So why do we need to be continually upgrading our financial literacy?
Because there are increasing numbers of financial decisions needing to be made throughout our retirement, we all need to get used to making better financial decisions now.
Live long and prosper. Science Officer Spock, Star Trek
In 1967, in Star Trek’s second season episode ‘Amok Time,’ the now famed Spock, (played by Leonard Nimoy) first made the now famous Vulcan greeting – Live long and prosper.
Today, we all know Australians are living longer – but the problem is what happens if we outlive our money?
Read in this article
- Our financial lives are becoming more complicated – and interrelated
- Our aging parents and our increasing responsibilities
- The best time to learn a skill is well before you need to use it
- The privatisation of our retirement
- There's a new and uncertain future ahead
- What you can do this week
- Start now and you'll begin to feel more comfortable with the realities of your financial life.
- Frequently Asked Questions: Retirement Longevity & Literacy
Our financial lives are becoming more complicated – and interrelated
As we’re all living longer, our financial worlds are naturally becoming more complicated.
We are faced with decisions about;
- how much life insurance is enough?
- how to invest our super?
- should we pay down mortgages first, or salary sacrifice more of our take-home pay to super?
- how do we make the most of our money by investing it, throughout our retirement years?
Living longer means we're being asked to make more financial decisions than we’ve ever traditionally had to face, drawing upon levels of financial understanding that may not yet be solid.
Most of us live close to our financial limits and often take a, ‘I’ll learn that tomorrow,’ approach to learning about new financial things.
Our aging parents and our increasing responsibilities
For many of us, as our parents get older and face their own new financial decisions, many of their decisions will at some time ultimately become our responsibility too.
Whether we’re helping them think about;
- how to invest their meager superannuation funds to supplement an aged pension,
- whether to sell the family home and downsize, or
- what to think about with age care and Powers of Attorney and Enduring Guardianship, or
- are they safe buying a property with others
– ultimately the end results of these decisions usually find a way back to us as their adult children.
The best time to learn a skill is well before you need to use it
Now many people are needing to make financial decisions that require the learning of a new, (often quite foreign skill) before that decision can be made.
- It’s like asking someone to bake a cake for the very first time and then asking them what’s their favorite cake they like to make.
- Put another way, it’s like asking someone what type of investor they are and then, in the very next breath, asking them how would they like to invest for the next 30 years?
Before they can make a decision about their own investing, they need to learn some of the basics like;
- There are many different ways to invest
- There are different types of asset classes (ever wondered what an asset class really is?)
- What type of investor are they (and has that changed as they get more or less education about investing) and what is their risk profile?
There are so many pieces to the financial puzzle, is it any wonder most people try and avoid the issue altogether, or utilise the services of a financial adviser like Sapience Financial to be their advocate. (yes shameless plug I know.)
The privatisation of our retirement
In the early 1990s, Australia effectively partially privatised the retirement savings system through the introduction of compulsory superannuation.
- All employers are required to withhold a percentage of an employee’s wage (called SG, or super guarantee contributions) — currently 9.5 % of wages — and deposit that into a super fund on the workers' behalf.
- This is then invested by super funds in different financial asset classes on the employees' behalf and taxed at concessional rates.
But it's up to the employee to decide how and where those withheld funds are invested - and that involves an informed financial decision.
There's a new and uncertain future ahead
I think it's fair to say when it comes to our financial future, we're all about to 'boldly go where no one has gone before.' A newborn Australian today can expect to retire at 67, and the age of retirement will no doubt continue to be extended by the government as seen in their eligibility age requirements table here.
As our life spans increase, so will our expectations about work, how our investment and superannuation will work and how we’ll deal with death taxes.
- Many people will try and delay leaving the workforce because of the need to increase savings to finance a longer life or start side jobs to help supplement their retirement income.
- This is further pressured by the growing share of the retiring population likely to be renting, or carrying substantial mortgage debt when they reach retirement age.
