Moving Forward April 2016

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Telstra Super Pty Ltd ABN 86 007 422 522

APRIL 2016

Building a future together Launched on 22nd February 2016, Telstra Super Financial Planning’s new financial advice model features different advice channels and an expanded service offering. Spearheading the updated offering is the newly created Limited Advice Team, located in Telstra Super Financial Planning’s Melbourne head office. Limited Advice Team This team of qualified Advisers can assist you with simple personal advice about your Telstra Super account including contribution strategies, investment choice* and insurance cover, and general advice about topics including redundancy, rollovers, and commencing an income stream. This advice is provided over the phone and is available as part of your Telstra Super membership. There is no additional advice fee charged. Importantly, if the Limited Advice Team determines that you may require more comprehensive advice, they can recommend and arrange a referral to Telstra Super Financial Planning’s Comprehensive Advice Team. Comprehensive Advice Team As the name suggests, the Comprehensive Advice Team can provide you with advice on more complex super and non-super topics including account consolidation, comprehensive insurance options, retirement planning, wealth accumulation and social security strategies. Their advice can be provided on a one-off or ongoing basis# depending on your individual financial needs.

CASE STUDY – Determining your advice needs Mary, age 64, contacted Telstra Super Financial Planning when she found out she was being retrenched. Her call was answered by Tom from the Limited Advice Team. Mary was concerned about the retrenchment and unsure what to do or how her lifestyle needs would be met going forward. Tom discussed Mary’s situation with her over the phone and provided her with general advice relating to her retrenchment. After asking Mary some additional questions about her current financial position and future goals, Tom assessed that she would benefit from receiving personal comprehensive advice and explained how this worked. Mary attended a meeting with Arnie from the Comprehensive Advice Team, which resulted in her receiving a financial plan and entering into an ongoing advice service.

Since commencement of the new advice model, there has been strong take up of Telstra Super Financial Planning’s special offer. Under the offer, if you choose to enter into an ongoing advice service that lasts for a period of at least 12 months you will have access to a partial waiver of up to $1,000 on the advice fee payable for one-off personal advice. To find out more visit telstrasuper.com.au/special_offer Whatever your advice needs, Telstra Super Financial Planning has a solution. All Advisers are employees of Telstra Super Financial Planning Pty Ltd and do not receive any remuneration or benefits which may influence the advice provided to you. Telstra Super Financial Planning Pty Ltd does not receive or pay commissions. We’re here to help To find out more about how Telstra Super Financial Planning can assist you, call 1300 033 166 between 8.30am and 5.30pm (Melbourne time), Monday to Friday, or visit telstrasuper.com.au/advice * Excludes Telstra Super Direct Access # Ongoing advice services can only be provided to members who have entered into an ongoing service agreement with Telstra Super Financial Planning and pay the applicable advice fee. Superannuation law requires advice fees to be paid directly by the member for ongoing advice services.


The Ant and the Grasshopper: inherent wisdom Neglecting your super savings because you expect to receive a large inheritance may not be the wisest policy.

In Aesop’s fable The Ant and the Grasshopper, a grasshopper spends the summer frolicking and having fun while an ant toils away, storing food for the winter.[1] “Why not come and chat with me?” says the Grasshopper. “I am helping to lay up food for the winter,” says the Ant, “and recommend you to do the same.” “Why bother about winter?” chirps the Grasshopper. “We’ve got plenty of food now.” But of course, when winter comes, there’s nothing for the Grasshopper to eat, and while the Ant and his friends are enjoying the corn and grain from their stores, the hungry Grasshopper can do nothing but fade away (while most likely wishing he’d done a bit more strategic planning). The moral of the story? It is best to think ahead and plan for the future. Banking on an inheritance Many Australians are grasshopper-like in their attitudes towards retirement. According

