Tag Archives: Retirement

Women & Superannuation

I’ve met plenty of people skeptical about our superannuation system over my years as a planner and I get it.  Believe me, I have to devote hours ever year to keeping up with the annual federal budget, managing legislative changes and getting my head around constantly changing tax and super laws.  It can be a drag!

It’s also true that we retire with about half the retirement savings of most men, and some women retire with no super at all!  But the reality is this, women live longer than men, making it even more essential that they accumulate enough superannuation to last them through retirement.

Having said that, women also face unique challenges when it comes to putting away retirement savings. Chances are, you’re still on lower pay than your male counterparts, you’ll take more time out of the workforce to raise the kids or care for your parents, and for those running a single-parent household, it can make it even more challenging to build a reasonable amount of super savings.

However, there are some simple strategies make it possible for women to overcome some of these hurdles, or make them less of an issue anyway…

Try and remember, that superannuation is actually your friend.  It is a very tax-effective way to save retirement. Your super fund pays a low rate of tax on contributions and investment earnings while growing your nest egg.  From age 60, you can withdraw your super tax-free.

Without any superannuation savings, many women are forced to rely solely on the age pension in their senior years.  Remember, the pension is designed as a safety net and won’t provide at all for a comfortable old age.  I’m not sure I could go back to a lifestyle that’s funded on around $23,000 per annum and you probably don’t want to either!

Firstly, don’t let your super funds get ‘lost.’  Try and ensure your funds are consolidated – this can help save on fees, but make sure you’re not losing valuable insurance coverage when doing so.  When possible, try to put extra away into super.  The ATO and website MyGov are making it easier than ever now to stay on top of your funds.

Affording an extra $20 – $50 per week now may not take food off the table but the additional money, plus years of compound interest will add up, and after all, your investing in your future self.  Sounds like a win to me!

Understand your fund and make sure your employer is putting your full entitlements in regularly on your behalf.  At the time of writing, this was 9.5% of your gross wage. Mostly now, we have super choice meaning that we’re able to choose the fund we want, and then check where your money is invested within the fund.  Is it in line with your investment profile?

To grow your fund, you’re often able to make pre-tax contributions (Salary Sacrifice) or even post-tax contributions where no tax is charged.  Depending on your circumstances, your partner may also be able to make contributions on your behalf and receive a tax offset for their efforts.

However you go about it, remember that you’re investing in your future and that superannuation is your money.  It certainly pays to be savvy with your super!  Sitting down with your financial adviser may reveal new and innovative ways you can make the most of your retirement savings!

Women & Retirement

Seeing there’s actually no fixed aged when you can retire, it’s really completely up to you.  What it does come down to usually is, can you fund it?

Most start thinking in their’s 50’s about how it’s all going to work, as entitlement to the Age Pension is somewhere between 65 and 67, depending on when you were born.

Often a gradual transition is the way to go, slowly cutting back on days at work, going part time before finally exiting the work force for good.  Other conditions to consider when approaching retirement and leaving the work force for good are the loss of social interaction provided by work and the mental stimulation that’s provided.

Do you have hobbies that can take the place of your usual schedule or will boredom quickly creep in?  Exiting slowly can help you keep a hand in, whilst transitioning slowly, giving you a taste for what lies beyond work.

Some may choose to continue working part-time towards their 70’s as life expectancy moves forward.  Others have always wanted to volunteer for a local school or charity and now enjoy giving back to their local community.

If you still have a partner, discussing expectations and plans for life after work is essential to ensuring you’re on the same page.  Suddenly being together 24/7 isn’t everyone’s ideal start to their retirement years.

For others, it’s time to buy that caravan or Harley (or both!) and join the multitudes of Grey Nomads touring the country!

For others it’s not so easy.  Forced retirement may be brought on by having to assist in caring for aging parents or unwell children or grandchildren.  This can seriously impact your ability to put away additional funds to help in your retirement years.

And still, financial considerations remain top of mind.  How much you’ll need in retirement is completely dependent on the lifestyle you’ll be living…  And what you have saved to boost your pension will often dictate that lifestyle.

You might want to sit down with your planner long before retirement is on the horizon and discuss strategies that may suit your circumstances.  If your debt is low, it may be time to give your superannuation funds a boost by implementing salary sacrifice strategies.  For those closer to retirement, it might be worth considering a Transition to Retirement strategy.  Those on a lower income may be able to take advantage of the Government’s Co-Contribution strategy.

Getting the right advice for your situation is likely the best investment you can make in your future.  So how does retirement look for you?

My Top Financial Tip

If there’s one tip I’m constantly asked for, it’s what’s the best way to get on top of your finances?  And for me, that’s easy to answer – “Live Within Your Means!”  Good money management boils down to harnessing the cash flow and getting on top of debt – with the biggest gremlin being credit cards.

If the word ‘budget’ annoys you and has you running for the door, try ‘spending plan’ instead.  A budget/plan should be divided between fixed regular costs (those you MUST meet) and discretionary spending (the WANTS and nice to have stuff.)

