Take charge of your Retirement Journey – Part 2

Whether you’re already retired, planning to retire next year or in 20 years, knowing the kind of lifestyle you want in retirement and having a sound financial plan in place will help make your retirement dreams a reality – Part 2

 

Last year ASFA also launched a new Retirement Standard for older retirees, Spending patterns of older retirees: New ASFA Retirement Standard,4 designed to provide a picture of how spending requirements change as people enter their late 80s and early 90s, again benchmarking both a ‘comfortable’ or ‘modest’ lifestyle. Perhaps spending more on health care and support including medical costs while spending less on leisurely activities. This information can help those who have already retired plan for later years and budget accordingly.

Funds required per year for a ‘comfortable’ retirement lifestyle for older retirees:

Single – $38,460 per year
Couple – $59,937 per year

Funds required per year for a ‘modest’ retirement lifestyle for older retirees:

Single – $23,062 per year
Couple – $34,257 per year

It’s also important to discuss with your financial adviser how you can plan for aged care costs, should you eventually need it. According to ASFA5, the probability of requiring aged care is high – the likelihood that a female aged 65 will enter permanent residential aged care in her lifetime is 54% and for a male this is 37%.

This means aged care planning is an important part of your retirement plan, so no matter how near or far, or even if you don’t think you will need it, talking to your financial adviser about it now can help you be financially prepared for whatever the future may hold.

When can you access funds for your retirement?

Currently you must be at least 65 to be eligible for the Government Age Pension, but from 1 July 2017 the qualifying age will increase by six months. It will continue to increase by six months every two years until 1 July 2023, when the qualifying age will be 67. The ‘preservation age’, or the age at which you can access your super, ranges from 55 to 60, depending on when you were born. Accessing your super when you retire, assumes you have reached the reservation age or some other condition of release. If you are not permanently retired then you may still be able to access part of your super under a transition to retirement pension.

Whether you’re working or not, once you’re over 65 you can access your super.

What does retirement look like for Australians?

The Australian Bureau of Statistics (ABS) Retirement and Retirement Intentions, Australia6 (July 2012 to June 2013) says the average age for recent retirees, or those that had retired in the five years prior, was 63.3 years for men and 59.6 years for women.

The main reasons for retirement, the ABS report says, were ‘reached retirement age/eligible for superannuation/pension’ and ‘sickness, injury or disability’.

Of the 4.7 million people in the workforce and over the age of 45, 3.7 million people unsurprisingly said they intend to retire sometime in the future. Far more interesting is the fact that 605,400 people said they never intend to retire, and 385,500 did not know whether they intend to retire.

Around 40% of full-time workers said they intend to work part-time before retirement, to phase in the retirement lifestyle. And 54% of this group said they intend to change to a different line of work during their transition to retirement.

Finally, of the people intending to retire, the ABS states:

  • 17% intend to retire at 70 or older
  • 49% intend to retire between 65 and 69
  • 25% intend to retire between 60 and 64
  • 9% intend to retire between 45 and 59.

This makes the average age of intended retirement 63.4 years. More importantly, the figures indicate the broad range of options available. No longer is a full-time worker offered a gold watch and shown the door at a certain age. There are many choices around retirement, particularly for those that have achieved their financial goals.

If you haven’t already, when will you retire?

The figures from the ASFA Retirement Standard assume retiree age of 65. If you plan to leave work five years earlier, that is five more years of income you’ll require. But if you’re one of the 17% of full-time workers that plans to stay in the workplace until you’re 70 or older, the opposite is true.

Putting a date on your retirement, whether it is likely to change or not, is important in terms of planning. Knowing your time left in the job market helps you to figure out your risk profile and investment mix. And knowledge of the number of years you’re likely to be retired for helps you to understand how much you’ll need in retirement. Being in control of your retirement timeline and familiar with all of the relevant facts means you’re able to make changes along the way, and can be confident in the end result. But you don’t need to do it on your own.

A financial adviser will continue to walk you through your retirement planning process – whether it’s near, far or you are already enjoying it. Your financial adviser can recommend the financial strategies that can assist you in reaching your retirement goals, such as salary sacrificing, concessional and non-concessional contributions, transition to retirement, spouse contributions and also help you with aged care planning.

