Search

Is delaying retirement a good idea?

It’s that time in your life when you should be able to kick back and enjoy the fruits of your labour, so how does the prospect of delaying retirement sit with you? The idea may not be a popular one but with the rise in the cost of living and the government looking to slash financial support for older Australians, it’s a decision many need to consider. US sites have been awash with stories of seniors remaining in the workforce beyond retirement age, with data suggesting more than one in five people in the US by 2040 will be over the age of 65. The same is true here in Australia. Following the Federal Government’s announcement to raise the pension age to 70 by 2035, it also seems like a trend that will continue, and for those born after 1965, a reality of life. But, is it all bad? While in most cases the decision to remain in the workforce is a financial one, many older workers enjoy the social engagement and the health benefits associated with keeping a job. Last year, a report found that workers in their early 60s who had a chronic health condition had better retirement savings and wealth than those who had quit work. The findings, released in National Seniors Australia Productive Ageing Centre’s report, A widening gap: The financial benefits of delaying retirement, also found that remaining in the workforce past the age of 65 had the potential to offset the high costs of poor health, which include treatment costs, changes to living arrangements and buying aids or equipment. The same study found that working up to and past the retirement age was associated with a significant increase in the value of household assets. For example, between 2006 and 2010, the financial assets of those who remained employed in 2006 and in 2010 increased by $59,400 while those who were employed in 2006 but not in 2010 saw less of an increase with $34,300. The upside of phased retirement Darren James, financial planner at AMP, says many Australians are giving greater consideration to the option of a phased retirement – reducing their hours over time and gradually “weaning” themselves into retirement – rather than going cold turkey. An approach which can lead to significant advantages from a superannuation standpoint. “The biggest advantage of waiting to retire until 60 or over is that income and any withdrawals from super are 100 per cent tax free, whereas up until this age tax may apply,” he reveals. “Also for every year that you delay retirement is another year that you avoid dipping into your retirement savings which will obviously help your retirement income last longer. You will also be another year closer to being eligible to receive the age pension which could reduce the amount of money you need to draw from your own retirement savings (provided you meet an income and assets test).” Why it pays to keep working For those nearing retirement but still working, look into topping up your super balance without reducing your after-tax income with a transition to retirement strategy. Mr James says you can make extra contributions to boost your super by salary sacrificing but then draw on the super to replace this income. “This super income is highly tax effective – it is currently tax free for people over 60 and tax advantaged for those aged 55 to 59,” he explains. “As the tax benefits of super really kick in after retirement, the less you can draw down on your super balance before retiring, the more money you will keep in your pocket for the future.” The reality is that Australia has one of the highest life expectancies in the world, which is good news, but along with that has gone the retirement age. For those who enjoy their job and are in no hurry to retire, or who wish to retire with a few extra bucks in the bank, delaying retirement can be a great boost for setting yourself up to be in a much better financial position for when you decide the time is right. Always seek professional advice to better understand your financial position and to find out when retirement may be possible for you. Image credits: Getty Images

Money & Banking

Wedding planner shares “wedding horror” story

One couple will have a wedding story that will last a lifetime after seeing their hilarious wedding cake. In a glorious effort to save on costs, the pair chose a cake from a supermarket instead of going to a professional cake maker. A wedding planner posted the photo of their client’s cake to Facebook, saying: “This is why you hire professionals. This will be their wedding horror story for sure.” The cake was supposed to say, ‘Wiser wedding’ - presumably, their last name. However instead the bright green font reads: “Why’s there a wedding?” <img style="width: 500px; height: 281.25px;" src="https://oversixtydev.blob.core.windows.net/media/7837531/eg-1.jpg" alt="" data-udi="umb://media/ac7380e537ec4a4faedc607520fbeb69" /> While it is likely the couple were annoyed by the cake, other social media users thought it was hilarious. “That takes the cake,” one person said on Reddit. “Honestly, I think I'd find this just hilarious and get tonnes of photos with it and show it off to everyone!” another wrote. “As a person who works in a grocery store bakery.... I've seen some things. It’s real weird what people will want for their weddings on the cheap,” a third user added. One person pointed out that the cake is perfect during a pandemic. “In these Covid times it actually applies quite well,” they wrote.

