Cooper and Sherry's personal super strategies
The industry is understandably obsessed with longevity risk. After all, who isn't worried about running out of money before you die, particularly if you're over 50? It turns out that professionals' personal retirement strategies can provide revealing insights and this week Penny Pryor speaks to two super gurus - Jeremy Cooper and Nick Sherry - to discover what they are doing with their personal funds.
Jeremy Cooper (pictured) chaired the Super System Review of 2009-2010, which became known as the Cooper Review, and is currently chairman, retirement income at Challenger.
"I'm mildly terrified about retirement," he says.
"There's a bit of that [being bored in retirement] and there is the money side."
Cooper has had a self-managed superannuation fund for 15 years.
"I'm not exactly a pioneer but I've certainly been in it for a while," he says.
"I'm mildly terrified about retirement." Jeremy Cooper
He is over 50 years old but expects to be working for as long as feasibly possible
"I'm more focussed on what's in the pot than madly trying to contribute extra," he says.
He spends "a fair bit of time" thinking about how much money he might need in retirement, how he will live off that and how he will achieve that outcome through setting enough money aside.
"I went through a process recently with a new adviser. [We worked out] what the goals were and I sort of articulated a number I thought my wife and I might be able to live on in retirement but that's no substitute for the real thing," he says.
Retirement outcomes and annuities are a big focus of Cooper's professional life as Challenger is one of the largest annuity providers in Australia, but when it comes down to a personal level it's "more difficult that people give credit for".
"Also you've got to cut your cloth, you really have to have a lifestyle that you can sustain."
He hopes that by the time he gets to retirement there will be a broader range of products available, which will also include deferred lifetime annuities
"I'm in the mode of just peddling as hard as I can," Cooper says.
Former minister for superannuation and corporate law in the Rudd Government, Nick Sherry, currently consults on superannuation to a number of institutions including Citi and is chair of FNZ Australia. He was recently appointed as chair of the Pension Policy Unit (UK).
"...I am not a believer in bonds or cash when I get close to retirement." Nick Sherry
As a former politician, he's in the fortunate position of being a member of a parliamentary defined benefit scheme - which will pay him an amount until death - but he is also actively building up his defined contribution superannuation account, which he reactivated after he left public life.
"I've got a good safety net," he says.
"In addition I max my contributions to my defined contribution account because it is tax advantaged."
He is also a strong believer in maintaining a growth investment allocation and says he will be in that investment option "until the day he dies".
"In a defined contribution system my strong belief is you have to maximise your outcome and I am not a believer in bonds or cash when I get close to retirement."
He is also over 50 but wants to work for many years yet. When he does reach retirement he plans to take a full comprehensive health check to give him the best understanding of his longevity and then will plan his retirement accordingly.
That could include some kind of annuity as he is also of the view that a "lump sum" system is not sustainable in Australia, particularly when the access age for superannuation is younger than the pension accessibility age.
It's comforting to know that retirement keeps even the best superannuation minds awake at night but perhaps a little worrying that even they think they will be working far beyond any kind of "official" retirement age.
