Should you relying on retirement schemes for your future?

the day. Um, I have a bit of a topic I want to chat to you guys about, which I am, uh, if you've ever heard me speak about this before, you know I'm a little bit passionate about it, just a tiny bit passionate about it, and have some quite strong opinions around it is the reality of the matter. Um, but before we dive in, this is the topic of retirement savings and superannuation, right? Um, but before we dive into that, uh, those that are listening in, could you just let me know that you can see me okay? Let me know you can hear me okay. Let me know all the audio and everything is working beautifully so I can just get into it. I've had the experience before of, um, recording an entire session and no one, no one heard it because it didn't work. But it says it should be streaming okay in, um, in everything. And if you're joining in live— okay, cool, thank you so much— if you're joining in live, let me know that you're joining in live. If you're watching this as a replay, uh, later on, let me know you're watching this as a replay. That would be absolutely awesome. Now, um, so we are on the topic of, uh, superannuation, or let's broaden out and call retirement schemes, right? In Australia, super— it's called superannuation. In the US, it might be the 401k. You know, in New Zealand, the KiwiSaver. And different countries have different ways that they, uh, call it. But we are on the topic of superannuation now. One of the biggest mistakes I see people make when it comes to superannuation is— the first is complacency, because it's kind of like this set-and-forget type of thing where it's automatically taken out of your Now, let me just be clear, it is automatically taken out of your paycheck. It is not a contribution that your employer makes. It is made out to be that way, but if it wasn't set up in this compulsory way, then you would be getting that in your back pocket, right? So it's compulsorily taken out of your paycheck, right, as part of your package. And so because it happens without your knowledge and it's out of sight, out of mind, a lot of people— and people consider it to be such a long way away and they get a statement once a year and that's basically their involvement in it. A lot of people get very, very complacent with their superannuation, right? And they only really start taking care of it or looking at it when it gets closer to retirement. And I think that is fundamentally a huge mistake, right? I believe, and I wholeheartedly believe this, if you're here to take control of your financial life, and you wouldn't really be tuning in and listening to me or in the Wealth Dojo group or wherever you're diving in right now, unless at some level you are here to actually improve your financial IQ, improve your investment IQ, and start to take control of your financial future once and for all, right? You wouldn't be here otherwise. So if you are here to take control of your financial future, then you have to look at all areas of your life, and that includes your superannuation, okay? So the first big mistake is all about complacency. They don't know what fees they're paying, they don't know how it's performing, they don't know who's managing it, they don't know what it's invested in, and it's just this set and forget thing, and let's just hope it all works out, and there's there's something magically available in the future, right? That's the first big mistake. The second big mistake is trusting that the government's not going to change shit. And, um, I think that's possibly the biggest mistake, right? Because what the government has consistently done, and the regulator, uh, regulators and all that type of stuff when it comes to superannuation, is that they've been changing the goalposts on a consistent basis for a long, long time now. So if you're sitting there thinking that the government's not going to change how this works in the future You are kidding yourself, kidding yourself. And let me tell you, it's not in your favor. Okay, it's not in your favor. So the second big mistake is just trusting the government and trusting superannuation funds that they're all just going to take care of it. Let me be clear, you are the only one responsible for your financial future. Don't put that responsibility in the hands of anybody else, right? Not me, not governments, not corporations, not funds, not anybody else. You need to have it in your own control. Now, that doesn't mean you don't lean on people for guidance and advice. A lot of people come and work with me in my programs or in the Invest program or the Grow program, the Scale program to get that guidance, get that advice to kind of shortcut their results. But it's all about becoming empowered so you can make better quality financial decisions. Now, there's a couple of key things I want to talk to you about today in terms of the superannuation system. Right. Number one, I want to talk to you about the importance of you doing audit on it and you actually getting clear on what the bloody hell is going on. I want to talk to you about setting up a self-managed super fund because there's a lot of confusion around this. Now, this isn't for everybody, by the way, and this isn't financial advice. I'm not a financial advisor. I'm not here to give you financial advice around this. I am just giving you some ideas around what a lot of my other clients have done and have been able to do in their superannuation and some of the things in my knowledge around what you can do in it. And then I'm going to talk to you about some risks with the superannuation system as it stands and some of the things that I potentially see that are going to be coming in the future, which again are not in your favor and, um, I think are really, really dangerous. And it's one of the reasons I think that relying upon superannuation for your retirement is a very, very dangerous strategy for a retirement strategy, like very dangerous, okay? And I don't think anybody should be doing it. In