Hi, this is Lynette, a Relationship Manager from Premium Finance Services. I found this article interesting and especially hope that the ‘baby boomers’ take it on board.
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 “ !!!
Hi, I’m Lynette, a Relationship Manager for Premium Finance. I have had several clients come in to our office lately who say they are “Set for Life”. I immediately assumed they had won on the scratchies. No, apparently what they mean is that they have now paid off their home and all will be rosy for their retirement because they don’t have any mortgage.
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.
This is Lynette, a Relationship Manager with Premium Finance Services. I was a bit saddened the other day when I read an article on “Reverse Mortgages” and the ever increasing number of Australian Retirees taking this option to help fund their retirement. Over 30,000 Equity rich but cash poor retirees have drawn down on the equity in their major asset, their home, to fund living costs such as food and clothing. A large proportion of these retirees have spent their adult life paying off their home over many years, now they are re-mortgaging their home to survive. They are not required to make any payments on the mortgage but the interest compounds over the term of the loan until the home is sold, you move into an aged facility or you pass away. The question for me is will their be enough proceeds from the sale of the home to pay for an aged care facility ? This type of loan definitely deserves a bumper stick “SPENDING THE KIDS INHERITENCE – QUICKLY” I believe a bit of future planning for retirement would not require this type of drastic solution. Seek help today and make a plan !!