That is the question on the lips of many older Australians, who are being forced to reconsider their financial positions going into retirement. Whether this is just fearmongering in the mainstream media or an actual issue is something we will try to unpack today.
It seems that with the cost of living constantly rising in Australia, teamed with record-low interest rates punishing savers and a higher life expectancy, worries are surfacing that retirees might not actually have enough money in their super accounts to last them through retirement.
But are these worries completely unfounded? That may be the case, according to a new report just published by the Grattan Institute. The report claims that the superannuation lobby has been ‘creating false belief retirees haven’t saved enough’, according to The Guardian. The report’s authors argue that a recent rise in think-pieces on the topic across Australia’s newspapers is, essentially, just the super industry talking up its own book.
After the report’s release on Tuesday, a variety of news sources quickly back-flipped on prior claims that Australians are dangerously underprepared for retirement.
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The Sydney Morning Herald has named the whole fiasco ‘the Great Super Lie’. Many are calling the superannuation lobby a ‘fear factory’, taking advantage of vulnerable Australians which may be worried about their financial future. From The West Australian earlier in the week:
‘Australians nearing retirement are being scared into believing they will face a life of penury when many will be better off than during their working lives, a report out today suggests.
‘Compiled by the independent Grattan Institute, the report argues plans to lift the superannuation guarantee to 12 per cent should be abandoned and tax increased on superannuation accounts.’
The super industry has its own, obvious, reasons to want more Australians to put more of their cash into their super. They are paid their management fees on every cent, however well or poorly your portfolio performs. You can choose which fund manages your money, but you can’t choose to opt out of the system entirely — unless, of course, you’re willing to put in the work to run a self-managed super fund of your own. Something that a mere 4% of Australians do.
So any lift in super contributions, whether voluntary or legislated by the government, benefits super managers.
Be careful who you listen to…
However, while you should be suspicious of super managers trying to frighten you into handing over more of your cash, that doesn’t necessarily mean you should trust the newspapers telling you not to worry and just to ignore your retirement savings, either…
The important thing to take away from this debacle (and the misinformation that comes with it), isn’t that we will actually have enough money to retire on. That will depend on your individual circumstances, and a newspaper (or e-letter) article talking about nationwide trends can’t address your unique situation.
Here at Markets & Money, we don’t pretend to have all the answers. Instead, we argue that you should take control of your own finances. We believe that every investor should understand their own investments, and make decisions for themselves. We’ll offer up our best ideas and research, and the rest we leave to you.
Stock picking veteran and economics expert, Greg Canavan, does just that in his investment advisory, Crisis & Opportunity. He looks for stocks which can carry your wealth unharmed in periods of economic uncertainty, and he hunts for beaten down value to benefit from the recovery. But most of all, Greg takes a humble approach. He makes sure his readers understand the thinking behind each of his recommendations, and the risks as well as the potential rewards. Greg wants to make sure that you go into each of the stocks he recommends with your eyes wide open. A level of transparency you won’t often see from the big players in the financial industry.
The latest macro trend Greg has been looking at is how to tackle the current energy crisis in Australia (with an alternative energy source we naturally have in abundance). To find out what his potential solution is — and how you could make money from it — click here.
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Editor, Markets & Money