General Information about Financial Advice

What happens when retirement does not go to plan?

We have written on numerous occasions over the last few years of the need to plan carefully for your retirement – financially, emotionally, physically and mentally.

What happens if it does not go to plan, not from a financial aspect but from a health perspective?

What am I talking about?

I have observed two people close to me, a good friend and a brother in law prepare for their retirement and then retire with their first years of “freedom” or “my time” planned.

Both men were in good health and had always been very active. This continuing and increasing level of activity was an integral part of their retirement – competing and training for an Ironman race and a number of endurance bike rides. As both have now retired, finding time to fit in all the necessary training was not an issue. They were excited and looking forward to the challenge.

Both men were diagnosed with “arrhythmia”, palpitations of the heart.

I have no medical qualifications and I am not going to attempt to explain the symptoms, consequences of this diagnosis or the treatment. All I do know from my own observations of these friends was that their training now needed to be curtailed and the initial ongoing treatment, although not necessarily painful, was incredibly frustrating from their point of view.

Understandably, both were upset and feeling sorry for themselves – all the plans and hopes they had for the first few years of their retirement had been disrupted.

So what is the answer?

I did do some reading, and there are a number of common processes which people can take when life’s plans go a little astray

  • Step back and understand that aside from this one glitch their lives are in fact generally quite great – never dwell on the question of “Why me?”
  • Moping is not allowed. Sit down, reassess your plans and then attack them with the same vigour. Get busy!
  • Understand that your plan does not define who you are. The people who surround you still love and respect you.
  • Accept your limitations and reassess the plan or activity- in this case taking into account the issue

I am not saying that this is the answer, and I do know that if I were in the same situation and someone quoted these to me I would be extremely sceptical.

However, I believe it is important to remember that retirement is a 20 to 30 year period of your life and to become self-observed and continue to ask the question of “why me” is not going to make this part of your life any more enjoyable.

 

Source: Mark Teale | Centrepoint Alliance

Raising resilient, passionate children

People often say that their biggest worry is what will happen to their children and their grand-children when they are gone. It is one thing to hand on a substantial estate – generally built through years of hard work, discipline and planning. It is another to be confident that our children and grand-children will themselves have the discipline and the emotional resilience to make the most of the opportunities that they are presented.

Growing resilient, passionate kids in affluence

We all as parents are doing our best to raise self-disciplined, appreciative, and resourceful children who are not spoiled by the prosperity around them. So why does it seem that the more we give them, the more ungrateful and entitled some children become? How can we use the advantages they already have to move them from striving to thriving?

MISTAKE: We cotton-wool our children from experiencing risk

Our own parents sent us out to play and didn’t call us in until dinner was ready. Someone always came home with a black eye or a nail in their foot. So why has parenting swung so far towards protecting our kids that we are preventing their growth and thriving?

Safety regulations, legal litigation and a heightened awareness of the dangers in our environment have turned us into over protectors. The “safety first” obsession plays into our fear of losing our kids, so we do all we can to shield them from harm. If a child doesn’t play outside, climb too high and fall, they frequently have phobias as adults.

STRATEGY: Let your kids explore their environment rather than the Internet

Let children play in a physically, emotionally stimulating and challenging environments that involve risk, and they may grow into better adjusted and more confident adults.

STRATEGY: Encourage your kids to try a new skill, especially if it frightens them

From public speaking to rock climbing, kids need to fall a few times to learn it’s normal; teens need to break up with a boyfriend or girlfriend to understand the emotional maturity that lasting relationships require.

MISTAKE: We rescue too quickly

Ever been the recipient or sender of a message to a fellow parent trying to sort out your childrens’ friendships? While this may look like sticking up for your child, it deprives them of the chance to stick up for themselves. By swooping in and intervening on behalf of our children, we are depriving them of the opportunity to encounter an obstacle and navigate around it. We are robbing them of the skills needed to solve problems independently. We are offering short-term relief and long-term low self-esteem.

STRATEGY: Let your children solve their own problems

Guide your child through a series of open questions towards finding their own solutions to their challenges. You are there to support and console them, but not to fix the problem. From a tough friendship dynamic to an academic concern, ask your child to brainstorm ways of solving the problem, all the while supporting and nurturing them.

MISTAKE: We praise too easily

Life is about winning and losing, not just winning. When Mum and Dad are constantly telling their children how clever/ pretty/talented they are, they doubt the objectivity of their parents and learn to cheat, exaggerate and lie and to avoid difficult reality.