any way, shape, or form, right? So I'm going to talk to you about that at the end as well. Now, when it comes to looking at your— so the first step you've got to do is that you've got to go, you know what, I'm going to choose to take control of this area of my financial life as well. And so the first step to do with that is that you want to actually get clear on what the bloody hell is going on, right? And so when we're talking about what's going on, like the first thing you've got to get clear on is your performance of your superannuation fund. Who here knows what their average return of their superannuation fund has been? What has it been over the last 12 months, and what's the average over 10 years? Who knows those figures? Like, pop it in the chat for me. Let me know if you know what your figures are, because some are doing okay, and some are doing well, and some are doing in just—they're just horrible. Like, just disgusting. Like, what are your figures? How is your superannuation fund? Currently performing. Okay, this is kind of information. Yeah, look at and and you know I I hear you and I see you, but don't worry about it. Right? Like this is normal. This is normal. Most people have no idea. So and by the way, anybody else? Does anybody else have that experience? They don't know what their um their superannuation is doing at this point in time. Right? Because that's really really normal, by the way. So you're absolutely not alone. So if you know what your superannuation has been performing at, pop it in the comments for me. Let me know. If you have no idea, let me know that as well. Now, so the first thing you want to check in on is the performance of your superannuation, right, as it's sitting right now. The second thing you want to check in on is how much fees you are actually paying. So you have to understand that there are hidden fees within your superannuation fund, and you need to be clear on that. A lot of people, when they talk about setting up a self-managed super fund, they go, oh no, there's fees associated with setting up a self-managed super fund and running on a yearly basis. Guess what? You're paying fees right now. They're not just managing your money for free. Like, do you know, out of the 20 largest, uh, companies in Australia, in terms of— I can't remember the exact frame— 20 largest companies in Australia, uh, 11 of them are superannuation companies. Private superannuation companies, which are for-profit industries. Okay, so believe me, they're making money off you 100%. So you need to know what your fees currently are. What are you paying to actually have this managed by somebody else, which you may not be paying attention and have no idea what they're even doing? Okay, so the second thing you want to check in on is the fees. The third thing you want to check in on is what are you actually invested in? Right? What are you actually invested in? It's your money. And if you don't know what it's invested in, at least the industry, then, um, quite frankly, that's financial laziness, right? And again, I, I'm not trying to be condescending when I say this. I, I just want to give you a kick up the backside, right? Quite frankly, is what I'm here to do— kick up the backside. Go and actually understand where your money is because it's your money, right? And it's, it's potentially will play a part of your future. Now, one of my core philosophies is that when we're talking about superannuation, I think of superannuation as a secondary person, so to speak, right? You have you and your personal wealth and your personal wealth business. And so everyone runs a personal wealth business, by the way, every single person. Now, I didn't say your business is doing very well. Maybe it is, maybe it's not, I don't know. But everybody has a personal wealth business, okay? And that's how you take care of your money in the investment portfolio that you are growing, right? Or not growing, depending on what's going on. But then I think of superannuation as a completely different entity altogether. Now, eventually these 2 things will come in together, okay? Eventually they will. If the superannuation as it stands right now is still as it stands— I don't think it will be, by the way, I'm going to talk about that soon— but I do not think that the superannuation system is something you should be relying upon. I think you should build wealth in your personal name and be fully financially free and secure in that way. And then if superannuation is still there, then it's a bonus. Now, if you're closer to retirement, maybe that's a little bit different and this is what you've been relying upon and things like that. All good, no issues, right? But if you're a little bit further away from retirement, you've got some time up your sleeve, then now's the time to go, Okay, I'm creating security and freedom in my personal life, and then later on, if I get super, happy days, but it's considered to be a bonus. Now, when we are talking about taking control of your superannuation, here's the question, right? A lot of people ask me, should I set up a self-managed super fund? Okay. And so what I want to talk about a little bit is, I guess, a little bit of the process of setting up a self-managed super fund. Some of the things that— yeah, freedom and personal life first, 100%, right? I want to talk to you about some of the things you can do in a self-managed super fund, some of the costs associated to it, and just so you can get a bit of an idea around what's kind of possible, what's not possible, and some of the things that you're going to hear a lot of accountants and financial planners say. Now, firstly, what is a self-managed super fund? What it simply means is that you get to make your own investment decisions. So when you set up a self-managed super fund, basically what you are doing is that you're setting up another entity and that you control any assets inside that entity is owned by the entity. It's not owned by you, it's owned by the superannuation fund. But what it