The Australian Securities and Investments Commission (ASIC) has warned about a new scam targeting superannuation savings¹. Through cold calls, scammers attempt to extract your personal and superannuation fund details by offering incentives in the form of gift cards, competitions or mobile phones.

Some induce victims to create an account on their ‘comparison website’ to legitimise themselves.

Rosie’s story:

When you get those phone calls in the evening, around dinner time, you’re immediately suspicious. But Steve rang mid-morning, saying he represented a well-known investment firm.

He said that his area of expertise was superannuation and that it would only take him a moment to explain what he could do for me. He then guided me through the steps for creating an account on his website.

Naturally, I was cautious, but Steve reassured me it was just a comparison site and I wasn’t signing up for anything.

He showed me how to compare my super fund’s returns with others, and the website seemed so legit that I felt a bit silly for initially having doubts. I listened to what he had to say, and it all made sense.

Gerry’s story:

The first I knew about all this was when Rosie called asking me to transfer her super into an alternative fund.

Rosie has been a client since we first set up a retirement plan and savings strategy for her, twenty-odd years ago. As her lifestyle changed over time, we reviewed and tweaked her portfolio, and she was on track for a comfortable, self-funded retirement.

Rosie is an intelligent woman. She may not be a superannuation expert – that’s my job – but we’ve had some quite detailed conversations about her retirement and savings portfolios. So, when she asked me to facilitate her rollover to this other fund, well, to say I was concerned was an understatement.

Scammers pose as financial planners or investment managers. Traditionally, they have targeted individuals searching online using words like, ‘safe’, ‘superannuation or ‘long-term’.

Recently, they’ve gone to the next level and begun cold calling.

Rosie:

When I phoned Gerry, he seemed reluctant to organise my rollover. He asked me for the details of the fund I was rolling into and said he’d get back to me.

I thought he was just a bit miffed that I was talking to someone else.

Gerry:

Alarm bells were going off in my head. I asked Rosie to sit tight for a day while I researched the fund.

I contacted the company this Steve fellow claimed to represent and asked them a few questions. Of course, neither Steve nor the fund existed. Then I checked whether the fund had a USI (unique superannuation identifier). Nothing for that either.

I rang Rosie.

Rosie:

I was shocked, I mean, Steve sounded so genuine – and the website! Wow. What a close call!

Gerry told me to report the scam to Scamwatch. They contacted me and said this kind of thing was increasingly common and recommended I join the ‘Do-not-call register’.

Lesson learned. I’ve had a great working relationship with Gerry for years, there’s a reason for that!

I’m due for my annual review next month – Coffee’s on me!

If you suspect a scammer has called you, ASIC recommends you:

• hang up immediately,
• contact your superannuation fund and bank and block withdrawals,
• join the Do-not-call register.

Above all, never accept financial advice from someone you don’t know, if in doubt, speak to your financial adviser – seriously, if the fund is legitimate, they’ll know about it!

The information contained in this article is general information only. It is not intended to be a recommendation, offer, advice or invitation to purchase, sell or otherwise deal in securities or other investments. Before making any decision in respect to a financial product, you should seek advice from an appropriately qualified professional.  We believe that the information contained in this document is accurate. However, we are not specifically licensed to provide tax or legal advice and any information that may relate to you should be confirmed with your tax or legal adviser.

1 https://asic.gov.au/about-asic/news-centre/find-a-media-release/2024-releases/24-092mr-asic-issues-warning-over-dodgy-cold-calling-operators-and-online-baiting-tactics/

Do you have a twelve-a-day habit? We’re talking seated hours, not cigarettes. Studies indicate that sitting too much and moving too little can be just as bad for your health.

The Victorian Government’s Better Health website suggests that sitting is the new smoking, and plenty of studies are backing up the claim. According to government stats, more than 60% of us do less than the recommended 30 minutes of daily exercise¹.

But it’s not just structured exercise that we lack.

Not so long ago, office workers communicated by walking to colleagues’ desks. Information was shared by hand-delivered memos (remember those?), and we physically attended meetings.

We went outside to buy lunch and – horrors – may have even eaten it outside!

Today’s world is one of remote connectivity. People work from home, use email or instant messaging to communicate with colleagues, and attend meetings via videoconferencing.

As a population, we are moving less. We’re buying online where we used to visit shopping centres. We, who once walked or cycled to school, now drive our kids; and they spend hours texting friends online instead of physically meeting up with them.

