Retirement Planning

RETP067 How much can we spend in retirement? (581 words)

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Having spent most of our lives accumulating retirement savings, it is easy to understand why retirees are fearful of spending their hard-earned nest egg. This article explains how an adviser can help evaluate the likelihood of achieving your retirement goals, as well as minimising longevity risk. Written in the eyes of the client, it is an effective piece with a meaningful call to action.

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Having looked forward to retirement for years, it was difficult to accept that two people who had spent decades living happily together could spend so much of their time arguing over money.

"Enough," I cried in frustration. "We need help from someone who can tell us just how much you can spend on a new car to tow the caravan and how much I can spend on updating a twenty-year-old kitchen without us running out of money," I said.

Within days we were in the office of a local financial planner, who had no doubt heard it all before.

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RETP066 The greatest challenges facing future retirees (551 words)

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Will you retire with enough money in your super fund? This article explains the challengers that today’s accumulators face in order to reach their retirement goals. Housing affordability, low interest rates, pandemics, through to an aging population and pressure our welfare system are all key points covered in this thought-provoking article.

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Most working Australians aspire to the idea that they’ll reach a point where they can retire debt-free and with enough money in their superannuation fund – perhaps supplemented by the age pension – to provide them with a comfortable standard of living in retirement.

For many that remains a reasonable aspiration, but a growing range of challenges mean that retirement goals that could easily be achieved a few years ago look like being harder to achieve in the future.

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RETP064 Retirees' cash flow drought (508 words)

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Interest rate cuts are greeted with delight by homebuyers and other borrowers, but what if you are a retiree and depend on interest payments for your income? In this article, we discuss the possibility of negative interest rates, the alternatives available to retirees, and finish with a call to speak with your financial adviser.

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While cuts in interest rates are greeted with glee by homebuyers and other borrowers, for the millions of retirees and others who depend on interest payments for their income, falling interest rates can be a disaster. For them, a drop in interest rates from 4% to 3% equates to a 25% drop in income. If rates fall from 2% to 1%, income falls by a massive 50%. Add in even a modest level of inflation, and many retirees are going backwards financially. And while the RBA has indicated it doesn’t want to go down the strange path of negative interest rates, this has happened in several European countries and Japan. Imagine: depositors pay banks a fee to store their money, and borrowers receive interest payments rather than make them.

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RETP063 The tips, traps and costs of retirement villages (659 words)

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Entering a retirement village can have major financial implications that not too many prospective residents are aware of. This article highlights some of the fees residents face as well as potential impacts to social security. The article encourages readers to seek guidance from a qualified financial planner.

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With an aging population, an increasing number of Australians are opting to live in retirement villages. While pitched at the ‘over-55s’, the average age of entry is 75, and average age of residents is 81. Depending on the retirement villages, attractions include having home maintenance issues taken care of, more social contact, access to recreational facilities and on call assistance in case of medical emergency. Moving to a retirement village can also free up capital to support living costs in retirement.

These benefits all come at a cost, of course, and the type and amount of fees can vary enormously from village to village. There are also several different types of ownership or occupation rights or ‘tenure’. Most commonly, residents pay the market price of a unit in exchange for a long-term lease, or pay an upfront fee for a licence to occupy. Straight rental arrangements, often for serviced apartment-style accommodation, are also available in some villages.

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RETP062 3 things you may have forgotten to plan for in retirement (697 words)

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Retirement should be a time to wind down and enjoy life, however there are a few important topics often overlooked when planning for retirement. This article explains three of these aspects including re-contribution strategies, death nominations and having a spending policy in place.

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Retirement can be an exciting phase in your life. But all the recent changes to superannuation bring with them lifestyle and financial issues you need to be aware of as you plan your retirement.

Retirement means different things to different people. For some, it’s an opportunity to travel, to begin that project they’ve been putting off for years, or to just relax, spend time with the grandkids and dabble in their favourite hobbies. Retirement should be a time to relax and be free.

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RETP061 Retire at 65 but don't retire your money (531 words)

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This article explains why most retirees can no longer park their funds entirely into conservative assets and enjoy a comfortable financial lifestyle. With the use of a case study, we explore the real-life impact of longevity risk and why it is important to retain some exposure into growth investments.

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Australian retirees are facing a ‘double whammy’ when it comes to funding their retirement. On the one hand we, as a nation, are enjoying longer and healthier lives. On the other hand, record low interest rates have slashed the returns on the traditional bedrocks of post-retirement investment portfolios such as term deposits, cash management accounts and annuities.

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RETP060 Retirement: it's time to get busy living! (520 words)

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Retirement can be a daunting time for many but it’s no longer the winding down of life, waiting for the final scene. Beginning with a story to relate to readers, this article presents a number of ideas for kick-starting life’s next chapter.

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Many people eagerly anticipate retirement. Others view its approach with trepidation, worried over how they’ll fill their days.

Australians are living longer; it’s not unreasonable to assume you’ll be retired for 20 or 30 years. Not sure how you’ll fill all those days? We have a few ideas to kick-start your new life.