basically means is that you are setting up another entity for your superannuation contributions can actually come into that entity, into that bank account, which you now control. It's not going arbitrarily to a superannuation fund where you have no control and no visibility, no nothing, right? It's actually coming into an entity that you control with its own bank account. So what you can do is that you set up a self-managed super fund. And you can actually do what's called a rollover. So all of your funds that are in another retail super fund, industry super fund right now, you can roll those over into your own bank account. So you would effectively cash that in and you don't have to cash the whole amount in. You can have 2 super funds, right? You can cash that in and roll your capital over into your own bank account. That's owned by the new superannuation, self-managed super fund annuation entity that you now control. Now, there are some industries where you can't— government, sometimes you can't; military, which is part of government, sometimes you can't— depending on what type of superannuation scheme is currently set up at the time. But basically, your first step is you set up another entity, and you can roll that capital over into your own bank account owned by this new entity. You now control it. Now, as a part of that self-managed super fund, you have to set up kind of like an investment charter. Like, here are some of the things that you're going to invest in, here's what you may not invest in. And it's kind of like a bit of an investment charter which lays out a framework for what that superannuation fund can actually invest in. Now, the— this can invest in a lot of different stuff, right? Whether it's shares, whether it's buying property, whether it's cryptocurrencies, whether it's buying metals, whether it's making lending investments, business investments. It— the, the scope is almost endless, right? So it means that you can actually go get it, because most in, uh, superannuation funds in retail, they are simply just invested in the share market or in funds. That's it. That's where they're invested. It's seldom invested in anything else, okay? So it's very, very localized in this because it's, uh, they can control it, the government can manipulate it. It's also What is crazy in these superannuation funds is that they have to diversify for diversity's sake. So they might have the best investment in the world, but they can't go all in on that investment. I'm not saying you should, but they can't go very heavy into that because their charter goes, no, we've got to diversify for diversity's sake. And so there's all these rules that are set up, which may or may not be in your best interest. You just got to understand what they are. So when you have a self-managed super fund, You get to make your own investment decisions. Now, that might scare the crap out of some people, right? But if it does, if that concerns you, then that's the sign. That's a sign you need to get educated in terms of your money, in terms of your finance, become empowered with your financial future, right? So it allows you to go make your own investments. That's what it is. It's all about control. Now, call me a control freak, right? But in terms of your financial future, and your financial security for you, your family, I think you should be a bloody well control freak, right? You want to be a control freak in this area of your life. You want to be in control of your own destiny, not just be at the mercy of government, superannuation funds, economy, banks doing stupid shit, superannuation funds doing stupid stuff. Like, you don't want to be at the mercy of that. You want to be in control of your own financial future and your own financial destiny. Okay, one of the hallmarks of all successful people is total and unequivocal responsibility, right? For what you where you are and what you're going to be doing next. One of the absolute hallmarks. So it allows you to go make your own investment decisions. Now, there are going to be some setup fees associated to it. Okay, so it might cost you anywhere from three to six thousand dollars to set up depending on what accountant you go to or financial planner you go to and. A whole lot of different stuff. Now, your superannuation fund pays for that. That doesn't come out of your back pocket. It comes out of your superannuation fund. You may need to front a little bit upfront out of your personal name just for those initial setup things, but then just pay yourself back from the superannuation fund afterwards. So the superannuation fund will pay for that. Then there's also going to be some ongoing management fees, a yearly management fee, right, when you're controlling the superannuation fund. So what you need to start asking yourself the question is, Number one, your management fee that you have to pay versus what's the management fee that you're paying in the retail industry super fund. Okay, so you want to understand the difference between those 2 things, right? From probably from a percentage type of level. Then you want to actually understand, okay, well, based on— do I think I can actually perform, um, perform well enough to make up that management fee and have control of my own future, right? That's what you need to be looking at. So there is some setup fees, there's some ongoing management fees you need to be aware of. Now, normally when you set this up, you can actually set this up yourself without going through an accountant or a financial planner, right? There are, you can, there are ways you can set this up yourself. Most people tend to go to an accountant or a financial planner. Now, something you need to be aware of, some common bit of advice you're going to get, a lot of financial planners or accountants are going to say no, you can't set up a self-managed super fund with under $250,000. You can't do it. And, um, by the way, that's a lie. It's actually not true right now. You're going to be told this a heck of a lot. Some will say