Technology has aided and abetted us in becoming more sedentary than ever before – to the detriment of our health and wellbeing.

According to the United Kingdom’s National Health Service (NHS), excessive sitting is putting us at risk of all manner of diseases, the most common being obesity and Diabetes Type 2².

The NHS quotes sources from Melbourne’s Baker IDI Heart and Diabetes Institute as claiming that too much sitting slows metabolism. This, in turn, affects the body’s ability to regulate blood sugar, blood pressure and metabolise fat.

Other consequences may include conditions like varicose veins, sciatica, deep vein thrombosis (DVT) or more sinister ailments like heart disease and cancer.

So, if too much sitting is the problem, is standing the solution?

Well, yes and no.

Adjustable workstations enabling office workers to stand at their desks are a step in the right direction, but standing alone is not a panacea. Standing for hours can affect posture and lead to neck, back and hip problems.

Movement is the key. Fitting more movement into daily life isn’t as difficult as you might think.

Consider:

• Taking the stairs instead of the lift.
• Visiting colleagues’ desks.
• Pacing while on the phone.
• Setting an hourly timer reminding you to get up and walk.
• Walking with the kids to school.
• Organising walking meetings– it’s a thing, Google it!

Our bodies are designed for movement. Lack of movement weakens muscles and bones, and ultimately our health and mental well-being can suffer.

It’s like leaving a car idle in a garage for months. You can replace a car, but you can’t replace your body – technology hasn’t gone that far yet – so get up and move it!

The information contained in this article is general information only. It is not intended to be a recommendation, offer, advice or invitation to purchase, sell or otherwise deal in securities or other investments. Before making any decision in respect to a financial product, you should seek advice from an appropriately qualified professional.  We believe that the information contained in this document is accurate. However, we are not specifically licensed to provide tax or legal advice and any information that may relate to you should be confirmed with your tax or legal adviser.

1 https://www.betterhealth.vic.gov.au/health/healthyliving/the-dangers-of-sitting
2 https://www.nhs.uk/live-well/exercise/why-sitting-too-much-is-bad-for-us/

A simple guide from an earlier era suggested eight hours for sleeping, eight hours for work and eight hours for leisure. Nowadays, work seems to take up more than its fair share, and many people might be seeking a way to maintain or increase their income without increasing their working hours. Creating passive income is one way of achieving this goal.

What is ‘passive income’?

Passive income is regular and reliable income that doesn’t rely on constant active involvement. In other words, you get paid multiple times for something you only did once. It sounds too good to be true, but it is possible.

There are numerous opportunities, of which these are just a few:

• Writing a book, blog or making YouTube videos.
• Selling products via an online store.
• Investing in property for rental income and capital growth.
• Investing in sound, dividend-paying Australian shares.

Some of these options require investment capital, while others require time to establish them.

However, an even simpler way to earn passive income is to pay off debt. If you’re not paying interest on your outstanding credit card debt every month, that money is all yours!

Online businesses

Thousands of businesses are now only web-based, and hundreds more seem to pop up daily. And it doesn’t have to be a business that sells anything – bloggers can earn mega bucks from advertising. Advertisers will gladly pay the owner for space if a site is popular enough.

Internet gurus espouse that this is the way of the future. However, the reality can differ on how many of these businesses are profitable and, just as importantly, how much time is required to make them profitable.

As with any new venture, conduct solid research of existing opportunities or maybe just look around you at what others are doing. Identify a need and a market willing to pay for that need.

It will take time to set things up, but if done right, maybe you can earn “money for nothing”—well, almost!

Investing in your future

One of the great aspects of investing is that your portfolio can be a source of passive income. If you choose to reinvest the passive income you generate, compounding your returns will help your portfolio grow even faster.

Working with a financial planner to help grow your investment portfolio is another great way you can move from relying on your income from working to creating a passive income stream for your future.

The information contained in this article is general information only. It is not intended to be a recommendation, offer, advice or invitation to purchase, sell or otherwise deal in securities or other investments. Before making any decision in respect to a financial product, you should seek advice from an appropriately qualified professional.  We believe that the information contained in this document is accurate. However, we are not specifically licensed to provide tax or legal advice and any information that may relate to you should be confirmed with your tax or legal adviser.

Navigating the world of personal finance can be challenging, especially with the myriad of myths that may cloud your judgment.

From misconceptions about debt to misunderstandings about investing and retirement planning, these myths can lead to poor financial decisions and missed opportunities. So, we thought we’d bust them once and for all!