Food & Wine

5 sneaky ways financial planners deceive seniors

There are some unscrupulous financial planners out there who could be giving you bad advice. Here are a few tricks to look out for. 1. Starting with an easy topic Most people are able to understand relatively simple financial issues, like paying back a credit card. However, once it moves up to complex things like superannuation investments, it’s not so simple. Dodgy planners could give you good advice on something simple to build your trust, before giving you bad advice on a complicated issue that you are less likely to understand. Always ask questions, even if they’ve given you good advice before. 2. Displaying lots of qualifications Research shows that we are inherently more likely to trust someone – and their advice – when we believe them to be more qualified. Financial planners could display lots of certificates or notices of qualification in front of their client, so they are more inclined to trust them. Even if the qualifications are real, their advice could still be bad. Don’t be overwhelmed by the paper. 3. Promoting illegal investment schemes As unbelievable as it sounds, unfortunately some financial planners have been known to advise people to invest in illegal schemes. This can result in losing all your money and even potentially being investigated for your involvement in such a scheme. Ask to see all of the information about a suggested scheme and, if you still feel unsure, do some of your own research. 4. Playing for both teams A financial planner should be an independent party working only for you, not for the investments or institutions they recommend. A number of planners have been caught and convicted of offering advice that benefited them through kickbacks or payments from banks and brokerage firms. Insist that your planner takes you through all of their professional connections, discloses any obligations and explains where their fees come from. 5. Charging money for nothing This might be the simplest one of all, but some operators will charge you fees and simply not do anything. You need to make sure you know exactly how much you are paying and what you are getting for that. Don’t be afraid to ask for regular updates or statements to see where your money is going. Have you ever had an issue with a financial planner?

Retirement Income

5 questions to ask your financial adviser

As forecasts for the average Australian’s retirement <a href="http://www.oversixty.com.au/finance/retirement-income/2017/09/1-in-4-aussies-will-see-their-retirement-savings-wiped-out/" target="_blank">continue to look bleak</a>, engaging the services of a financial adviser seems less like a luxury and more a necessity. Yet with so many horror stories out there of seniors being swindled by unscrupulous advisers, or unknowingly finding themselves saddled with worthless investments, you can understand why many Australians are reluctant to do so. If you’re considering the services of a financial advisor but don’t know where to start, we’ve put together a simple guide, to help separate the wheat from the chaff. Here are five questions everyone should ask their financial adviser. 1. What are your qualifications? Your advisor should be willing and able to give you a comprehensive rundown of their qualification, explaining everything from course length to content. As a general guide, the longer the course the more comprehensive the content. It’s also worth asking who their clients typically are, and if you are getting a bad feeling don’t be afraid to look elsewhere. The Australian Securities and Investment Commission has provided a handy rundown of financial adviser qualifications and what they mean, which you can <a href="https://www.moneysmart.gov.au/investing/financial-advice/financial-advisers-register" target="_blank">access here.</a> 2. Are you licensed to provide advice on my whole situation, or just specific products? This is an important distinction. Make sure your adviser is licensed to provide advice, and that you’re aware of the scope of their authority. Some advisers may be restricted on providing advice on superannuation, for example. If your adviser does have a conflict of interest, it’s necessary that you ask them how they will navigate it. 3. How does your advice process work? For financial advice to work, you must be comfortable with your adviser and how their individual advice process works. Make sure they’re taking the time to get to know you, including your goals, objectives, circumstances and needs. If they’re not, there’s a high likelihood they’re just palming you off with a “one-size-fits-all” solution. 4. What fees should I expect? Advisers are required to disclose all forms of payments and fees, and if they’re not that’s a red flag. While the initial consultation is usually at no cost, fees could come in the form of upfront fees, initial fees, plan fees, brokerage, commissions, administration fees and ongoing fees. It’s imperative that you are aware of the nature of these fees before signing the bottom line, and whether they’re one-offs or ongoing fees. 5. How are you keeping up to speed with changes that could affect your clients? It’s important that your financial adviser is abreast of any changes that could affect their advice, so make sure they’re regularly undertaking professional development, which could be in the form of courses, seminars or workshops. Have you ever engaged the services of a financial adviser?