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to research from the Financial Services Council, of the 55% of Australians who intend to supplement their retirement savings with money from outside sources, one in five are relying on an inheritance.[2] “If someone told me that was their plan, alarm bells would ring,” says Chris Winton, Telstra Super’s Team Leader Member Education and Client Services. “The inheritance might not be what they expected. There might be tax implications. For example, if they inherited a property and have to pay capital gains, that could make the inheritance much smaller than expected. Or the inheritance might not happen at all or could come too late.” Make concrete plans Rather than pinning your hopes on an inheritance to fund your retirement, making additional contributions to your super can significantly add to your retirement nest egg. You can choose to make pre-tax or post-tax contributions with factors such as your salary and personal circumstances determining which option may suit you best.

Visit telstrasuper.com.au/contributions to find out more. “The super system is designed to provide you with income in retirement,” Winton says. “If there is a potential inheritance that’s fantastic, but don’t rely on it. You’re better off planning for certainty in your future.” Need a little help? Use the Telstra Super Simulator at our website to estimate your projected super balance and whether you’re likely to have enough savings for an adequate income in retirement. Telstra Super Financial Planning can also assist, providing expert advice on a broad range of financial topics including contributions and retirement planning. Contact them on 1300 033 166 between 8.30am and 5.30pm (Melbourne time), Monday to Friday or request a call at telstrasuper.com.au/call_me. [1]

http://www.bartleby.com/17/1/36.html

http://www.fsc.org.au/downloads/file/MediaRelease File/2015_1011_MediaReleaseYourSuperFuture %28consumer%29-FINAL.pdf

[2]


Keeping up with the Joneses Keeping up with our idea of what we need to be happy is putting a lot of Australians in debt. Here’s some suggestions for combating consumer envy. They bought a Jeep, did they? Are the neighbours really having more fun than you, or do you just think they are? Would your life actually be better than theirs if your Lotto numbers came through? Consumer envy is embedded in our culture. Australians owe around $32 billion on credit cards, an average of around $4,300 per card holder with each paying approximately $700 in interest a year (if their interest rate is between 15-20 %).[1] We are spending above our means, in a lot of cases because we think we need what somebody else has. Director of the University of Melbourne’s Centre for Positive Psychology, Professor Lea Waters, says envy is an emotional pain caused by the desire to have the advantages enjoyed by others.[2] “It’s normal because we’re always striving to seek a solid sense of self-worth, but we don’t understand that we’re trying to buy an external product to fix an internal problem,” she explains. “Buyer’s remorse is the recognition that we’ve made a mistake. It’s a double whammy – the initial sense of dissatisfaction with yourself and on top of that the financial guilt.” [2] Waters has a technique for dealing with consumer envy. “Ask yourself, what feelings do you think you are going to get when you have this thing. What will it give me?” [2] The theory is when we ask this question, we start to realise that perhaps a new possession isn’t going to fill our needs. “Self-worth is tied to our fundamental need to belong to a group of people, being included and being liked, and the sense of being helpful and adding value to the lives of others,” says Waters. “Who you are is a much bigger predictor of success in relationships than what you can buy.” [2] Waters’ solution? “Your most valuable possessions are your personal qualities,” she says. “That’s the story we need to teach to our kids.” Finally, she prescribes gratitude as the antidote to envy. “Reframe what you think you need to live a happy life. Be thankful that you live in a stable economy in a country that is not involved in a conflict. You’ll soon recognise that you have enough.” [2] https://www.moneysmart.gov.au/borrowing-and-credit/credit- cards/credit-card-debt-clock

[1]

Interview with Professor Lea Waters by journalist Gillian Samuel, The Dubs, 10 March 2016

[2]

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How retirees are becoming the generation with power, money and a voice We chat to expert Bernard Salt about how the eternally youthful baby boomers are choosing to age. They’re educated, opinionated and their presence has changed the world. There are nearly 5 million baby boomers in Australia, controlling 40% of the country’s wealth.[1] Not surprisingly these change agents are driving what ageing and retirement look like, and impacting our society and economy at the same time.