Myth: “I’ll never be “good at” money.”

Fact: Financial literacy is a skill that can be learned and improved over time.

Resources such as books, online courses, and financial planners can help you develop better money management and investment skills. Many successful people have improved their financial literacy through education and practice.

Truth: You can be “good at” money. Give yourself some credit; you’ve got this!   

Myth: “I’ll be able to start budgeting/saving/investing once I start earning more money.”

Fact: Effective money management is about making the most of what you have, regardless of income level.

Starting small with budgeting, saving, and investing can build good financial habits that benefit you regardless of income. The key is consistency and discipline, not the amount you start with. Even high-income earners can face financial challenges if they don’t manage their money wisely.

Truth: Let’s be real; you can start now. What’s the harm in trying?

Myth: ‘All debt is bad.’

Fact: Good debt, such as mortgages or student loans, can help build wealth and invest in your future. The important factor is managing debt responsibly and ensuring it fits within your financial plan.

Truth: Shopping on a credit card you only pay the minimum balance on = bad. Investing in high-quality wealth-building assets = priceless.

Myth: ‘You need to buy your home.’

Fact: Whether to buy or rent depends on individual circumstances, including financial stability, career plans, and lifestyle preferences.

While buying a home offers its advantages, renting can be a smart financial decision, depending on your circumstances. It provides flexibility and can sometimes be more affordable than homeownership.

Truth: The Great Australian Dream doesn’t have to be your dream… and that’s ok.

Myth: “It will never happen to me.”

Fact: The most valuable asset for many is your ability to earn an income.

Unfortunately, regardless of age or health, unexpected events can happen to anyone.

Insurance provides financial protection and peace of mind in case of an emergency, accident, or illness.

Truth: The person ‘it’ happened to probably also thought ‘It will never happen to me’“

Myth: “I don’t have enough money to invest.”

Fact: Small, regular investments can grow significantly over time due to the power of compound interest.

Many investment platforms offer a range of low-cost options that allow you to invest with minimal amounts, meaning you don’t need a lot of money to get started growing your wealth!

Truth: No more excuses! Start investing to improve your financial situation. Investing isn’t only for the wealthy!

Myth: “Investing in the stock market is too risky.”

Fact: While the stock market does involve risk, diversification and long-term investing can help reduce this risk and provide substantial growth opportunities.

Educating yourself and seeking advice can make stock market investing accessible to everyone. Financial advisers can help boost your financial literacy and confidence in investing in the market.

It’s not about timing the market, it’s about time in the market.

Truth: Some might say that not investing in the stock market is risky.

Myth: “I don’t need to worry about retirement until I’m older.”

Fact: Planning and saving for retirement early allows your money to grow through compound interest, and investing across a diversified range of assets, ensuring a more secure financial future.

Early planning also provides strategic opportunities, such as taking advantage of concessional super contributions, which can reduce your taxable income. The earlier you start, the more you can benefit from these strategies, allowing you to build a substantial retirement nest egg over time.

Truth: One day, you’re fresh in the workplace, thinking you don’t need to worry about retirement… Before you know it, you’re 5 years out from retirement, wondering where the last 30 years went!?

Myth: “You don’t need a will or estate plan unless you are rich or have children.”

Fact: Everyone should have a will or estate plan to ensure their assets are distributed according to their wishes, regardless of wealth or family status.

Estate planning can help prevent legal complications, ensure your wishes are honoured, and simplify the process of administering your Estate.

Truth: Make sure you have an Estate Plan in place… if for no other reason than peace of mind and making the lives of your loved ones easier.

Myth: “You need a lot of money to have a financial planner.”

Fact: Financial planners can provide valuable advice and strategies for people at all income levels.

They can help with budgeting, saving, investing, and planning for future financial goals, making their services beneficial for everyone!

Truth: What came first… the chicken or the egg?

Whether it’s starting to save and invest early, understanding the true value of good debt, or recognising the importance of estate planning, challenging these misconceptions is crucial for making informed decisions and taking control of your financial future.

If you’ve experienced a myth-busting today and are ready to ‘face the facts’, contact us to find out how we can support you on your new path forward.

The information contained in this article is general information only. It is not intended to be a recommendation, offer, advice or invitation to purchase, sell or otherwise deal in securities or other investments. Before making any decision in respect to a financial product, you should seek advice from an appropriately qualified professional.  We believe that the information contained in this document is accurate. However, we are not specifically licensed to provide tax or legal advice and any information that may relate to you should be confirmed with your tax or legal adviser.

