by Olivia Long

Let’s talk about why taking control of your retirement savings is more important than ever.

Firstly, some of us could live forever. Medical technology will add a year of life expectancy every year. Consider this impact on our issue of the ageing population.

What pressures will it place on the taxation system? What do we need to survive a long retirement? Will the government be able to provide adequate housing, cover medical expenses, address transportation issues?

Will people need to work longer and if they do – what are the implications of this on the greater employment market? Less jobs for graduates and school leavers?

Are we going to see huge issues with unemployment and how will that affect society? Will the richer get richer while the poorer get poorer?

All I know is, I’m not prepared to rely on the government and I don’t think any Australian should.

So let’s consider superannuation in general. Don’t underestimate the importance of taking advantage of the generous tax concessions that encourage people to save for retirement, hence not ending up being financially dependent on the government.

It’s likely the superannuation rules will change with increasing life expectancies, allowing people to contribute to their super for longer. Let’s continue to lobby to increase contribution caps to encourage people to contribute as much as is possible throughout their entire working life toward their retirement savings.

To cater for an influx of self-funded retirees, we need the financial services industry and investment advisers to develop more products that are designed specifically for members in pension mode – as we’re going to need to survive on our pensions for decades.

The upcoming enquiry into the Financial System chaired by David Murray is an excellent opportunity to examine how people’s retirement savings can be more productively used throughout the Australian economy.

SMSFs are an integral part of that, representing more than one third of the superannuation industry.

To a large degree many SMSFs invest predominantly in blue chips shares and they need more options outside of the ASX200 and cash.

But how do we go about it? After all – the diversification of SMSFs into property has received huge push back and great debate. We’ve only recently got a retail bonds market which is still very much in it’s infancy. How many trustees know they can buy bonds?

I’m constantly approached by Fund Managers of all asset classes. They know the money is out there but don’t know how to access it. The answer is – it’s not easy. There’s nearly a million trustees with different ideas on how to invest.  If I was a Fund Manager I’d be thinking long and hard about what’s required and making that suggestion to the upcoming Financial Services enquiry to start the debate sooner rather than later.

What I do know, is trustees can be tempted outside of their comfort zone – especially if they are using professional advice. The question is – how to educate the self-directed Investor which is an expanding profile in the SMSF market.