2: willingness to downsize. 140 00:07:11,240 --> 00:07:14,480 Speaker 1: So, given all this, what do you want people to 141 00:07:14,520 --> 00:07:19,120 Speaker 1: be doing, be they twenty or forty or nearly sixty. Yeah, 142 00:07:19,120 --> 00:07:20,320 Speaker 1: what do you want them to be doing? 143 00:07:20,480 --> 00:07:22,640 Speaker 2: Yeah? And I don't think Sean, there's a silver bullet, 144 00:07:22,680 --> 00:07:24,720 Speaker 2: but I do think it can sound like doom and 145 00:07:24,720 --> 00:07:26,320 Speaker 2: gloom when you listen to all of that, but there 146 00:07:26,360 --> 00:07:29,320 Speaker 2: are things that Australians can do. The first thing we 147 00:07:29,400 --> 00:07:32,160 Speaker 2: would say is to is to check in with your 148 00:07:32,160 --> 00:07:36,720 Speaker 2: superannuation fund and that could be as simple as looking 149 00:07:36,720 --> 00:07:40,680 Speaker 2: online every few months how your investment investments performing. Is 150 00:07:40,720 --> 00:07:42,840 Speaker 2: there any information that you should be keeping up to 151 00:07:42,880 --> 00:07:46,040 Speaker 2: speed on just knowing more about what's happening with your 152 00:07:46,080 --> 00:07:49,840 Speaker 2: fund and what is ultimately your investment. The second thing 153 00:07:50,080 --> 00:07:53,280 Speaker 2: would be if you are able to make a voluntary 154 00:07:53,280 --> 00:07:56,800 Speaker 2: contribution to your superannuation over and above what your employer 155 00:07:57,040 --> 00:07:58,920 Speaker 2: has paid into the superannuation. 156 00:07:59,040 --> 00:08:01,320 Speaker 1: So just explain that, so up to a limit of 157 00:08:01,560 --> 00:08:04,000 Speaker 1: twenty seven or eight thousand dollars, let's say you pay 158 00:08:04,000 --> 00:08:07,280 Speaker 1: fifteen thousand dollars in suber you're able to pay that 159 00:08:07,480 --> 00:08:10,360 Speaker 1: extra amount or part thereof, yep, and get a lower 160 00:08:10,400 --> 00:08:10,760 Speaker 1: tax rate. 161 00:08:10,840 --> 00:08:13,800 Speaker 2: Is that right? Correct? And that's a again people should 162 00:08:13,840 --> 00:08:17,840 Speaker 2: seek advice on that. That's everyone's circumstances are different, but 163 00:08:18,440 --> 00:08:20,800 Speaker 2: generally speaking, if you're able to that, that could be 164 00:08:20,840 --> 00:08:25,680 Speaker 2: a wise move to make as to help your retirement success. Thirdly, 165 00:08:25,720 --> 00:08:29,559 Speaker 2: i'd say just increasing financial literacy is something everybody should 166 00:08:29,560 --> 00:08:35,760 Speaker 2: do also becoming more familiar with the superannuation system. And lastly, 167 00:08:35,840 --> 00:08:38,720 Speaker 2: we would say building that retirement plan. I talked about 168 00:08:38,720 --> 00:08:41,120 Speaker 2: that a little bit earlier, building a retirement plan, and 169 00:08:41,440 --> 00:08:43,640 Speaker 2: it doesn't need to be perfect. It doesn't have to 170 00:08:43,640 --> 00:08:47,520 Speaker 2: involve a financial advisor. It could be a small spreadsheet 171 00:08:47,520 --> 00:08:49,560 Speaker 2: where you map out some of the things that we 172 00:08:49,640 --> 00:08:52,840 Speaker 2: talked about earlier. What sort of life cycle lifestyle do 173 00:08:52,840 --> 00:08:54,840 Speaker 2: you want to have in retirement, how long should you 174 00:08:54,880 --> 00:08:58,720 Speaker 2: be planning for, what are your goals? Putting a plan 175 00:08:58,800 --> 00:09:01,080 Speaker 2: in place. Do need to have all the answers, but 176 00:09:01,120 --> 00:09:03,760 Speaker 2: putting a plan in place is something that will help Australians. 177 00:09:03,840 --> 00:09:06,760 Speaker 2: So we see that as all those things again no 178 00:09:06,840 --> 00:09:09,400 Speaker 2: silver bullet, but they will all move strands in the 179 00:09:09,440 --> 00:09:09,960 Speaker 2: right direction. 180 00:09:10,200 --> 00:09:12,640 Speaker 1: Are we heading in the right direction as a country? 181 00:09:12,679 --> 00:09:14,840 Speaker 1: Given that we now pay twelve percent of our super 182 00:09:14,960 --> 00:09:16,959 Speaker 1: it's a big chunk of our pay every week or 183 00:09:17,040 --> 00:09:19,560 Speaker 1: fortnite or a month. Do you think we're getting better? 184 00:09:20,040 --> 00:09:22,719 Speaker 2: I think we are, There's no doubt about it. I 185 00:09:22,760 --> 00:09:25,960 Speaker 2: think with more. I think advice and guidance is something 186 00:09:26,000 --> 00:09:28,840 Speaker 2: that we've talked about before, Sean. I think there's reform 187 00:09:28,960 --> 00:09:31,480 Speaker 2: on the way. I think that will hopefully help more 188 00:09:31,520 --> 00:09:34,480 Speaker 2: Austraands get the support they need to make the right 189 00:09:34,520 --> 00:09:38,040 Speaker 2: decisions that meet their needs. I think that's another really 190 00:09:38,040 --> 00:09:41,880 Speaker 2: big step in terms of Australians building for retirement and 191 00:09:41,920 --> 00:09:43,200 Speaker 2: having a successful retirement. 192 00:09:43,440 --> 00:09:45,480 Speaker 1: Daniel, thank you for talking to Fear and Greed. 193 00:09:45,720 --> 00:09:46,480 Speaker 2: Thank you for your time. 194 00:09:46,640 --> 00:09:49,560 Speaker 1: That was Daniel Strumsky, Managing director of van Guard Australia, 195 00:09:49,640 --> 00:09:52,400 Speaker 1: a great supporter of this podcast. Invest Strong and Steady 196 00:09:52,400 --> 00:09:55,280 Speaker 1: with Vanguard. Head to Vanguard's super website and take the 197 00:09:55,400 --> 00:09:58,599 Speaker 1: Smart Retire Quiz to uncover your strengths and discover the 198 00:09:58,600 --> 00:10:02,240 Speaker 1: building blocks of a confident retirement, and remember to read 199 00:10:02,280 --> 00:10:05,640 Speaker 1: the relevant PDS and TMD before considering if any product 200 00:10:05,720 --> 00:10:08,040 Speaker 1: is right for you. This is Veering Greek Q and A. 201 00:10:08,200 --> 00:10:09,679 Speaker 1: I'm Suan Alma. Enjoy your day.