“In the game of thrones, you win, or you die.” This quote from Game of Thrones captures Westeros’s ruthless struggle for power and legacy.

While dragons, knights, and medieval intrigue might seem far removed from our modern lives, the Targaryens’ complex family dynamics and political maneuvers offer surprising parallels to estate planning challenges.¹

How can we learn from these valuable lessons about careful and strategic estate planning?

1. The importance of clear succession

King Viserys’s failure to clearly name a successor and the resulting power vacuum illustrate the catastrophic consequences of not having a well-defined Will.

In the real world, unclear or ambiguous estate plans can lead to prolonged legal battles, fractured family relationships, and significant financial losses.

To avoid such outcomes, it’s essential to state your wishes regarding the distribution of your assets explicitly.

2. Protecting your assets for future generations

The legacy of dragons represents the wealth and power that the Targaryen family seeks to protect and preserve. Just as the Targaryens invest time and resources in raising and maintaining their dragons, you should carefully manage and protect your assets.

This mirrors the real-world need to safeguard valuable assets for future generations. Whether it’s real estate, investments, or family heirlooms, ensuring that valuable assets are preserved and passed down can secure your family’s financial future. This involves strategic planning and appropriate legal tools to ensure that assets are protected and effectively transferred to heirs.

For example, a certain trust can ensure that a child inherits property only after reaching a certain age or achieving specific milestones. This can prevent mismanagement and ensure that the assets are used as intended.

3. Collaboration and communication in Estate Planning

The Small Council, comprised of trusted advisors who help govern Westeros, exemplifies the importance of collaboration in estate planning. Involving trusted individuals in your estate planning can ensure your wishes are carried out effectively.

Appointing executors and trustees to manage and distribute your estate is critical. These individuals should be trustworthy, reliable, impartial, and capable of handling the responsibilities.

Their role is to execute your Will, manage any trusts, and ensure that the distribution of assets is carried out according to your specific instructions. This collaborative approach can provide a system of checks and balances, reducing the risk of mismanagement or disputes.

Open and transparent communication about your estate plan with family members can help manage expectations and prevent misunderstandings. Discussing your plans and the reasons behind your decisions can further clarify and reduce the potential for conflict.

4. Seeking expert advice for Estate Planning

The intricacies of Westerosi laws, customs, and politics often complicate succession and inheritance, leading to conflict and uncertainty.

Estate planning involves navigating a complex web of laws and regulations that vary significantly depending on your jurisdiction. Understanding these legal requirements is crucial to creating a valid and enforceable estate plan.

Professional advisers can offer valuable insights into your estate plan’s legal, financial, and tax implications. They can help you understand the various tools and strategies, ensuring your plan is comprehensive and effective. Their expertise can prevent costly mistakes and ensure your estate is managed and distributed according to your wishes, and reducing the risk of any potential challenges to your estate.

Additionally, understanding the tax implications of your estate plan can help you reduce tax liabilities for your heirs.

5. Adapting to changing circumstances

Westeros’s political and personal landscapes constantly change, with alliances forming and breaking and new heirs being born.

Similarly, in real life, significant life events such as marriages, births, deaths, and changes in financial status necessitate regular updates to your estate plan.

An outdated estate plan can lead to unintended consequences, such as assets being distributed to individuals you no longer wish to benefit or new family members inadvertently missing out.

Regularly reviewing and updating your estate plan ensures that it accurately reflects your current wishes and circumstances. This might involve revising your Will, updating beneficiaries on insurance policies and retirement accounts, and adjusting trusts to align with your evolving goals.

Keeping your estate plan current helps prevent legal challenges. It provides clarity and certainty for your heirs, reducing the likelihood of disputes and ensuring a smoother estate transition.

Final Thoughts

The Game of Thrones offers rich and compelling lessons on the importance of careful and strategic estate planning. From the chaos of unclear succession and the necessity of protecting valuable assets to the benefits of collaboration and the wisdom of seeking expert advice.

By taking these lessons to heart and implementing them in your estate planning, you can avoid the pitfalls that plagued the Targaryens. You can create a clear, effective plan that reflects your wishes and provides for your loved ones, to help ensure your legacy is protected and your family’s future is secure.