Starting to take charge and plan now can only help your retirement plans.

 


2 The Association of Superannuation Funds of Australia, ASFA Retirement Standard, September 2015.

3 The Association of Superannuation Funds of Australia, Spending patterns of older retirees: New ASFA Retirement Standard, September 2015.

4 Ibid.

5 ASFA 2015 Media release: 26 November 2015, Superannuation well placed to play a role in health and aged care funding and advice: ASFA.

6 Creative Commons license – http://www.abs.gov.au/ausstats/abs@.nsf/Latestproducts/6238.0Main%20Features3July%202012%20to%20June%202013?opendocument&tabname=Summary&prodno=6238.0&issue=July%202012%20to%20June%202013&num=&view


Disclaimer: This article has been prepared by Count Financial Limited ABN 19 001 974 625, AFSL 227232, (Count) a wholly-owned, non-guaranteed subsidiary of Commonwealth Bank of Australia ABN 48 123 123 124.

Information in this article is based on current regulatory requirements and laws, which may be subject to change. While care has been taken in the preparation of this document, no liability is accepted by Count, its related entities, agents and employees for any loss arising from reliance on this document.

This document contains general advice. It does not take account of your individual objectives, financial situation or needs. You should consider talking to a financial adviser before making a financial decision.

Take charge of your Retirement Journey – Part 1

Happy Retirees

Whether you’re already retired, planning to retire next year or in 20 years, knowing the kind of lifestyle you want in retirement and having a sound financial plan in place will help make your retirement dreams a reality.

 

When will you retire? How long will you spend in retirement? How much money will you need in retirement? What will your retirement lifestyle look like? If you’re already retired, what should your budget look like and what will you need to plan for as you get older? Your financial adviser can also assist with the complexities of aged care and help you select the preferred option for your individual situation. Answering these questions now can give you real peace of mind, and lead to a satisfying, fulfilling and financially secure retirement.

Retirement lifestyles – which one suits you?

Beer or bubbly? Caviar or chips? Harbour front mansion or sea-change shack? We all have different hopes, dreams and lifestyle requirements. Defining yours is an important step in planning your retirement. In order to help define how much you’ll need to spend each year in retirement, now or in the future, the Association of Superannuation Funds Australia (ASFA) releases an updated Retirement Standard 2 every quarter. This Retirement Standard benchmarks how much, in today’s dollars, retired singles and couples aged around 70 need to spend each year to enjoy what ASFA define as either a ‘comfortable’ or ‘modest’ retirement lifestyle described using everyday indicators.

A ‘comfortable’ retirement is defined by ASFA as enabling an older, healthy retiree to be involved in a broad range of leisure activities and to have a good standard of living through the purchase of such things as: household goods, private health insurance, a reasonable car, good clothes, a range of electronic equipment, and domestic and occasionally international holiday travel.

Funds required per year for a ‘comfortable’ retirement lifestyle:

Single – $42,962 per year
Couple – $58,915 per year

A ‘modest’ retirement is defined by ASFA as better than the Age Pension, but still only able to afford fairly basic activities such as one or two short breaks in Australia closer to where you live, infrequently eating out at cheaper restaurants, owning an older car, buying reasonable clothes, haircuts at basic salons, infrequent paid leisure activities and private health cover but with little money left over for home repairs.

Funds required per year for a ‘modest’ retirement lifestyle:

Single – $23,695 per year
Couple – $34,090 per year

Age Pension only:

Includes day trips in your own city, only inexpensive takeaway meals, no car, basic clothes, less frequent haircuts, very low-cost leisure activities, less heating in winter, no private health insurance and no budget for home repairs.

Single – $22,666 per year
Couple – $34,169 per year

Of course, you may prefer more than a ‘comfortable’ lifestyle. But these ASFA figures provide excellent starting points for understanding the potential costs of living in retirement.

Planning for later years of retirement

Australians are living longer and spending more time in retirement than ever before. An increasing number of Australians will live to age 90 and beyond.3  This may bring a new set of challenges to retirement, which can mean it’s even more important to have a plan in place.