Retirement Income

4 myths about financial planners busted

Megan Giles is a retirement designer for women. She supports and coaches women approaching retirement to successfully transition and create a lifestyle that is fulfilling, meaningful to them and lights them up each day. It’s a theme that comes up with some regularity as I work with women to prepare for the transition into retirement- women who have great plans for retirement but just don’t know if or when they’ll be able to afford those dreams. They want to be able to write that novel, travel the world or retire early, but when I ask “what’s stopping you” they admit that they have no idea what their financial position is. Not only that, but these women seem to avoid finding out. Perhaps they fear confirmation that they will need to keep working or perhaps they don’t know where to get informed advice. The challenge is that until you know your numbers, it’s difficult to take meaningful action. Knowledge is power and understanding your financial situation can only help to increase your financial confidence, your sense of optimism about your future and your ability to achieve a fulfilling and meaningful life after work. With this in mind, I sat down with Christie Spence, an experienced Financial Planner from regional South Australia, to explore just what might be going on for these women. I wanted to know from her experience what might be holding these women back from understanding their money situation and taking action to create that life in retirement that lights them up. Through our discussion and reflection, we realised that not all women (or men for that matter!) fully understand how a financial planner can help them to achieve their goals in retirement. By that I mean that they dismiss the need to see a financial planner, assuming that is something only ‘others’ do, for example people with lots of money or with complex investments. Both Christie and I want to make sure that women get the most out of their retirement in a way that is responsive to their ideals and goals, and we don’t want assumptions about the support available to be a barrier to this. Below we challenge four common assumptions held by women which can stop them from meeting with a financial planner. 1. I don’t have millions of dollars, what good will a financial planner do? <ul> <li>A trusted and accredited financial planner has the expertise and tools to leverage your finances and position you positively for retirement. This advice can be even more impactful when you don’t have a huge portfolio of assets, e.g. an extra few thousand dollars more may mean more to you than to a millionaire</li> <li>You may not have investment properties or extensive stock options, but an expert can assess your unique situation to determine where best to direct your money while you are still working, e.g. to your super fund, to minimising debt or other investment (i.e. make your money work hard for you)</li> </ul> 2. It’s too late for me, it won’t make a difference <ul> <li>Advice from a financial planner can have a positive impact on your financial position at any stage, and even small amounts invested the right way can make a big difference – it’s about knowing where to direct your money</li> <li>Christie has seen a number of clients for the first time when they were only three to five years away from retirement and has been able to create a tailored plan which ensures that those clients are better off in retirement than originally anticipated</li> <li>There is huge benefit in contributing to your retirement fund from a young age but don’t let age be a reason for inaction</li> </ul> 3. My husband takes care of the finances, I don’t have to worry <ul> <li>We would never wish this upon anybody, but it is important to consider what would happen if you unexpectedly lost your significant other. Become an equal in financial discussions so that if the unforeseen should occur, you are able to make informed decisions, rather than urgent and emotive ones </li> <li>If you contribute money to your relationship, don’t you want to know where it’s being directed and how it will benefit you in retirement?!</li> </ul> 4. I’m scared of judgement, I don’t want anyone else knowing my spending habits <ul> <li>Financial planners aren’t interested in the specifics of your weekly shop (the don’t need to know that you buy Roquefort cheese when you really should be buying cheddar, or about the expensive dress you bought online!) but what they will be interested in is how you proportion your income, e.g. X amount on living expenses, Y to savings and Z to paying off debt. From there they can provide recommendations about changes that you can make to benefit you</li> <li>Financial planners only want what is best for their clients and recognise that it is a great strength that people take that first step to better understand their financial situation</li> </ul> Don’t be scared to seek professional advice. Women approaching retirement tend to already have enough questions swirling around in their head, such as “what should my retirement look like”, “what am I supposed to do” and “how do I stop getting old before my time”. Don’t make money matters another unanswered question. Think of a financial planner as part of your trusted team and work with them to help create a life in retirement that you truly look forward to. For more great retirement advice please visit Megan Giles’ <a href="http://www.megangiles.com/" target="_blank">website</a>. Related links: <a href="http://www.oversixty.co.nz/finance/retirement-income/2016/08/72-hour-money-saving-trick-that-will-change-your-life/">The secret, simple money saving trick to cut out splurging</a> <a href="http://www.oversixty.co.nz/finance/retirement-income/2016/03/seniors-investment-income-suffering/">Seniors relying on investment income are suffering</a> <a href="http://www.oversixty.co.nz/finance/retirement-income/2016/07/what-are-additional-sources-of-income-in-retirement/">What are additional sources of income in retirement?</a>