The information contained in this article is general information only. It is not intended to be a recommendation, offer, advice or invitation to purchase, sell or otherwise deal in securities or other investments. Before making any decision in respect to a financial product, you should seek advice from an appropriately qualified professional.  We believe that the information contained in this document is accurate. However, we are not specifically licensed to provide tax or legal advice and any information that may relate to you should be confirmed with your tax or legal adviser.
1 https://www.forbes.com/sites/truetamplin/2024/06/16/5-estate-planning-lessons-from-house-of-the-dragon/

Among the many financial concepts we juggle as adults, superannuation (super) stands out as the cornerstone of retirement planning in Australia. Yet, the term ‘superannuation’ often brings to mind a maze of complex terms that many find daunting.

Here we look at ways you can transform superannuation from a puzzling concept into a super exciting part of your child’s financial education.

Introducing… Super Accounts

Imagine if you had a magical treasure chest where every coin you put inside would continue to grow and grow, until one day you could open the chest, stop working and live happily ever after!

This is the essence of a superannuation account – a special savings account designed for your retirement.

What is a Super Account?

From the moment you start working, a portion of your earnings from your employer (called the ‘Superannuation Guarantee’) begins to flow into your super account. These contributions are invested to grow over the course of your working life.

Learning Activity

To help your child grasp this concept, consider using a clear jar as a visual aid. Each time they complete a chore, contribute a small amount to the jar, explaining that this is similar to how super accounts grow over time with contributions from work.

The Hunt for Super Treasures

Imagine a grand adventure in treasure hunting.

This adventure is filled with paths of varying difficulty. Some paths offer smaller treasures that are easier to find (low risk, low return), and others have larger treasures guarded by more challenges and uncertainties (higher risk, higher return).

The Safe Shoreline (Lower Risk, Lower Return):

Near the shoreline, treasure is often found in the shallow waters. It’s easy to reach and requires little effort, but the treasures are modest.

This is like investing in term deposits or savings accounts, where your investment is safer but will likely receive lower returns.

The Mysterious Jungle (Medium Risk, Medium Return):

At the edge of the shoreline is a jungle. The jungle is tougher to navigate but has hidden treasures that offer better rewards.

These are like balanced funds, where the risk and the return are moderate, appealing to those who seek a bit more adventure but aren’t ready for the highest peaks.

The Mountain of Legends (Higher Risk, Higher Return):

Farthest from the shore is a mountain where the largest treasures are said to be hidden. To reach them, you’ll face steep climbs and uncertain paths. You might even get lost and need to retrace your steps.

This is like high-risk investments such as stocks, where the potential for high returns is significant, but the ride will be a bit bumpy.

Learning Activity

To help your child grasp this concept, use three cups to represent the different paths. 

Cup 1: Add one marble to the cup and place one metre away from a starting line.

Cup 2: Add two marbles to the cup and place two metres away from the starting line.

Cup 3: Add nine marbles to the cup and place three metres away from the starting line.

Offer your child the marbles from their jar and ask them to try throwing them into one of the three cups. 

Discuss the relationship between risk and return—how cup one might be the easiest to get, but it only offers one marble, and how cup three offers a lot of marbles, but would be harder to get. 

Empowering your children with the knowledge of superannuation is more than just a lesson in finances. By breaking down these concepts into understandable, relatable pieces, we can help our children feel confident about taking control of their financial future from a young age.

The information contained in this article is general information only. It is not intended to be a recommendation, offer, advice or invitation to purchase, sell or otherwise deal in securities or other investments. Before making any decision in respect to a financial product, you should seek advice from an appropriately qualified professional.  We believe that the information contained in this document is accurate. However, we are not specifically licensed to provide tax or legal advice and any information that may relate to you should be confirmed with your tax or legal adviser.

Adjusting to life after divorce, particularly later in life, is akin to navigating through some of life’s most challenging events. It’s a journey comparable to coping with loss, relocation, major illness or injury, or job loss.

While these upheavals are often beyond our control, how we manage them can significantly impact our recovery.

Is grey divorce on the rise?

Unfortunately, yes. Despite overall divorce rates declining since the 1990s, both the age at divorce and the rate of divorces among couples in long-term marriages are on the rise.¹

According to data from Australian Seniors and the ABS, 32% of divorces now occur after age 50.

What are some of the key financial impacts of grey divorce?

Superannuation is typically considered part of the assets in any pre-divorce financial settlement. Understanding that superannuation can be divided without the need for fund withdrawals or meeting specific conditions is crucial if no prior agreement has been reached with your partner. While splitting it isn’t obligatory, ensuring its inclusion in the settlement is vital due to its significant role in overall wealth. However, dividing it can substantially diminish what was once a solid nest egg, potentially impacting retirement plans.