NEXT: Take charge of your Retirement Journey – Part 2


2 The Association of Superannuation Funds of Australia, ASFA Retirement Standard, September 2015.

3 The Association of Superannuation Funds of Australia, Spending patterns of older retirees: New ASFA Retirement Standard, September 2015.


Disclaimer: This article has been prepared by Count Financial Limited ABN 19 001 974 625, AFSL 227232, (Count) a wholly-owned, non-guaranteed subsidiary of Commonwealth Bank of Australia ABN 48 123 123 124.

Information in this article is based on current regulatory requirements and laws, which may be subject to change. While care has been taken in the preparation of this document, no liability is accepted by Count, its related entities, agents and employees for any loss arising from reliance on this document.

This document contains general advice. It does not take account of your individual objectives, financial situation or needs. You should consider talking to a financial adviser before making a financial decision.

Insurance priorities for all ages – Life Stage: Retiree

Wealth Protection

Are your family, friends or adult children part of the large percentage of Australians who are under-insured? Here’s a simple guide to stage-of-life insurance priorities.

 

Life insurance seems less important, but do you have debt? If yes, think about how it might affect loved ones if you were no longer around. Make sure debt is covered during discussions with your financial adviser.

Trauma cover and/or TPD are still of great value. With another few decades to enjoy, the last thing you need is the expense of a serious illness or injury.

1 http://ricewarner.com/rice-warners-latest-underinsurance-research-report/


Disclaimer: Information in this article is based on current regulatory requirements and laws, which may be subject to change. While care has been taken in the preparation of this document, no liability is accepted by Count, its related entities, agents and employees for any loss arising from reliance on this document.

This document contains general advice. It does not take account of your individual objectives, financial situation or needs. You should consider talking to a financial adviser before making a financial decision.

Budget today … save for tomorrow

Make the most of the family home

A household budget is the single most effective tool to maintain control of your cash and stretch your nest egg to last as long as you need it to.

TRY THE BUDGET CALCULATOR

By the time we reach our seventies most of us have a reasonable idea of regular living expenses. What’s less certain is how much we should set aside for future aged care costs. It’s an issue that can be a source of stress for retirees.

Government-funded aged care accommodation is available so it shouldn’t form a cloud over your retirement. Nonetheless, aged care is something worth considering long before it’s needed.  Rushed decisions can be costly, and seeking professional financial advice at a reasonably early stage can protect your wealth and minimise care costs.

Years of fulfilling retirement ahead

However the reality for many retirees is that aged care could be some time away. So, how do you extend your nest egg over what will hopefully be a lengthy and fulfilling future? A simple yet remarkably effective tool for the job is a personal budget.

A budget planner makes it easy

A budget plays several key roles. It will highlight major costs to allow for – like household insurance or utility bills. It will reveal whether you are dipping too freely into your pool of investments, and it will also highlight areas where cutbacks can be made to extend your nest egg a little longer.

A common pitfall is underestimating the amount we spend on seemingly small purchases –like a few lunches with friends or some treats for the grandkids. These are the things that make retirement enjoyable but it’s also wise to ensure they aren’t exhausting your funds at too rapid a pace.

Ask for help to keep you on track

Of course making a budget is one thing, sticking to it is often the hard part.  Ask a friend or family member to help you stay on track. Or appoint a financial adviser to offer you guidance here, providing insights into whether your investments are on track to last the distance.

Budgeting for aged care costs

Aged care accommodation typically involves two types of costs – entry fees and ongoing charges.

Entry fees vary depending on the type of care. Low level care often requires an upfront bond, with high level (nursing home) care more likely to involve an annual charge.  Both types of care facilities are required to offer some places to those who cannot afford to meet the cost of accommodation themselves.

Ongoing fees are charged to cover daily living costs. A basic daily care fee will usually apply plus income tested fees.  Self-funded retirees may be asked to pay a higher rate.

For current details of aged care costs visit Estimate fees for aged care services and please speak with your financial adviser to get a better understanding of the costs involved.

Review how Insight Financial Partners can assist with the setup of Aged Care for yourself or for a family member.

AGED CARE SERVICES ESTIMATORCONTACT US FOR MORE INFORMATION


Disclaimer: Information in this article is based on current regulatory requirements and laws, which may be subject to change. While care has been taken in the preparation of this document, no liability is accepted by Count, its related entities, agents and employees for any loss arising from reliance on this document.