you can't do it with under $500,000. You're going to be told this a heck of a lot. That, that's actually a lie. It's not true, right? What it basically is is that their licensee who licenses them to set up a self-managed super fund, which is a financial product, their guidelines say that they can't set one up for under $250,000 or half a million dollars or $100,000 or $200,000 or whatever it is. And that is based on what the government guidelines recommend, right? That's what that is based on. So I have a bunch of clients who they've been setting up their self-managed super funds with $150,000 in, $200,000 in, and different things. So they want to make— they— you— because they want control, they want choices around what they're going to be able to do, right? So that's, that's, um, just need to be aware of that. Now, um, risks. This is a big one. And by the way, if you've got any questions, please put them in the comments. I'm happy to kind of answer some as I go or answer them later on, um, whether you're watching this live or as a replay. If you've got any questions around this, please let me know. Now Risks. As I mentioned, I think that relying upon the superannuation system for your retirement is incredibly risky, incredibly risky strategy. And I want to share with you some of the key reasons why and a few different stories. First, I want to say that 77% of the population rely upon some form of the pension and retirement in Australia. 7%. What that means is that the superannuation system is failing people miserably, miserably. Um, if you think about how much you need— I'm just going to pull up a calculator while I'm doing this— if you think about how much you need in order to live a comfortable retirement, and you might think about it for yourself, you might go, well, do you know what, I, I— let's say comfortable, you know, the government says comfortable is like $40,000 a year or something stupid like that. I don't know about you, but I have a little bit of a higher standard for my life than what the government thinks for my life. If you want $100,000 a year in income coming in from your fund, then, uh, if it's earning an average yield of 5%, you're gonna need $2 million of assets in your fund. $2 million. Now that's based on as if you don't want to chew up the capital. The original amount. If you just want to earn $100,000 and not chew up the capital, you need $2 million in that fund yielding 5% on average. Most people have a few hundred thousand dollars and that's it, and they're retiring on maybe $300,000 or $400,000. And that's what it is for most people. The number of people that have $1 million in their self-managed— in a superannuation fund is very, very minimal. I wonder if I can find that statistic actually. Okay, in Australia, 210,000 people have more than a million dollars in their superannuation fund. 210,000 people. That is it. Now, I don't know what's our current population. Um, 25.69 million. I'm just doing math while I'm at 25. Okay. All right, 0.8%, less than 1% of the population have over $1 million in their superannuation funds. Less than 1%, 0.8% have $1 million plus in their superannuation funds. That means most people retiring on— and the average balance is really poor. For those between Let's have a look. Gotta love Google, hey? For those who are currently in retirement, the average superannuation balance for a man is $324,000, for a woman is $289,000. That's the average balance right now, right now. How long is that going to last you in retirement? Okay, so you've got to be asking yourself the question on yours. So here's the first risk: you're not going to have enough. Right, unless you're making substantial extra contributions, which again I'd be going, why don't you just add this to your own personal name and build wealth in your personal name? Why the hell would you lock it up into a system you have no control over that maybe one day you're going to be able to access when you're 60, 65, or 67, or 70, or 80 because the government keeps raising the retirement age, right? Why on earth would you not just build your own wealth? Okay, because you're not going to have enough, right? Most people do not. Second reason: government cannot afford the aging population. Fact, fact, in terms of a pension. So guess what I think they're going to do? I think they're going to grab your superannuation and I reckon they're going to ration it to you as a pension. That's what I think is going to be happening to your superannuation in the future, right? I think they're going to grab it, I think they're going to control it, and I think they're going to ration it to you as a pension. Because the only way they can afford the, um, the aging population monetary-wise is printing more money, which doesn't bloody work, right? It just makes the inflation go up and the cost of goods go up and, uh, the— your buying power goes down, right? But they cannot afford the aging population, okay? Third reason why I think it's a silly idea to leave it in a retail superannuation fund forever and a day and why I don't like Why I don't like the superannuation industry in general. They keep changing the goalposts. So you might invest, put your money in there based on one environment. The government has full control and regulators have full control to change everything. And you might be trying to interact in that superannuation fund in a completely different environment. My mother got caught up in this. She set up a— she has got herself in a super fund. When her mother passed away, she got some inheritance. She was advised by a well-meaning accountant or a financial advisor, financial advisor, I think, to go and put that money into super because it's the most tax-effective environment. Government came along, changed the rules. She can't get her money back out again. Now, my mother works in aged care, okay? She's a speech pathologist. She works in aged care. Let me tell you right now, she doesn't do it for the money. She's got like two degrees, and she may as well go work