50 is the new 45 when it comes to investing for retirement
September 24, 2023
In a move to enhance member retirement outcomes, TelstraSuper is making changes to its popular MySuper lifecycle arrangement.
Lifecycle products gradually reduce members’ exposure to growth assets as they get older. TelstraSuper is extending the length of time its members are invested in growth assets and introducing an additional aged-based ‘Moderate’ investment option for members between age 65 and 70.
TelstraSuper Chief Investment Officer, Graeme Miller, said the new, growth-enhanced, product recognised that people were working and living longer and that members could benefit from a longer exposure to growth assets over the course of their super journey.
“Working patterns are not as binary as they used to be. People are not only living longer, but they are also staying in paid work longer or working more flexibly,” said Mr Miller.
Mr Miller said the fund had carefully considered the appropriate risk and return levels for the different age groups, extending the investment time frames by five years for younger and older members.
“50 is the new 45 and 70 is the new 65 when it comes to investing for retirement,” he said.
The changes will see members have their exposure to growth assets reduced at age 50 rather than 45, and then further reduced at age 70 rather than 65. This could add extra money to the retirement balance on an average TelstraSuper member over their working life by the time they reach age 70.
“Younger members who are decades away from retirement have time on their side to ride out periods of market volatility that can come from a higher exposure to growth assets. Importantly, our Growth option is invested across a range of diversified assets, which makes investing super in this option less risky than investing in a single asset class, such as shares,” Mr Miller said.
Equally, it was felt that older members could also benefit from another five years of moderate exposure to growth assets, he said.
“The average 65 year-old today could live for another two or three decades in retirement so a higher exposure to growth is going to help their super last the distance. Importantly, the Moderate option still has an appropriate focus on dampening volatility and preserving capital,” Mr Miller said.
The changes came into effect from 1 October 2023.