STRATEGY: Praise for Effort not Result

Praising children’s intelligence can encourage them to embrace self-defeating behaviours such as worrying about failure and avoiding risks. However, when children are taught the value of concentrating, strategizing and working hard when dealing with academic challenges, this encourages them to sustain their motivation, performance and self-esteem.

MISTAKE: We try to be friends with our children and treat them all ‘equally’

Your child doesn’t need a friend in you, they need a parent. We may want them to like us so much that we try to avoid making the tough calls that may disappoint or frustrate them.

With multiple kids, when one does well, we feel it’s unfair to praise and reward them unless we also praise and reward their sibling/s. This is unrealistic and misses an opportunity to enforce the point to our kids that success is dependent upon our own actions and good deeds.

STRATEGY: Parent your children don’t befriend them

Your child does not have to love you every minute. Sometimes they need to be disappointed and frustrated by you in order to understand that conflict and boundary-setting are part of any healthy relationship. Your kids will get over the disappointment of not going to the hottest party or buying the latest gadget, but they won’t get over the effects of being spoiled. So tell them “no” or “not now,” and let them fight for what they really value and need.

STRATEGY: Parent each child according to their needs

Your children have different shoe sizes, different wants and needs and different personalities from their siblings, so you can’t parent them as if they were the same person. Treat each child as an individual and celebrate their uniqueness.

MISTAKE: We don’t practice what we preach

As parents, it is our responsibility to model the life we want our children to live. Children are very capable of pointing out the double standards we have and are the first to catch us out if we tell them to do as we say not as we do.

STRATEGY: Live in your integrity

If we want our offspring to be accountable for their words and actions, we have to be too. Show your kids what it means to give selflessly and joyfully. Work on your own passion and commitment and your kids will learn to be passionate and committed. Communicate clearly, respectfully and honestly. There is no point shouting at kids that they have no manners or respect when you are demonstrating the same trait.

MISTAKE: We give our kids our money, not our time

We work hard and we’re time poor. There is always another email to answer or another phone call to make. We may be doing all this hard work so our kids can benefit but when we rush from the chaos of the day we may miss the ordinary moments that our kids crave with us. We may compensate by buying them wonderful gadgets or throwing them great parties but nothing makes up for time.

STRATEGY: Prioritise time with each other

Turn the electronics off and have a real conversation. Speak about the highlights and lowlights of your day, ask them about theirs. Make your questions count, and listen to the answers. Make a special family time so that everyone knows Saturday afternoon or Thursday evening is just for the family.

 

Source:  LaTrobe Financial

Home Care/Help – what a blessing

Do you have elderly parents living on their own, in their own home? Have you noticed their ability to look after themselves has declined, although certainly not to the extent where you need to consider placing them in residential aged care?

What are your options?

As a first step, you can research the services available through the Commonwealth Home Support Program.

Your parents will need to talk to a local assessor from the Regional Assessment Service about the care they require and develop a comprehensive support plan to assist and make their life a little easier.

The services available through the Commonwealth Home Support Program are very comprehensive covering domestic assistance, personal care, home maintenance, transport, social support and food services including helping to shop, cook and delivering meals to the home.

A couple of very important points regarding the Commonwealth Home Support Program is that even though the government subsidies a range of services available through this program, you do not need an income assessment – the fees you pay are negotiated between yourself and the provider. Secondly, an assessment carried out by the Regional Assessment Service is quite different and not as comprehensive as an assessment carried out by the Aged Care Assessment Team.

These teams will provide a written assessment of the help required and make a recommendation as to the level of support a person is eligible to receive. The levels are as follows:

  • Level 1 supports people with basic needs
  • Level 2 supports people with low-level care needs
  • Level 3 supports people with intermediate care needs
  • Level 4 supports people with high-level care needs

The government provides a different amount of subsidy for each level. This amount is paid to the provider that you select. The subsidy contributes to the cost of the service and care, however, depending on your circumstances, you will be required to contribute to the cost of this care.

Your level of contribution will depend on the financial details provided by you to either Centrelink or Veterans Affairs. They will assess your circumstances and based on a complicated formula, advise you in writing of your daily financial contribution. This income-tested amount is on top of the standard contribution of $10.17 per day, which everyone pays regardless of their finances.

If we are able to provide the care and assistance to a person in the home either through the Commonwealth Home Support Program or one of the levels of the Home Care Packages, this should always be the first option.

 

Source: Mark Teale | Centrepoint Alliance

Should I retire?

Mark and I have written about aspects of retirement on many occasions over the past three years. Mark describes retirement as ‘my time’.
In a couple of weeks, I will be celebrating 50 years since I first started working. In case you were wondering, I started working when I was very, very young.