at Macca's for what they pay her. She does it for the contribution, right? And I love her for it. Now she loves what she does, so she doesn't want to retire. Because she doesn't want to retire, she hasn't been able to access her super apart from a transition to retirement scheme. It's her bloody money. She put it in there based on the rules that were available at the time. Government changed the rules and gone, right? She can't access it. Has anyone else noticed how much the government and regulators have changed the rules around superannuation? It's a constant changing set of goalposts. So how can you keep up? How can you control that they're not going to start limiting, oh, sorry, retirement age is now 85 years old? It's going up and up and up, which impacts your ability to be able to access your super. What's stopping them from changing your ability to be able to access everything in a lump sum? What's stopping the ability for you to make extra payments in, or the tax environment in super? What's stopping them from changing everything, right? The answer is absolutely nothing. So again, call me a control freak, but I think you should be a control freak when it comes to your financial, financial future. Fourth, it's the government's biggest slush fund. Don't think that they're not going to take their piece. They have already come out during this low recent COVID nonsense and have said that they're in in terms of a financial, a financial economic crisis, which was deemed that we were in an economic crisis, that they're willing to tuck into the superannuation fund and 401k if you're in the U.S. to be able to kind of bow themselves out and help things. Don't think they're not going to take their piece, okay? Because they will. Right? Um, money in general has been used as a control system in how it controls our life, and it manipulates our behavior, and it keeps us being functioning cogs in the economic wheel of society. I mean, that's what the monetary system is designed to do. It's up to you whether you play in it or you play a different game and you break free of it. I believe that freedom is our birthright, and I believe it's been taken away from us. I believe that there's been a systematic creep in our liberties, and I'm not okay with it, right? I'm not okay with it, and nor should you be. So when it comes to superannuation, um, wrapping all this up, tying a nice bow on it, uh, when you want to take control of your financial life, I think you should take control of every single area. That's not advice to go set up yourself in a super fund. What it is advice about is go be clear and understand what your superannuation fund is currently doing, and then you may, if you've got enough in there and such, you may explore setting up yourself in a super fund. And even if you don't do it, At least you know, right? Or you might have a plan— excuse me— have a plan to build up your balance to a level, or when you're going to switch it to a self-managed super fund in the future. Okay, um, be clear on the, the fees associated with it. And but put a— you've got to decide how much weight and what having control is worth to you. Because again, if the government goes— the government can manipulate the share market, right? And they can control the dividends that come out from your super funds and the share market and the funds. That's all under their control. But for example, if you had your own self-managed super fund and that entity is investing in certain elements and you control the cash flow, they can't control that. That's under your control. Okay, so I'm a big believer in taking control of these things. Got to know the fees. You got to know the numbers in and out and what's happening and what figures you need to beat. You have to understand the risks of the superannuation system as it sits right now and what they can potentially change without asking your permission for the future and what risk that poses to you. Third, fourth and final thing, or fifth and final thing, or third and final thing, set up wealth in your personal name first, right? You absolutely should be doing that. And then for the future, I would think about the superannuation as a bonus. That's how I'd look at it for most people. Now, if you're close to retirement, might be different, no issues, right? But if you've got some time up your sleeve, then you still, you set up your personal wealth, create financial freedom. Don't arbitrarily wait until you're 65 and someone says it's time to retire, right? I don't believe in retirement. I retired twice before I got bored in my bloody mind. What I believe in is setting up a life you don't have to retire from, and that's what you should be setting up. Um, I'd love to hear your thoughts. I'd love to hear what you took out of that. I'd love to hear what you think about superannuation. I'd love to hear how your results are going in your current super. Do you have a self-managed super fund set up, or are you still in retail? I would love to hear from you. Pop it in the comments for me. Let me know if you've got any questions. Let me know. Happy to come in and answer them. Um, this is a topic I'm very, very passionate about, and the reason I'm so passionate about it is that I believe in your financial sovereignty, and I believe in you having financial control over your future and creating freedom. And, um, I don't like how this system is set up in any way, shape, or form. I don't think it is in your favor ultimately. So, uh, that's my thoughts. I would love to hear yours. Put in the comments, team, um, and I'll jump in and kind of answer some questions stuff later on. All right, go and enjoy your morning. Uh, I am, I'm out, I'm out. I've got things to do and I'm flying out, uh, tonight. Got a lovely 16-hour flight. It was hilarious. 8 PM tonight, so I'm looking forward to that. So I've got some packing and a few different things to do, but I think I'm going to try hit the beach before we head out. I think so. Why the hell not? All right, okay, take care everyone.