A 2018 survey by JP Mortgage Asset Management of more than 8200 people and found;
- More than 80% do not have any formal investment products, and
- On average, about one-quarter (23%) of respondents said their lack of understanding was a reason for not investing.
- The next reason on the list was Fear and volatility in the market (22%).
If we’re all retiring longer, then we’ll all need to make ongoing investment decisions about our money and super, throughout our retirement to make it last.
If we haven’t started practicing these skills throughout our life, ‘most people will risk not having any growth in their retirement savings in real terms.’
What you can do this week
- Take an interest in learning a little more about your financials each month about financial matters. Subscribe to our seasonal Sapience Not-A-Newsletter. While not every article may be immediately relevant to your individual circumstances, it's designed to be a convenient relevant resource you can come back to at different times of your financial life.
- Find some friends with whom you can become more comfortable talking about the basics of investing in property or investing in shares and diversification.
- Ask them how they manage the normal risks of everyday life for their family.
- If you have a mortgage, make sure you use an offset account or have a really good reason why you don’t.
- Download and read our free eGuide # 31 Good Money Habits to Model for your Kids (send one to a friend and read and discuss a page a day for 30 days)
Start now and you'll begin to feel more comfortable with the realities of your financial life.
The sooner you start to improve your financial literacy, the better your decisions will be and the more helpful you’ll become to friends and family who haven’t yet started learning the basics.
And with this new knowledge and growing confidence in having more control over your financial future, in the immortal words of Spock, you will
- Live long and prosper.
Frequently Asked Questions: Retirement Longevity & Literacy
What does it mean to 'outlive your money'?
Technically known as longevity risk, this occurs when your capital is exhausted before the end of your life. As healthcare improves, many Australians find themselves in a 30-year retirement. Without a solid understanding of asset classes and growth strategies, inflation can erode the purchasing power of your super, leaving you reliant solely on the Age Pension in your later years.
Is the Super Guarantee (SG) enough for a comfortable life?
In 2026, the Super Guarantee rate is 12%. While this is a substantial improvement from previous decades, the "privatisation of retirement" means the quality of your later life depends entirely on your investment decisions. Upgrading your financial literacy allows you to determine if 12% is sufficient for your specific lifestyle goals or if additional concessional contributions are required.
Why should I learn about 'Asset Classes' now?
Understanding Asset Classes (Cash, Fixed Interest, Property, and Shares) is like learning the ingredients of a recipe. To fund a 30-year retirement, you need a balance of 'defensive' assets for stability and 'growth' assets to outpace inflation. Making these decisions for the first time at age 67 is high-risk; the best time to build this skill is well before you need to rely on it.
How do my parents' financial decisions affect me?
As our parents age, the administrative burden of their financial lives—such as managing Aged Care entries or Enduring Powers of Attorney—often falls to their adult children. Upgrading your financial literacy now ensures you can navigate their needs with confidence, protecting their dignity and your future inheritance from avoidable bureaucratic errors.
Disclaimer: Longevity projections and superannuation laws are subject to change. This information is general in nature. For a personal "Life Confident" retirement audit, we recommend a confidential consultation.
Call us today on 1300 137 403 or email us here for a no-obligation private chat about your situation.
Drew Browne is a specialty Financial Risk Advisor working with Small Business Owners & their Families, Dual Income Professional Couples, and diverse families. He's an award-winning writer, speaker, financial adviser and business strategy mentor. His business Sapience Financial Group is committed to using business solutions for good in the community. In 2015 he was certified as a B Corp., and in 2017 was recognised in the inaugural Australian National Businesses of Tomorrow Awards. Today he advises Small Business Owners and their families, on how to protect themselves, from their businesses. He writes for successful Small Business Owners and Industry publications. You can read his Modern Small Business Leadership Blog here. You can connect with him on LinkedIn. Any information provided is general advice only and we have not considered your personal circumstances. Before making any decision on the basis of this advice you should consider if the advice is appropriate for you based on your particular circumstance.