Retirement Income

The difference between a financial adviser and planner

Nobby Kleinman is an award-wining ex financial planner who developed <a href="http://moneyrules.com.au/" target="_blank">Money Rules</a>, a personal money management program which anyone can use. It is little wonder people are reticent to seek out professional guidance when the industry itself uses terminology which is confusing. Without resorting to Wiki to clarify the differences, here is simple logic to divide the two. When you have available money (investable assets) and are seeking to invest for profit and most likely for retirement, then a financial planner should be consulted. Financial planners might also be specialists in the area of estate planning and tax efficient investments. Just like generalist and specialist doctors and lawyers, there are specialists within financial services. On the other hand, when looking to manage personal funds to address the likes of lifestyle and debts, then a financial adviser is the person to seek out. There are even divorce financial advisers, retirement only aged care specialists. Or possibly even a money coach! This then also separates out the Risk adviser who covers insurance and protection products. Recent reports concluded that 80 per cent of the population do not seek financial planners because they don’t believe they have sufficient funds. Yet this same 80 per cent is going to run into trouble further along the money track and more likely to be dependent on the government for financial assistance More needs to be done to talk to people in general about money management to provide them with the confidence to get to a point in their life where they realise the need to consult with a financial planner to map out their futures. That being said, more should be done by the financial services themselves to help the general public along a path to managing their money more efficiently, rather than just constantly looking to maximise profits through charging interest and fees and the sale of ‘products’. It is little wonder people are sceptical of the big banks when they see the quarterly profit numbers in the billions splashed on the front pages of newspapers, and they realise just who it is that is contributing to these massive profits. But the financial industry does not endear itself either when viewing the fees it charges clients to manage their money for virtually little in return. Most client funds are invested and left there to accumulate in the same portfolio without being actively managed. If fees were to be levied based on the percentage of annual return rather than assets under management, then there would be many poor planners! That of course also applies to the investment houses and financial institutions who are managing the funds. If however those same planners were proactive in managing the broad spectrum of a client’s financial position then perhaps the trust may be more endearing and rewarding. The problem is that ‘helping’ clients has not been a financially rewarding aspect of ‘financial planning’! Money is earned when a sale is made and generally that is a product or a fee for service. There will be a number who claim they are fee for service only and take no commission. This is the way the industry will go in the future. Charging clients for time or based on knowledge to provide advice is nothing new, and has been used by many services in the past, such as doctors and lawyers. The financial planning industry wanted to be considered professional and has for many years gone down the path of higher education, supposedly to be of greater value to clients. Every so often, higher education standards become the imposition whenever there is a review of the industry with the resulting problem of driving experienced advisers out of the industry. But higher education does not necessarily benefit clients who are mostly seeking limited advice around getting insurance and some retirement advice. The general population has a limited need while those with vast sums can afford to engage the higher end fees charged by accountants and larger planning firms. It is because of a shrinking number of advisers that the majority of the population will no longer be able to afford ‘financial advice’. Future planning is left to their own devices until they are in a better position to seek out some-one to guide them. By then the need to catch up is generally a huge chasm leaving many bewildered as to how they will afford to retire in financial comfort. Advisers and planners are passionate about their role in serving their clients and enjoy the work they perform. However, with constant and increasing compliance, educational and fiduciary pressures being applied by government regulators and life companies through ongoing higher standards, it is the clients who will eventually lose out. The media focus on the small number of ‘rotten apples’ always seems to unfairly tarnish the whole industry. Instead, the media should take an even handed approach and also highlight the enormous benefits clients have received as a result of having worked through advisers. <img width="500" height="250" src="https://oversixtydev.blob.core.windows.net/media/23119/shutterstock_290952128_500x250.jpg" alt="Shutterstock _290952128"/> Education about getting financial advice at a young age needs to go mainstream, much in the same way that some banks set up savings accounts at schools to get children into the savings habit. Not only did the banks benefit from the exposure, but many of those children remained with the same bank after leaving school. Since then, profits have become the major driver in shutting down this avenue of client acquisition. Advisers were and are still seen as a perfect source of getting new business and would only be paid a commission on the basis of successfully attaining clients for the companies. Without new business, there is no income. Commission are a fair way of payment, as the life companies paid nothing for employees or overheads to retain a sales force other than training and then compliance. With the coming of ‘fee for service’ clients will no longer be able to have the life company pay the adviser through commission, but rather will be forced to pay the adviser for their time and knowledge. Advisers are self-employed people and carry business overheads just like any other, all of which need to be paid for before a profit is turned. Many clients will look for a cheaper alternative and use the internet to find cost effective options, and in doing so, will miss out on the expertise offered by advisers. Even worse than cheap premiums and service is finding out that a claim is denied because the policy definition didn’t cover the insurance need. That’s what cheap insurance is for. Yes, there is a difference between a financial planner and a financial adviser. But at the end of the day, whichever you need is more likely to have years of education and experience and will never be the cheapest alternative. So be advised to choose wisely when seeking valuable financial advice! You will pay for your education whether you wish to or not. If you think the cost of education is expensive, consider the cost of ignorance! Have you ever sought advice from a financial adviser or financial planner? If so, how did you find the experience and would you do so again? Share your thoughts in the comments. To find out more information, visit <a href="http://moneyrules.com.au/" target="_blank">Nobby Kleinman's site here</a>. Related links: <a href="/finance/money-banking/2016/05/woman-lasts-a-year-without-money/">Woman lasts a year without money</a> <a href="/finance/money-banking/2016/05/woolies-set-to-undergo-major-overhaul/">Woolies set to undergo major overhaul and drop prices</a> <a href="/finance/money-banking/2016/05/who-to-contact-if-you-have-been-scammed/">Who to contact if you have been scammed</a>

Money & Banking

Is a self-managed super fund right for you?

