Retirement Planning

It’s Never To Late to Start

Retirement or ‘The Golden Years’ is an exciting milestone one reaches after many years of hard work. A time to take action on goals you have set such as taking a holiday (COVID-19 permitting) and living financially secure. Crest Financial Services believe you should be able to enjoy your retirement without the stress and worry of finances. This is especially true during uncertain times, where we have seen a mass increase in people seeking advice.

What is the Retirement Age in Australia? How do I know I can retire?

There is currently no set retirement age in Australia, leaving this decision completely up to you. The average, based on those who retired in the last five years, is 63 years with this to gradually increase to 67 years 2023. Whether you are entering or leaving the workforce, we recommend you engage with a financial adviser to help you prepare yourself with retirement planning. Advising when you could retire can take into account factors such as your personal health, financial situation and the preferences you have to increase your likelihood of living financially secure.

Benefits of Retirement Planning

The benefits of retirement planning are:

1. Peace of Mind: Having some preparation especially about making decisions such as the age you wish to retire and how to navigate your finances to do this, and help give you confidence when transitioning into this life stage.
2. Making Efficient Decisions related to Career and Finance: If you start your retirement planning early, it could help you in making more efficient decisions in relation to career and finances.
3. Plan for Unforeseen Expenses: Realistically we cannot always know what the future holds, this is why there is the benefit of planning for unforeseen expenses such as medical bills or treatments.
4. Tax Benefits: If your retirement plan is effective you could take advantage of tax benefits such as tax rebates and higher tax free thresholds.
5. Maximise Government Benefits: There are varying of Government Benefits available such as Age Pension Commonwealth Senior Health Card and others. Your entitlements are based on factors such as age, income and assets, therefore it is worth structuring your assets to maximise any benefit.

Who can help me plan for retirement?

Crest Financial Services has a team of financial advisers, skilled and experienced in assisting clients’ transition in retirement. They would be happy to also help you in your journey toward a successful and secure retirement. Your financial adviser can help give you peace of mind and confidence in transitioning into retirement and answer questions you may have such as when you can access your Super. Book an appointment to get started on your retirement plan today!

Are you a Superhero?

Unfortunately, the reality is that we don’t have to look very far to see the terrible emotional and financial impact that sickness and death can have on the lives of our friends, family and loved ones.

So it is important that when taking on any additional debt, such as buying a house or re-financing a home loan, that you conduct a ‘reality check’ to determine the potential risks and how best to protect against them.

A simple starting point is to ask yourself:

How long would my family be able to keep our home (i.e. keep making the monthly repayments):

• If I (or my partner) died tomorrow?
• If I had to stop work due to health issues or an accident?

If the answer means the house would have to be sold at some point, then an immediate analysis of your Life insurance requirements should be completed.

Personal insurances, such as Life insurance, Income Protection, Trauma and Total and Permanent Disability policies, normally form a key part of protecting your situation. These can be tailored to ensure that debts and cost of living expenses can continue to be met, no matter what life throws at you.

It is true that the above events may entitle you to some Work Cover, Centrelink Disability Support Pension or the ability to access part of your super. However, in our experience these benefits (on their own), are usually not enough to save the family home from being sold.

At Crest Financial Services, as part of our financial planning process, we assist clients to put in place appropriate personal insurances and advise on how to best structure these to minimise cost and impact on your daily cash flow.

Become a real superhero for your family, and get advice on how to best protect them.

The danger of living for too long!

I am often asked by clients “how much money will I need in retirement?”

This always depends on 2 factors:

1. How much will you spend each year?
2. And how long will you live for?

I can usually calculate the answer to the first question easily, however the great unknown is the second question, how long will you live for once you have retired?

I am constantly having these conversations with my clients and most times they underestimate how long they will live for once they retire. It is my job to help educate them to plan for the realistic time frame, not the desired timeframe.

Based on current statistics, if you are currently 65 years of age, your life expectancy at birth was 68 for males and 74 for females. The reality today though, is that on average, those aged 65 are expected to live another 19.5 years if they are male (to 84.5 years old) and 22.3 years (to 87.3 years old) if they are females. Those figures are also based on historical data, not taking into account any medical advances that could be made over the next 20 years.

Furthermore that is just average life expectancy, did you know that 65 year old males have a 42% chance of living beyond their 90th birthday and 65 year old females are even higher at 55%?

At present, each generation is living longer than previous generations, mainly due to advances in medical science, technology, education, nutrition and hygiene.

But what does all this mean for your retirement?

Well as people have progressively been outliving their previously estimated lifespans, the risk of running out of money has become far more significant. Furthermore, with the baby boomer generation now retiring, an increasing proportion of the Australian population are ageing, which forces governments to reduce the reliance on the Age Pension, especially in its current format (and we have seen this over the past 10 years with the significant changes to the Centrelink Age Pension).

At Crest Financial Services, we believe that if you have a better understanding of how long you live, you are able to make better superannuation and investment decisions now to plan for the future.

By Rhys Higgins

Deaths, Life expectancy – Australian Institute of Health and Welfare. (2018). Retrieved from https://www.aihw.gov.au/reports/life-expectancy-death/deaths-in-australia/contents/life-expectancy