Aside from the emotional toll of asset division, the physical process can also be complex. Factors like investment properties, primary residences, or self-managed super funds (SMSFs) with less liquid assets—such as business holdings, real estate, closed funds, or art—can further complicate matters.

Selling assets without proper advice can trigger capital gains, and shifting assets out of more efficient tax structures such as superannuation or trusts can result in hefty tax liabilities.

Centrelink entitlements and thresholds will also alter with your changed circumstances.

Seeking the professional advice of more than just a lawyer is the financially smart thing to do.

Divorce is also expensive

Many shared expenses, such as utilities, become the sole responsibility of each party post-divorce.

For instance, while the average monthly living expenses for an Australian couple total around $4,118 ($2,059 per person), for a single person living alone, it’s estimated at $2,835. In essence, each individual spends roughly 70% of what a couple would spend.²

After divorce, budgets can become tight with each person potentially having only half of their assets (or less due to the potential impact of capital gains tax, etc) but needing around 70% of their income to cover living expenses.

So, how can you rebuild financial stability post-divorce?

• Ensure you have updated your superannuation death nominations. You may want to change your beneficiaries or lock in a binding nomination if you don’t have one.
• Review your Will and confirm it reflects your current situation. If something happens, this will help ensure that the right people inherit your assets.
• Consider strategies to rebuild or manage retirement savings, investments, and income. For instance, a recontribution strategy can help you reduce potential tax on any superannuation death benefits paid to non-dependents by converting taxable amounts into tax-free amounts.
• Revise your budget and expectations for retirement.
• Be sure to seek advice on Centrelink entitlements. Thresholds can differ, and you might be entitled to benefits you weren’t entitled to pre-divorce.
• Evaluate debt. Consider how much, if any, debt you should take on to re-enter the property market or rebuild assets.

In other words, review your financial plan and seek professional advice. A qualified financial adviser can help you learn to take control of your finances and plan your future.

Remember, the benefits of compounding mean that the sooner you start, the better off you’ll be!

https://www.seniors.com.au/news-insights/australian-seniors-series-love-after-50-report
The information contained in this article is general information only. It is not intended to be a recommendation, offer, advice or invitation to purchase, sell or otherwise deal in securities or other investments. Before making any decision in respect to a financial product, you should seek advice from an appropriately qualified professional.  We believe that the information contained in this document is accurate. However, we are not specifically licensed to provide tax or legal advice and any information that may relate to you should be confirmed with your tax or legal adviser.
1 https://aifs.gov.au/research/facts-and-figures/divorces-australia-2023
2 https://www.mebank.com.au/the-feed/manage-the-cost-of-living-on-a-single-income/

One of the most frequently asked questions is, ‘How much do I need to retire?’. While you may think of reaching for a calculator to tell you the answer, it goes much deeper than that. No magic number fits everyone, as it depends on your circumstances and what you want from life when you retire.

In conversations with clients, we help to paint a vivid picture of their ideal retired life. This may range from simply enjoying where they live with the people they love, to world adventures and everything in between. Importantly, the retirement you see for yourself today may be completely different than in ten or twenty years.

How expensive is retirement?

Research conducted by the Association of Superannuation Funds of Australia (ASFA) provides a good basis for answering how much retirement costs. Each year, ASFA surveys retirees aged between 65 and 84 to determine their spending. This provides a detailed average breakdown of how retired Australians spend their money. These are compiled as the basis for two lifestyle standards, ‘Modest’ and ‘Comfortable’, for singles and couples.

Based on ASFA Retirement Standard for the March quarter 2024, for those who own their own home outright, to live ‘comfortably’ as defined by ASFA, which includes the occasional restaurant meal and an international holiday once every seven years, singles need to budget $51,630 per year, and couples $72,663 per year. To achieve this ‘comfortable’ retirement, you’ll need to have a nest egg well above half a million dollars by retirement age (age 67), with singles needing a total of $595,000 and $690,000 for a couple.

Again, for those who own their home outright, a ‘modest’ retirement as defined by ASFA allows a lifestyle only marginally better than what can be afforded on the Age Pension, with infrequent access to exercise, leisure, and social activities. Singles and couples need at least $100,000 to achieve this.

