financial advice – Adelaide Financial Advice

A recent global survey conducted by HSBC^[1] found that only 21% of working age Australians believe they will be financially comfortable in retirement!

In fact, the report suggests, of those surveyed,

58% believe they will have to work longer and continue working to some extent in retirement
75% were willing to defer retirement for two years in order to have a better retirement
65% are concerned about declining state pensions, like the Australian Age Pension because of mounting national debt and an ageing population.

This report paints a rather bleak picture of the future, not only for the baby-boomer generation, but also for Generation X (1966 – 1979), and Millennials (1980 – 1997).

The report sets out some practical steps when planning for retirement. While these are more directed towards the Millennials, I believe they apply to all generations:

Be realistic – start saving earlier, and save more
Consider different sources of funding – balance savings to spread risks and maximise returns
Plan for the unexpected – include worst case scenarios when planning
Embrace new technology – use online planning tools, and seek professional advice.

While on the topic of retirement planning, the Association of Superannuation Funds of Australia has just released its March 2017 Quarter Retirement Standard figures.

The March 2017 figures show a small increase in costs over the previous quarter’s figures. The factors that led to the most recent increases included petrol, medical services and electricity. Offsetting that were savings in international travel and accommodation, and fruit, with a small fall in clothing and footwear reflecting discounting during the post-Christmas sales.

The Retirement Standard budgets for March 2017 are:

	Couple		Single Female
	Comfortable	Modest	Comfortable	Modest
Weekly	$1,150.13	$668.45	$837.41	$465.07
Annual	$59,971	$34,855	$43,665	$24,250

So, my tips for those who are considering retirement in the foreseeable future;

Consider deferring retirement if possible – even if it means continuing to work on a part-time basis for a while
Understand exactly how much it will cost you to live in retirement – prepare a realistic budget, and account for contingencies (like new hot water system, or roof repairs)
Know what government benefits you are entitled to
Seek some really good financial advice from a financial planner experienced in retirement advice

As was highlighted in the HSBC report, starting to save earlier, and saving more, will be the secret to being best placed to enjoy the type of retirement you have always dreamed of.

^[1] Reproduced with permission from The Future of Retirement Shifting sands, published in 2017 by HSBC Holdings plc.

Source: Peter Kelly | Centrepoint Alliance

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Good advice isn’t something to take lightly. Listen too often to the wrong people and you can do serious damage to your retirement accounts.

It’s natural for investors to seek advice from friends and family. But those closest to you don’t always have the right answers – because they aren’t financial experts.

Those claiming to be financial advisers sometimes are not. Paid financial advisers could represent a different problem from the well-meaning advice of friends and family. If the advisers are paid through commissions by third parties to sell insurance or exotic mutual funds, they may have their own best interests at heart rather than yours.

It’s up to everyday investors to determine if their financial adviser is putting their best interests forward. In order to do so, ask the adviser how they get paid. If it’s by commission, then look for a fee-only adviser who will get paid a flat amount for work.

Parental bias can leave children in harm’s way. More young investors turn to parents for financial advice, but parents are limited by their own experiences. While the parent probably means well, emotionally charged financial advice rarely results in good decisions.

Finally, there’s the issue of risk tolerance. The parent’s taste for risk may differ from the child’s. While a young investor has decades to save – and can therefore take more risk – an older investor could be more inclined to choose a strategy that favours bonds and less volatile equities. Young investors copying that strategy could be left wanting more when they are ready to retire, and if things go wrong, it can cause conflict within the family.

Friends often share successes, but forget about the failures. Clients who are considering buying a first home and converting it into a rental property often hear from friends about the potential profits, but not the effort or risk.

More than a quarter of young investors take advice from friends. It’s often difficult to ignore someone who brags about a sweet stock pick or huge returns from an investment. But people are less likely to talk about stock picks that fail or the hard work involved on a real estate property.

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