Uncertainty is the new normal. For those in the lead-up to retirement, the coronavirus pandemic couldn’t have come at a worse time. Many pre-retirees are being forced out of the workforce and having to come to grips with the complex retirement system overnight. To add to their woes, super balances have taken a massive hit, leaving financial plans in disarray. Others, who have held onto their jobs, hope to work longer to recoup the losses.
If there’s one message in all of this, it’s that being disengaged isn’t a viable plan.
However, super’s many rules and endless jargon act as a serious barrier. It is especially challenging when members need to roll over into pension mode.
While there is a regulated, low-cost default option in accumulation phase, there isn’t one in pension mode. People are left to choose an investment product from a long list of options, understand the risks involved and work out how long their super will last. Consumer groups and industry researchers say the current system is far too complex and cumbersome.
Ian Henschke, chief advocate for National Seniors, says people worry whether they will have enough money to retire on and are desperate for information.
“It’s a minefield,” he says. “The system we have in Australia is extremely complex. There needs to be an improvement in this area, a simplification of the rules governing super and the age pension.”
Meanwhile, there are things you can do to help yourself. Being well informed is a big advantage. Use the retirement tools and information on your fund’s website and don’t be shy to ask for help. Or pay $2500 to $5000 to get advice from a trusted source.
This story is from the May 2020 edition of Money Magazine Australia.
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This story is from the May 2020 edition of Money Magazine Australia.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 8,500+ magazines and newspapers.
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