Your lifestyle and spending

Your lifestyle choices are important in determining how much you’ll need to save for retirement. Creating a detailed budget based on your lifestyle preferences will help you set your retirement savings goal. It’s helpful to divide your expenses into needs and wants. While you cannot go without what you need, you can prioritise what you want. This will be a significant determining factor in how much you need to retire.

Superannuation

It’s important to grow your super balance as it can be a very tax-effective tool. In retirement, it’s also very flexible and purpose-built to fund retirement income needs. Overall, it is generally the most effective retirement structure available in Australia.

Superannuation is typically the largest asset retirees in Australia have, excluding the principal place of residence. One of the best ways to grow your super is by contributing what you can. While the mandatory superannuation guarantee contribution (11.5% from 1 July 2024) is helpful, depending on your desired lifestyle, it’s usually insufficient.

You can contribute more to your super through salary sacrifice or personal contributions. The maximum yearly threshold is $30,000 for concessional contributions and $120,000 for non-concessional contributions. If certain requirements are met, it is also possible to bring forward up to three years of non-concessional contributions or utilise unused concessional caps from the previous five years.

Additional options include spouse contribution, co-contribution, superannuation splitting, and downsizer contribution. To make the most of these options, it’s always wise to seek guidance from an adviser before you make additional contributions.

Downsize your home

Often, the family home is bigger than what you will need in retirement. If you’ve owned your home for at least ten years and are over 55, you may be able to contribute up to $300,000 (per person if a couple) from the proceeds of downsizing into your super. Before considering a downsizer contribution to super, it is important to consider eligibility requirements and weigh the pros and cons to ensure it aligns with your financial goals.

Review your investment strategy

It’s vital to ensure that your investments align with your goals and risk tolerance, especially as you approach retirement. Assessing asset allocation, income generation, inflation protection, and liquidity can help boost your retirement savings and provide financial security.

Age Pension

The Age Pension is designed as a safety net, providing a guaranteed income stream to cover essential living expenses. Eligibility depends on various factors, including age, residency status, and income and assets tests.

When planning for retirement, taking the Age Pension into account can help you better estimate how much is needed to supplement your pension income and maintain your desired standard of living.

Working with your financial adviser to understand the rules and eligibility criteria for the Age Pension can help you make informed decisions about your retirement savings strategies, such as when to access your super and whether to make additional contributions.

Conclusion

As you can see, there is much more to figuring out how much you need to retire than simply reaching for a calculator to tell you the answer.

As a financial adviser, we can help you visualise your ideal retired life and create a plan to help you achieve it.

The information contained in this article is general information only. It is not intended to be a recommendation, offer, advice or invitation to purchase, sell or otherwise deal in securities or other investments. Before making any decision in respect to a financial product, you should seek advice from an appropriately qualified professional.  We believe that the information contained in this document is accurate. However, we are not specifically licensed to provide tax or legal advice and any information that may relate to you should be confirmed with your tax or legal adviser.

For some Australians, retirement is everything they were promised. Indeed, those retiring today may be healthier than any previous generation. Social researcher Bernard Salt calls ages 65-85, ‘The Great Contentment’¹.

However, retirees and pre-retirees often face a wall of worries. In the earlier decades of our working lives, most Australians are focused on career, family and buying a home. Put simply, superannuation isn’t a priority. Until it is.

In focus group research conducted for AMP², many in their 50s and 60s talk about a sudden mad scramble to ‘catch up’ and meet an ill-defined retirement goal.

So, let’s look at some of the challenges you might be facing.

Conquering the Fear of Running Out (FORO)

Many Australians worry about running out of money in retirement. After a lifetime of working and receiving a constant income, the prospect of funding an enjoyable retirement from a single, soon-to-dwindle pile of money looms as a mathematical challenge and emotional rollercoaster.

This fear of running out is heightened when the growing cost of living eats away at your lifetime savings. International retirement income specialist Don Ezra points to two sources of worry when providing for life after full-time work: “One is that you don’t know how long you’ll live. The other is that you don’t know how large a return your financial capital will earn.”

Complexity and variables

In Australia, we may have the most complex retirement system in the world³ and this complexity seemingly increases with every election cycle. In addition to regulatory, longevity and return risk, retirees operate within complex tax and social security systems.

Everyone has a unique set of variables that impact their situation. Some retirees are ushered into retirement by illness or injury. Others have retirement strategies complicated by divorce and re-partnering. Or perhaps a couple retires at different ages and access the age pension at separate times.

And, of course, the duration of retirement is itself unknown.

