“First of all, let me assert my belief that the only thing we have to fear is fear itself –nameless, unreasoning, unjustified terror which paralyses needed efforts to convert retreat into advance.”

FEAR, it stops us dead in our tracks ! It prevents action when we know we have to act. Yet most of our fears are unfounded. They are based on illogical perceptions of what “might” happen. Some people are very fearful of sharks and are nervous of going in the water at the beach, but these same people don’t mind getting behind the wheel of a car and driving thousands of kilometers. Their fear of sharks and lack of fear of a car accident are not reality. According to the Australian Bureau of Statistics, on average, only one death a year is caused by sharks for the past 200 years, while over one thousand people are killed in car accidents every year. What should we be more fearful of, sharks or cars ?

If people are afraid of plunging into an investment plan, they should keep in mind the alternative of living their retirement years without enough funds for their everyday needs, holding out for a meager pension that may or may not be there in the future. As a pensioner, how many times do you want to avoid clearing your letterbox because you know there will be an electricity or telephone bill in there you can’t pay. What a horrible retirement !

People of Retirement age will out number young adults by 2.1 within the next 5 years. The number of Aussies aged between 60-74 will be double the number of people aged between 25–39 by 2014, by then us oldies will eclipse the 10-24 years old age group by four times.  It just makes me wonder who is going to assist the government in paying the aged pension for about 70% of “ baby boomers ”.  It amazes me that my age group (the new 40’s) the old 50’s, still think that the Aged Pension is a God given right, but where is the money coming from.  I’m with Tom Cruise on this one  -  “ SHOW ME THE MONEY “  !!!

But what if they only have superannuation of around $ 200,000 or less, how is this small amount supposed to feed and cloth them for a potential 20 years plus of retirement ?  It is not like the parable in the Bible of the loaves and fishes, their superannuation won’t keep on replenishing itself after they spend it.

Yes, it is great to own your home but do focus on investment at the same time so you will eventually retire with at least another source of income than just the small pension derived from Superannuation.  Last year most superannuation funds lost quite a bit of our money, so if we had  been retired and reliant on our allocated pension, we would have had to draw down on the principal and basically run out of money half way through retirement.  What then one asks ? – your home puts a roof over your head but your bricks and mortar wont feed you.

This is Lynette, a Relationship Manager for Premium Finance.  I had a lovely couple in during the week, the husbands motivation for coming to see us was to reduce the horrendous amount of tax he was paying, over $ 40, 000 per annum and some $ 50,000 jointly.

As I like to reduce my clients tax to under $ 5,000 per annum, I put in place a strategy to enable them to use their tax dollars now to assist them in an investment plan and thus enable them to retire in comfort.  This couple wanted to retire in 14 years but I pointed out with the superannuation they currently have they were on target for a retirement pension of less than $ 10,000 per annum plus maybe a part aged pension if  it was still around.

How was it possible for them to go from an income today of over $ 160,000 per annum to one under $ 25,000 per annum and not have to make dramatic changes to their lifestyle for their 20 years plus of retirement.  They would still have rates, electricity, phone, insurances, food, registration and maintenance on maybe one car etc. There would be no money available for travel so I hope they enjoy day time TV.

Even though the husband’s motivation was to reduce tax, the wife unfortunately couldn’t see the benefit of saving $ 45,000 in tax over 14 years, some $ 600,000 in their retirement kitty, not to mention the creation of wealth from their investments.  There will always be people who bury their head in the sand and think they will never grow old, however I felt quite sad for the husband because of his wife’s attitude, he will now spend his retirement in poverty with her.  I hope he buys her some good investment books for Xmas so she can see what a bad finance decision she made for them both and perhaps knowledge will lead her to understanding and time to correct the bad decision.

My name is Lynette & I am a relationship Manager with Premium Finance.  I had some absolutely delightful clients in the other day but the way they ran their family finances did bring back a lot of nostalgia for me from when my mother was alive.  Mum was a single mum in the days when it was very much frowned upon and there was very little government support.  So Mum, being the frugal lady she had to be, had all these little glass jars that was the basis of her accounting system.  One glass jar held the milkman’s money, one for the rent, another for electricity, yet another for groceries, and I am sure you get where I am going with this.   So when these clients came in the other day they were doing things pretty much like Mum did, but instead of glass jars they had all these different bank accounts.  One account was for bills, another Xmas club, another for holidays etc.  Then they had “The Mortgage” with a payment coming from yet another savings account where their wages were paid into. Surely things should have changed in 50 years !!  I was exhausted just thinking about how they really kept control of their finances and knew where their money went.  When I explained how rolling all these different accounts into one and making just the one payment each month, they would be able to keep track of every dollar of their income, own their home much sooner then they thought, and my personal favourite “ pay the bank less money by reducing the interest paid”. 

The clients are still wondering why they wasted so much time in getting the right financial advise.

I had clients in during the week that were similar ages to myself and they had a major problem. The first problem was that they wanted to retire in 10 years at age 65 but they had another 15 years worth of payments on their mortgage alone, not to mention another $ 30,000 in consumer debt of credit cards, car loans and personal loans. Secondly they only had $ 150,000 in Superannuation . How were they going to own their home prior to retirement and give themselves an income in retirement. Even after 10 years of potential growth their Superannuation could not give them a decent lifestyle for a potential 20 years of retirement.

Luckily they realized that they needed professional help and approached Premium Finance to see if they could assist. On looking at their overall position of income and debt level I found that they were paying over $ 3,500 per month on their current debts and their cashflow was suffering – in other words they were spending all their income each month just to survive. They were obviously also concerned with their future in retirement with only a small amount in superannuation.

After consolidating all their debts and getting them the right mortgage structure for their needs, they decreased their monthly commitment from $ 3,500 to $ 1,400 per month and would own their home in 8 Years. I used $ 300 of the $ 1,900 savings each month to start them on an investment plan to give them a decent lifestyle in retirement. They were totally excited and very grateful clients. It only takes one phone call to see if you can better your situation. Look at your mortgage statement and if you aren’t getting excited about how much you have paid off your mortgage in the last 6 months, especially with interest rates being so low, then you are obviously in the wrong product and need help.

I urge all “Baby Boomers’ to take stock of their financial position TODAY. Is your mortgage the right structure for your needs ? Are you still in that mind-set whereby you think by paying more to the bank in repayments you will own your home quicker. Don’t you think the Banks are wealthy enough ? There IS a better way !! . Clients I had last week Maree & Mal, are planning to retire in 8 years, aged 65. Unfortunately they still had 13 years to go on their home loan, so they had a real problem. I refinanced them into a better loan facility and now they will own their home in 6 years and are actually paying less to the bank then their original payments, thus putting the saved part of the repayment into an investment strategy and making their money work harder for them. No, they didn’t have to change their current lifestyle !!

If you know your superannuation will run out after a few years in retirement – DO SOMETHING about it TODAY.