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RETP059 Transitioning into retirement (481 words)

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This article explains how Transition to Retirement pensions work and identifies three scenarios where this strategy might be used to great benefit.

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If you’re nearing retirement age but don’t want to stop work entirely, another option might be to transition into retirement. For those over 60, Transition to Retirement (TTR) pensions are tax-free and TTR strategies can provide a number of benefits.

Let’s look at some options available to 62-year-old accountant, Brian. He works full time and is on an annual salary of $100,000.

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RETP058 A tale of two retirements - which would you choose? (541 words)

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It is a strange phenomenon, and one governments are addressing – why would retirees prefer to live frugally on the age pension just because they think they’ve earned it? This article compares two couples who make different choices for their retirement – age pension entitlement or building superannuation.

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Sam and Sally Smith have worked hard all their lives, paid their taxes and, now they have retired, they feel they are entitled to a full age pension.

Jan and Jim Jones have also worked hard and paid their taxes. However, concerned that Australia’s aging population and ballooning pension bill will make it increasingly difficult to qualify for an age pension, they have sought to be as financially independent in retirement as possible. With diligent savings and smart use of superannuation they have built a significant nest egg.

While both couples have equally valid views, in one respect Jan and Jim’s belief was proven correct when changes to the assets test in January 2017 reduced the number of people qualifying for a part pension and some lost it altogether.

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RETP057 Sequencing risk - the order of things (541 words)

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This article explains what sequencing risk is and how it can affect retirement savings. It begins with an example to make it easier to understand.

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As financial advisers, we talk a lot about risk, so what is sequencing risk? Let’s begin with an example.

Wayne and Chris each contribute $20,000 per year to their superannuation funds for 10 years...

This simple example demonstrates that it isn’t just the average of annual returns that matter; of equal importance is the sequence in which those returns occur. Not surprisingly this is called sequencing risk.

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RETP056 Retirement living: oh, so many choices! (597 words)

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This article covers some of the options available to your clients for retirement living. It highlights the upsides and downsides of retirement villages, granny flats or hitting the road. This topic is huge so this is just an overview to provide food for thought and encourage discussion with a financial adviser before a decision is mad

RETP052 The inflation effect on retirement (390 words)

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This article calculates how inflation has affected income and costs over the past 20 years to demonstrate to your readers how they should take this into account when determining how much they will need to retire.

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Without the benefit of a crystal ball, it’s impossible to determine exactly how much one person will need to meet their individual retirement needs. We often hear that we’re living much longer so the amount we retire on must last a longer distance. However, what about the value of your retirement funds? How will inflation impact on your savings, particularly if you’re still being highly conservative and holding a large portion of your portfolio in cash waiting for the economy to “get back on track”?

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RETP050 10 tips to prepare for retirement (562 words)

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This article outlines 10 tips for your clients to prepare for retirement. It is a great reminder for clients to use as a checklist.

RETP048 Funding a fulfilling future (496 words)

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This detailed article discusses Australia’s ageing population and looks at the impact of living a longer life has on retirement funds. It takes a positive approach to what can be a daunting topic.

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The title for the oldest Australian rests with Christina Cock who was 114 years, 148 days old when she died in 2002. While there aren’t many people who could claim to reach such a fine age, the latest Intergenerational Report tells us that Australians are living longer. This means that we all need to plan for even more years in retirement than any previous generation.

But how can you plan for the unknown? If only working out how much you need in retirement savings were an exact science you would simply multiply how long you were going to live times how much income you would need each year and choose an investment to provide the appropriate returns, then start working towards that magical figure.

As we all know, life is never quite that simple so what can we do?

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RETP043 When will you retire? (475 words)

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This article looks at 3 different options for funding "retirement" – age pension, non-super savings and superannuation.

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There has been much social and political debate since the federal government proposed pushing out the age at which Australians can access the age pension. Although most occupations don't have a legislated retirement date, there is little doubt that our tax and social security systems do have a significant impact on when many of us retire and how we plan to do it.

Here are a few examples:

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RETP032 The future for 'retirement' (486 words)

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This article provides facts and figures on life expectancies, statistics, projections and their effect on the changing face of retirement over the next 40 years.

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Research over recent years suggests that the secret to a long and healthy life is to continue working and to stay in control of your finances and life. The nature of work may change – fewer hours, less stress, new career – and with good planning it is possible to have all the good things associated with retirement such as more leisure, time with family, travel and new activities.

No government can afford to support the Baby Boomer generation through retirement. Paying pensions for longer life spans is not sustainable. In 1905 the average life expectancy was 55.2 years for men and 58.8 for women. The age pension was introduced from 1909 and was available from age 65 so most people did not qualify.

However, a century later...

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RETP030 A glimpse of the future (594 words)

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This interesting article focuses on the changing population trends and how they might affect retirement plans. It culminates with some options for your readers depending on their life stage.

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Demography is the study of population – births, deaths, ages, life spans, migration, and so on. Governments can record the changes but in free societies can do very little to change the overall trends. It’s a bit like the tide coming in – you can adjust where you sit on the beach but you can’t stop the water rising.

Research by worldwide organisations including the United Nations and European Union shows disturbing trends such as these:

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