This document contains general advice. It does not take account of your individual objectives, financial situation or needs. You should consider talking to a financial adviser before making a financial decision.

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Learning From Experience

The Count Report-Summer 2016-Learning From Experience

It is no secret that retirement is more successful for some than for others. One of the secrets to success is planning that begins decades earlier. Here we speak with a 67-year-old who has begun his (semi) retirement with style and hear his real-life tips on how to make your retirement dreams happen.

Learning-From-Experience-Blog-Article-January-2016

Ewan Brown couldn’t be happier with his retirement, partly because he is not yet fully retired. The 67-year-old Canberran knows that in order to have a full life he must remain active in a number of pursuits, including work, fitness and family. So he makes sure, through both paid and volunteer positions, that he is working two to three days a week. Any more and his lifestyle suffers. Any less and he risks losing his sense of self.

The most powerful tool Ewan has in his retirement is choice, which is a benefit of being actively and passionately involved in his superannuation planning with his Financial Adviser from his 40s onwards. Some knowledge and training in economics and accounting didn’t go astray, but the basics that brought him financial independence, including tax-effective investing and understanding where your money is placed and how it is performing (the type of insights your Financial Adviser offers you), were exactly that – simple basics.

So Ewan is able to cherry-pick jobs and volunteer roles and decide what suits him. He is able to say how much time he would like to spend working and how much he needs to keep free for his favourite hobby – fishing. And if a particular job doesn’t meet his expectations, which was the case with a recent role, then he has the freedom to search for a new one.

His latest role is a Directorship with the Council on the Ageing ACT (COTA ACT), an industry body representing the interests of older people in the ACT. This gives Ewan the opportunity to spread the word about planning a happy, healthy and wealthy retirement. Ewan has shared some of his learnings for different age groups with us.

Accumulating wealth: 40 to 49 years

At this stage of life, Ewan says, you are likely at the peak of your earning capacity, so your mortgage is less of a drag on your income. It is during this stage of life that an individual or couple finally feels a little wealthier than ever before. Deciding on what to do with this extra wealth, he says, is key to success later in life.

“It is very important at this stage to resist the temptation to overspend, rather than to save,” Ewan says. “You’re likely reaching a cusp with some of your debts, so it’s important to start ramping up your saving capacity. The tendency is usually to spend because you’re finding you have better cash flow. But this is the perfect time to start making use of the tax system by looking at the benefits of superannuation and salary sacrificing etc. with your Financial Adviser. Finding out what investment methods are available to you that are tax-effective is the first step in planning for your retirement.”

At the same time as seeking professional advice and being disciplined with your savings, doesn’t mean living a life without enjoyment. Ewan regularly rewarded himself with holidays and nights out at restaurants. It is during this time of life that you should begin to properly picture the lifestyle you would like to have in retirement, and if you don’t have an enjoyable lifestyle now, it will be difficult to imagine a retirement that includes little luxuries.

“While you do have to find that balance and be steeled to making saving a part of your life, don’t be afraid to then take advantage of your current situation, rather than saying, ‘I’m going to leave it all to my retirement’,” he recommends. “A lot of people who do that never achieve anything. They never get to realise their goals because they fail to set themselves up for a retirement lifestyle.”

Ewan says that during this period he always had some form of personal insurance – particularly when it also offered tax benefits – to protect his retirement strategy from unforeseen events.

Before retiring: 50 to 65 years

It was early in this stage of life that Ewan and his partner began planning the physical side of their retirement. They designed and built a house that was shaped around their life together as they aged, rather than one that included children at home.

“This was a deliberate action, to design and build a home that was suitable for a couple,” Ewan says. “We didn’t want a “McMansion”, we wanted a place for retirement. And we don’t see it as our forever home, there is knowledge that there will have to be another move as we age, but it certainly suits our purposes during the first stage of our retirement.”

Planning your retirement in the amount of detail that it deserves, he says, can take up to five years to achieve. Far better to do this before retirement begins and with the assistance of a professional Financial Adviser.