Work out first what it costs for mortgage or rent payments, food, clothing, utility bills and loans.  This means you’ll have a much better idea of where you stand and how much you are spending on fun stuff like entertainment and non-essentials.

Losing the credit cards should be a top priority.  Learning that if you can’t afford it now, you can’t have it, is a great skill to take through life.  That’s not to say lay-buy or payment plans can’t work, but we need to move on from the ‘I want it now’ mentality.

Learn what you’re capable of when you’ve got less commitments like interest payments for items you’ve forgotten that you’ve even bought.  You may be pleasantly surprised at what you can achieve with better spending and saving habits.

Did you know, that if you’re 25 and have a nest egg of around $5000 and you’re able to save $50 – $75 a week at around 7% average interest (compounding over the long-term) you could have yourself a cool $1 million by retirement at 65?  It might be a while off, but it does highlight the opportunity cost of spending around $200 to $300 a month on eating out, movies, drinks and ‘stuff.’  Add that to your compulsory super and that’s not a bad way to enjoy post-work life.

Most however don’t really start thinking about retirement until they’re 40 plus and suddenly realise they’re half way through their working life and have been wasting the ready for over 20 years.  It’s time to analyse those poor financial habits now!

Reducing debt and saving as much as possible is imperative if you want to maintain a certain standing of living both now, and when you retire, and living within your means makes life a lot easier.  Life without ongoing financial stresses also helps you sleep easier now. Chances are, the Centrelink age pension will be harder and harder to come by and eventually disappear.

It’s up to us to take charge of our financial future, and the sooner, the better.  Living within your means from now, is vital.  Are you?

How many jobs?

It seems the days of lifetime service to a single company and retiring with the gold watch are well and truly over.

Do you think you should only have one main job during your working life or is it OK to have 2-3 part-time ones?

As the workplace continues to evolve, many people are finding that they do not want one primary job any more, but instead the flexibility of having a few projects on the go, sometimes consecutively, and sometimes all at once. How do you feel about working in more than one place?  Or, are you more of a traditional one-job style of person?

The main reason many look for additional work is to boost take-home income.  If you could find a way of supplementing your income and also your joy for pursuing something that stimulates you creatively, what would you be doing?

Research shows that we’re now going in the direction of working at more than one job.  Many find that they are way too attached to their job and if it changed, would be in total chaos.  But life has a way of throwing curve balls, so it’s not a bad idea to think of what else you could be doing.

Be prepared for the twists and turns.  What other type of work would you like to try?  Is there a hobby that you’d love to turn into a business?  Are you a budding entrepreneur just waiting for the push of being sacked?  It’s never too late to start pursuing something you love, even if it’s part time.

Rethinking Retirement

On my final morning in Beijing, we headed to The Temple of Heaven, a Taoist monument dedicated to praying to the heavens to bring a good harvest at the start of spring, and to offer thanks when it was done.

This is a 600+ year old building, that’s managed to survive the Japanese and British, and has been restored to its former glory for tourists the world over to enjoy.

 Temple of Heaven

This story however, isn’t about the monument, but about the fun that takes place in the surrounding grounds of 200+ acres surrounding the central buildings.

Over 55’s can buy an annual pass to the parklands surrounding the temple allowing unlimited annual entry for around $20AUD.  Over 65’s are free.  And you should see what these creative retirees are up to!

On entering at The North Gate, there were couples learning Rock & roll, and incongruously jiving away to classical Chinese tunes.  Check them out here: http://youtu.be/DLVBi86HPoE

Others were honing their skills with a shuttlecock with an agile version of Hackysack.  Paddles were available for those who prefer a racquet to using their feet and large and small groups were loving kicking it around.  The feathered ball was also available for purchase for anyone wanting to take one home to try with the family. I’m kind of regretting now that I didn’t grab one off the touts for practice at home.  Then I’d be a legend by retirement!

 TOH

Others were learning or had mastered the art of tai chi and slowly went about their moves, completely engrossed and ignoring all onlookers.

One group of four that stopped us in our tracks was a human game of quoits and I captured a little on video. Their skills obviously the result of much practice.  Check out their skills: http://youtu.be/dtwF4VzwvyQ

One woman regaled us with her operatic tunes while women danced, and more practiced their musical instruments, mostly brass, and loudly.  And if not well, at least with enthusiasm.

I kid you not, I’m sure I heard bagpipes!

Others had dressed up in traditional Turkish garb and were practising their Whirling Dervish routines.  And all with massive smiles of enjoyment on their faces at the fabulous gift of being alive and the wonderful sense of community they no doubt felt.

So, for all those who think retirement means hanging up the boots, an occasional game of golf or going home to die… Think again!

What was it you’ve always wanted to accomplish?

Maybe it’s time to find a tribe and invade your local park!  Perhaps I won’t lock myself away in a mouldy attic to write a novel after all.  It appears my seniors beach volleyball team awaits!  Or salsa lessons… Retirement’s looking better to me every day!  But hey! Why wait?