When you get to my age, it is fairly common for people ask me when I intend to retire. The truthful answer is ‘I honestly don’t know’.

At this stage, I still enjoy getting up and going to work each day. I really enjoy the work I do and the people I get to engage with on a regular basis. I have met some wonderful people and got to travel to some amazing places, all in the name of work.

However, I do think about retirement from time to time, and there are those moments when the thought of not having to sit in front of a computer all day looks attractive. But the feeling soon passes.

Retirement requires careful and well-thought-out planning. It is not something that should be rushed into blindly.

The most fulfilling retirements I have observed are those where people have planned out what they want to do. It doesn’t mean having to plan every moment of everyday but having an idea of the sorts of things you would like to achieve in retirement and a deciding on a rough time frame is important. Whether retirement includes travel, ongoing education, voluntary or community work, or pursuing a hobby or business endeavour, they all require some planning.

On the other hand, the most unfulfilling retirements seem to be those that are lacking any plans. They not only erode the will to embrace life but sadly, contribute to a decline in physical and mental health.

While it is great to be able to plan ahead, that is not always going to happen. Occasionally, life throws a curveball that catches us off-guard. We may find ourselves leaving the workforce as a result of circumstances over which we have little control. Perhaps we are unable to continue to work as a result of sickness, or we are made redundant, or a change in economic or family circumstances impacts our business.
Even though we may not be able to control these situations, having a contingency plan in place may help to minimise the disruption that an unplanned exit from work life may inflict.

As retirement will last 20 to 30 years for many Australians, investing some time in planning sound like a perfectly sensible idea to me.

Source: Peter Kelly | Centrepoint Alliance

Affordable housing – Is super the answer?

In the 2017 Budget, the Government announced several measures designed to ease the pressure on spiralling housing prices, particularly in the East Coast capital cities of Melbourne, Sydney and to a lesser degree, Brisbane.

I will provide an update on two of the key measures contained in the 2017 Budget.

On 7 September, the Government tabled a Bill in the House of Representatives covering its first two measures.

  1. The First Home Savers Super Scheme (FHSSS)

This initiative is designed to allow intending first home buyers to save for their home deposit through superannuation and then withdraw the savings when the time comes to buy.

A broad outline of the scheme will allow additional contributions of up to $15,000 to be made each year with the maximum amount that may be withdrawn being $30,000 plus investment earnings. For a couple, multiply this by two.

Contributions may be concessional contributions, such as those made under a salary sacrifice arrangement or personal contributions where a tax deduction has been claimed. Or, they may be non-concessional contributions made from after-tax income. All contributions made under the scheme are subject to the usual contribution caps.

Contributions made by an employer in fulfilling their superannuation guarantee obligations – the 9.5% contribution – cannot be withdrawn under the scheme. Only voluntary contributions may be withdrawn.

The FHSSS came into effect on 1 July 2017, however, at the time of writing, the legislation has not been passed by the Parliament.

With that is mind, it might be prudent to wait until there is legislative certainty before making additional voluntary contributions that may be required for a home deposit.

Whether the FHSSS is an appropriate strategy will be very much dependent on individual circumstances. Some appropriate advice, before putting extra money into super, is vitally important.

  1. Downsizer Contributions

In an attempt to free up housing that is currently occupied by older Australians, the Government has introduced legislation that will enable people aged 65 and over, who have owned their home for at least 10 years, to contribute up to $300,000 of the sale proceeds of their home to superannuation as a non-concessional contribution.

These contributions will not be subject to the usual restrictions that apply to making non-concessional contributions.

Once legislated, this initiative is due to come into effect from 1 July 2018. It will only apply to home sales occurring on or after that date.

Whether this measure will make a meaningful difference to the supply of housing is questionable.

One of my biggest concerns is that the primary residence is currently exempt from the assets and income tests for the age and Veterans Affairs pensions. With a very high proportion of older Australians receiving either a part or a full pension, the implications of downsizing could be significant.

Selling the family home and investing any surplus proceeds from the sale into superannuation, or most other types of investment will see money that was previously exempt from means testing now being caught under the assets and income test.

In fact, a couple of modest means who own a valuable home could lose their age pension entirely if they sold their family home and contributed $300,000 each to superannuation as a non-concessional contribution.

However, contributing the surplus proceeds from the sale of a family home, to super will be quite appropriate for some.

Like so many of these initiatives that at first glance seem very attractive, the devil lies in the detail. Whether selling the family home and downsizing simply to get more money into super is an appropriate strategy, will depend on individual circumstances.

 

Source:  Peter Kelly | Centrepoint Alliance