For those looking for greater control over their finances, self-managed super funds (SMSF) could be a great way to go. But, are they right for everyone?Greater control, flexibility and potentially lower costs are just some of the reasons why many Australians have decided to go down the SMSF path. But, what some people don’t realise is that managing your own super fund can be time consuming and stressful, particularly for those who don’t have experience in financial or legal work. However, if you’re willing to give it a go, then this is what you need to know.The ins and outs of a SMSF The major difference between SMSFs and other super funds is the level of control people have, which includes the added responsibility and workload associated with managing your own fund. You are also personally liable for all the decisions made by the fund, even if you ask a professional for help.It can also be costly. You want to make sure you have enough in your super fund to come out ahead of set up costs and ongoing expenses, including professional accounting, tax, and legal and financial advice.David Calvert, managing director of superannuation at financial services firm Dixon Advisory, says SMSFs tend to be more cost-effective for people, or couples, with a reasonable balance, usually above $300,000 if they’re still earning and contributing to super or about $500,000 if retired.In terms of cost, he said this can vary depending on your provider, so you need to be clear on the level of support you require and what you get for the fee your provider charges.“For example, at one end of the spectrum you can get a no frills offer which has minimal cost but you receive no support and have to do the heavy lifting yourself or you must pay for everything you request help on. At the top end, a SMSF partner will organise all the paperwork, filing etc and even contact and follow up existing providers for you.”He suggests that if you’re looking for support, be focused on value. Look at the capability of the provider and what you get in return for the money you pay. Being able to choose where to invest your retirement savings, including in direct property, and the potential for better performance compared with retail or industry funds has increased the popularity of SMSFs.“If you value benefits such as control, in our case having capped fees versus other types of fund where you pay a percentage of your balance, expertise of investment committee making investment recommendations, full accounting and admin support, and all these things working together for you, then setting up a supported model SMSF is a good choice,” Mr Calvert explains.So how do SMSFs work? To set up your own super fund and manage it you’ll need to adhere to strict rules set out by the Australian Taxation Office (ATO). A SMSF can have between one to four members, who are each called trustees and are responsible for all legal duties.The money must only be used to provide for retirement benefits and follow an investment strategy that ensures the fund will likely meet your retirement needs. Comprehensive records need to be kept and an audit by an approved SMSF auditor must be undertaken annually.  For help with either the administration or investment elements of the fund, an adviser can be paid to undertake these duties for you but you’ll not be able to pass on the responsibility of being a trustee or director.Is it right for you? Setting up a SMSF is not something to be done lightly, so understand your own appetite for the ongoing maintenance required for your fund.Embarking on your SMSF journey can be intimidating but there are a variety of resources available to help. The Association of Superannuation Funds of Australia’s online resource, Super Guru, is a good point of reference that spells everything out clearly and plainly while the ATO and the Australian Securities and Investments Commission have developed a comprehensive guide for those interested in going down this path.At the end of the day, remember to research, research, research and then, research some more, before jumping into a SMSF. Super is one of the most important investments you’ll ever make so take your time in finding what’s right for you.Related link: <a href="/superannuation/super/2014/06/one-million-aussies-choose-self-managed-super.aspx" target="_blank">One million Aussies choose self-managed super</a>

Retirement Income

Our Partners

Over 60

News

Shop

Catalogues

Newspaper

Contests

Entertainment

Travel

Health

Lifestyle

Finance

Property

Compare

Games

Information

Keep up to date

Search

Is delaying retirement a good idea?

Wedding planner shares “wedding horror” story

5 sneaky ways financial planners deceive seniors

5 questions to ask your financial adviser

4 myths about financial planners busted

The difference between a financial adviser and planner

Is a self-managed super fund right for you?

Our Partners

News

Shop

Catalogues

Newspaper

Contests

Entertainment

Travel

Health

Lifestyle

Finance

Property

Compare

Games

Information

Keep up to date

Search

Is delaying retirement a good idea?

Wedding planner shares “wedding horror” story

5 sneaky ways financial planners deceive seniors

5 questions to ask your financial adviser

4 myths about financial planners busted

The difference between a financial adviser and planner

Is a self-managed super fund right for you?

Our Partners

Join Over60