He predicts this spending will have a multiplier effect that will be good for the broader economy. He also believes that retired people in their 60s looking for ways to give back to the community through volunteering, for example, contribute to building social cohesion and community resilience.[3]

Given how hard they have worked and what they continue to offer both their families and the community, many would agree this isn’t too much to ask.

KPMG demographer Bernard Salt [2] says there are five areas of key concern to this demographic: wellbeing, money, engagement, family and housing.

On the flipside, the boomers are also the sandwich generation, often still providing support to adult children while caring for elderly parents.[4] They are the demographic most likely to be providing free child-minding, says Salt, resulting in a situation where 60-somethings can feel they are being taken advantage of.

[4] http://mccrindle.com.au/the-mccrindle-blog/q-and-a-the- sandwich-generation

“They’re the first generation in history to see their parents reach old age,” he says, “and it’s made them quite determined to age well.” Baby boomers are reconfiguring what wellness means through everything from what they buy at the supermarket to Pilates classes and active wear, permeating our business culture through their choices at the same time. Their lifetimes of earning and investing, usually in the family home, mean that many over-50s feel a sense of entitlement: that is, after working and raising families it’s their time now. “The narrative is ‘I need to fit stuff into the next 10 years. I need a Toyota Landcruiser and to go on a river cruise’,” Salt says.

As for expectations that boomers will downsize and move to retirement villages, this isn’t always the case with some more likely to invest in an upscale apartment or simply stay where they are.[5] “There’s an emotional connection with the family home. The kids’ pets are buried in the backyard,” says Salt, citing the prevailing trend as renovating to create a “schmick” property as a legacy for the kids. One thing is certain. “Baby boomers are not going to just shuffle off into old age,” Salt warns. “They will demand attention and resources.”

http://mi9.com.au/blog.aspx?blogentryid=1101760& showcomments=true

[1]

[2]

http://bernardsalt.com.au/profile/

http://www.onlineopinion.com.au/view.asp?article =7918&page=0 [3]

[5] http://www.smh.com.au/business/oversized-melbourne- apartments-pitched-at-downsizing-baby-boomers- 20140805-100q45.html

Call 1300 033 166 8.00am to 5.30pm (Melbourne time) Monday to Friday Web www.telstrasuper.com.au Email contact@telstrasuper.com.au

This magazine has been prepared by Telstra Super Pty Ltd, ABN 86 007 422 522, AFSL 236709, the trustee of the Telstra Superannuation Scheme (Telstra Super), ABN 85 502 108 833. PO Box 14309 MELBOURNE VIC 8001, Telephone 1300 033 166 © Telstra Super Pty Ltd, April 2016 The information contained in this publication is correct as at April 2016 and may change in the future. This information is general advice only and does not take into account your individual objectives, financial situation or needs. Before acting on any advice you should assess whether it is appropriate for you and consider talking to a financial adviser. Before making any decision about acquiring any product, you should obtain and review its Product Disclosure Statement by calling 1300 033 166 or visiting www.telstrasuper.com.au. Telstra Super Pty Ltd does not recommend that any member make a decision concerning superannuation arrangements based solely on this publication. References in this document to Telstra Super Financial Planning are references to Telstra Super Financial Planning Pty Ltd (ABN 74 097 777 725). Telstra Super Financial Planning Pty Ltd is a legal entity separate to Telstra Super Pty Ltd. Telstra Super Financial Planning Pty Ltd is a licensed financial adviser (AFSL 218705) and is able to provide financial advice about Telstra Super products to members of Telstra Super. Telstra Super Pty Ltd does not endorse or accept responsibility for the information or advice provided by Telstra Super Financial Planning Pty Ltd. The investment returns from any Telstra Super product are not guaranteed. ® is a trademark in Australia of the Telstra Corporation Limited.


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