Trouble at home

Reverse mortgage schemes like the Government’s Home Equity Access Scheme are gaining popularity and provide a significant increase in age pension income. Yet many retirees will remain ‘asset rich and cash poor’ until they can monetise the capital in their home without the risk, costs, and potential bequest-reduction inherent in a debt-driven home-equity solution.

Price pressures

The re-emergence of inflation is exacerbating these challenges. In AMP’s 2022 Financial Wellness report⁴ nearly half of those aged 50–59 were ‘extremely concerned’ about the rising cost of living. While you are working, your wages, super contributions, and investment income typically rise with inflation. In retirement, that protection is lost, and because inflation compounds over time, it can represent a real threat to your lifestyle.

Finding a solution

Are you retiring soon, or are you already retired? We can guide you through managing these challenges, helping you build a large enough nest egg to enable you to balance your retirement lifestyle with any sense of obligation to your family. After all, retirement should mean giving up work, not giving up your lifestyle.

This goal requires education, determination, clear goals, strategic advice, and clear communication. We’re here to help.

Based on article provided by NMMT Limited. The information contained in this article is general information only. It is not intended to be a recommendation, offer, advice or invitation to purchase, sell or otherwise deal in securities or other investments. Before making any decision in respect to a financial product, you should seek advice from an appropriately qualified professional.  We believe that the information contained in this document is accurate. However, we are not specifically licensed to provide tax or legal advice and any information that may relate to you should be confirmed with your tax or legal adviser.

1 https://www.theaustralian.com.au/business/property/the-peak-time-of-our-life-ages-at-which-australians-pass-through-life-stages/news-story/c11a96ba0ec87329cd08a2d91e378bc0
2 What wealthy means to Australians in 2023, AMP
3 Good Practice Principles: Superannuation and retirement models, Jim Hennington, Actuaries Digital, April 2022
4 Generation stressed: Retirement concerns and how to alleviate them. AMP, October 2022 

The increasing cost of living is making retirement more expensive than ever, according to the Association of Superannuation Funds of Australia (ASFA)¹ as the cost of living grows, so does the pressure on Aussies who are saving for retirement.

As the cost of living continues to climb, so too does the price of a comfortable retirement, with the savings needed to retire hitting “a new record high”². To live “comfortably” as defined by ASFA, which includes the occasional restaurant meal and an international holiday once every seven years, singles now need to budget for $51,278 per year, and couples $72,148 per year, for those who own their own home outright.

To achieve this “comfortable” retirement, you’ll need to have a nest egg well above half a million dollars by retirement age, with singles needing a total of $595,000 and $690,000 for a couple.

For a “modest” retirement as defined by ASFA, allowing a lifestyle only marginally better than what can be afforded on the Age Pension, with only infrequent access to exercise, leisure and social activities, both singles and couples who own their own home outright will need to have at least $100,000 in their fund.

ASFA analysis shows exactly how inflation is affecting retiree budgets.

• Although annual food inflation eased to 4.5% in the final quarter of 2023, that was from a food inflation peak of 9.2% in December 2022. To retire today, a single person living comfortably would need to put away $283 per fortnight for food alone.
• The cost of medical services increased 1.2% in the 2023 December quarter.
• Electricity prices rose 1.4% in the 2023 December quarter and 6.9% over the last 12 months, but ASFA said that without the Energy Bill Relief Fund rebates from July 2023, “electricity prices would have increased 17.6% over this period.”
• Insurance prices rose 16.2% in the 12 months to the December 2023 quarter, which ASFA called: “the strongest annual rise since March 2001.”
• While petrol prices dropped 0.2% in the December 2023 quarter, this fall followed nearly record-high prices.

Retiree budgets have been under substantial pressure for the past two years due to the high cost of essential goods and services. With many of us spending more than a quarter of our life retired, you might need a lot more money for your retirement than you think.

The information contained in this article is general information only. It is not intended to be a recommendation, offer, advice or invitation to purchase, sell or otherwise deal in securities or other investments. Before making any decision in respect to a financial product, you should seek advice from an appropriately qualified professional.  We believe that the information contained in this document is accurate. However, we are not specifically licensed to provide tax or legal advice and any information that may relate to you should be confirmed with your tax or legal

1 https://www.superannuation.asn.au/media-release/retiree-budgets-continue-to-face-significant-cost-pressures/
2 https://www.superannuation.asn.au/media-release/retiree-budgets-continue-to-face-significant-cost-pressures/