“I starting doing things that other people would usually put off until retirement, such as tidying up all of my finances, documenting important information, knowing what you’ve got and making sure there is adequate insurance coverage, starting new hobbies etc.,” Ewan says.

“I had heard a lot of people say, ‘I’ll get around to that when I retire’, then when they retired they were so busy doing the little things that they couldn’t organise or enjoy any of the big things. People then experience less choice and, they tell me, they lose their identity during the early stages of retirement. They feel they no longer have a purpose. But if you retire on your own terms and under your own control, then you hold on to your sense of importance.”

Source: Count Financial

Disclaimer: This article has been prepared by Count Financial Limited ABN 19 001 974 625, AFSL 227232, (Count) a wholly-owned, non-guaranteed subsidiary of Commonwealth Bank of Australia ABN 48 123 123 124.

Information in this article is based on current regulatory requirements and laws, which may be subject to change. While care has been taken in the preparation of this document, no liability is accepted by Count, its related entities, agents and employees for any loss arising from reliance on this document.

This document contains general advice. It does not take account of your individual objectives, financial situation or needs. You should consider talking to a financial adviser before making a financial decision.

0 comments on “How to achieve the retirement lifestyle you deserve”

How to achieve the retirement lifestyle you deserve

Happy Retirees

How do you plan a perfect retirement? We asked an expert to identify the most important ingredients in the creation of retirement bliss.

The very act of stopping paid work can introduce a sudden lack of routine, a shortage of networking and socialising opportunities and the purpose that a retiree may have enjoyed in the workplace. So how do you get around these challenges and ensure your retirement is a joyful and productive period?

Those that get the most out of retirement, says Dr Ruth Williams, a Research Fellow at the National Seniors Productive Ageing Centre, tend to be the ones that plan in advance. And the years leading up to your retirement are the very best time to put these plans in place.

Concentrate on the following specific aspects of lifestyle, and it is very likely that your retirement will be even more fulfilling than any period that has come before. Here are a few lifestyle approaches she recommends.

Fitness and health

“Maintaining a healthy lifestyle is extremely important. A lot of people who work full‑time probably don’t have a great deal of time to do physical exercise, but in your retirement you need to make a plan for physical health. Some people join clubs, like tennis or golf, so they can socialise as they maintain their physical fitness. It’s also important to maintain your cognitive health, such as doing things like crosswords and Sudoku puzzles.”

Socialise by volunteering

“Socialising in retirement is very important. Many choose to volunteer, and that could be through formal volunteering. For example, a lot of organisations are now looking for experienced people to sit on Boards. There is also informal volunteering, like grandparents taking on caring roles for their grandchildren.”

Volunteering also gives people a sense of meaning, community and purpose. That is extremely good for mental health.”

Make a transition

 “A lot of people don’t retire immediately anymore, they go into a semi-retirement. Even if they do fully retire a lot of people still make themselves available for consultancy work where they can still contribute knowledge on specific projects. There is an opportunity for skill-sharing and mentoring enabled by keeping a foot in the door of your organisation.”

Indulge in hobbies

“This is the time when a lot of people are looking forward to finally pursuing whatever it may be that they love. It could be travel or home renovations. Having time to pursue personal interests is a big drawcard for people in retirement. A lot of these activities are often through community houses and local municipal sectors, so there is a lot of opportunity for people to engage in an interest and develop local social connections as well.”

Be a lifelong learner

 “An attitude of lifelong learning is something that I am quite passionate about. Learning should not end at retirement, and there is an opportunity to mix this in with personal interests. It could be to do with knowledge or to do with learning new skills. This not only maintains cognitive health but contributes to your social networks.”

Source: Count Financial

Disclaimer: This article has been prepared by Count Financial Limited ABN 19 001 974 625, AFSL 227232, (Count) a wholly-owned, non-guaranteed subsidiary of Commonwealth Bank of Australia ABN 48 123 123 124.

Information in this article is based on current regulatory requirements and laws, which may be subject to change. While care has been taken in the preparation of this document, no liability is accepted by Count, its related entities, agents and employees for any loss arising from reliance on this document.

This document contains general advice. It does not take account of your individual objectives, financial situation or needs. You should consider talking to a financial adviser before making a financial decision.