Sugar high: Federal Budget snapshot
Sugar high: Federal Budget snapshot
This year the federal budget was delivered six weeks early in what was clearly the start of a campaign for re-election. In the face of global uncertainty, the Australian economy has performed exceptionally well. And that’s what’s funding an almighty sugar hit for retirees, small businesses and certain parts of regional Australia.
War in Ukraine: Implications for your retirement
War in Ukraine: Implications for your retirement
Russia’s invasion of Ukraine is first and foremost a human tragedy. The images we’re seeing on the news are just terrible. But if we turn our minds to the economic impact, we can see that there have been immediate consequences. Sure, they’ve been felt most acutely on the other side of the world, particularly in Europe. But there are economic consequences of the war in Ukraine being felt right here in Australia as well.
So, what does it mean for Australian retirees in the short-term and should we be doing anything now to protect ourselves?
Independence: The key to trustworthy advice
Last month Dixon Advisory, a once respected retirement specialist firm, collapsed into voluntary administration. In the end, it was overwhelmed by compensation claims and legal actions from 5,000 former clients who had sustained heavy losses from Dixon’s in-house products.
So, what went so wrong for Dixons? And what can we learn from their business model and the experience of their clients?
The importance of strong returns for retirees
When it comes to money, what’s most important to us changes over time. When we’re younger, and starting a family, perhaps taking out a mortgage, life insurance is the most important thing. When we get to midlife, super contributions become more important, loading money into super and taking advantage of the mathematics of compound interest.
But when we come to retirement, investment returns become most important. That’s because the period around retirement is when our super balances are at their highest. It’s what finance nerds call the ‘portfolio size effect’.
Economic update: Market ups and downs
The share market has started 2022 with a fizzle, falling more than 8%. It’s on the back of some concerning economic data. Inflation is higher than expected, which means interest rate increases this year now seem likely, and it appears omicron has dented business confidence.
So, what does this mean for retirees?
Madness of crowds
Recently industry fund Rest announced that it is considering investing its members’ money in cryptocurrency. We think that’s a bad idea. Here are our five reasons why.
Spending in retirement
There are lots of uncertainties when it comes to retirement. While most Australians are working longer, we’re also living longer, so our retirement is longer. In fact, for some of us, retirement can span a period of 30 or 40 years.
A lot can happen in 40 years and it can be difficult to know how much we can afford to spend. How do we balance spending today, and still be responsible for the future?
Secret to Happiness
Over the course of our careers we have helped hundreds, maybe even thousands of local people plan for retirement. Most settle into retirement successfully and enjoy higher life satisfaction as they age. But we have also seen some retirees really struggle with retirement, and never recover their sense of identity outside of their career.
So, what’s the secret to living well in retirement? And is there anything we can do to increase our happiness?
Return of Inflation
Return of inflation
The news that inflation grew more than expected in the September quarter has spooked retirees and homebuyers equally. And rightly so; inflation is bad news for retirees who are trying to balance spending today, while being responsible for the future. And for homebuyers, the return of inflation may mean increasing interest rates and mortgage stress.
So, what has caused the inflation spike? And what will happen if prices continue to rise? More importantly, what can pre-retirees and retirees do now to protect themselves from inflation risk?
Why we all need a Plan B
Over the course of our careers we have met thousands of pre-retirees and retirees. During that time, we have observed changing attitudes to retirement.
Today, most of us are planning on working longer; the average age we plan to retire is now 67. And almost all of us want to transition into retirement, reducing our work hours over time.
But foresight may be vain. According to the Australian Bureau of Statistics “Retirement and Retirement Intentions” research, in reality, the average age at retirement is around 55.
Most of us don’t get to choose the timing of our retirement. It’s forced on us by circumstances and that’s why we all need a plan B.
Evergrande: A timely reminder about risk
Just a fortnight ago, most of us hadn’t even heard of the Evergrande Group. But recent developments have changed that.
Just in case you missed it, Evergrande is a Chinese property developer that has run out of cash. It is probably going to default on its debt obligations. The big problem is, Evergrande is massive and its finances are entwined with financial institutions right across the world.
Hope is not an investment strategy
With local and International share markets at record highs, now might be the time to check in on your investments.
Independence Day
On Monday, 2 August we took a stand and started our own Australian Financial Services Licence.
We are calling it Catalpa Pty Ltd. By self-licensing we can free ourselves from real and perceived conflicts of interests. It enables us to officially provide unbiased advice.
Our reasons for seeking independence are simple. We believe that professional financial advisers should serve their clients and their clients only. There should be no other money flows or vested interests.
Nothing to see: Making sense of the inflation spike
If you’ve been watching the financial news over the past week, you will know that Australia’s inflation rates have now peaked to a 13-year high.
What does that mean for retirees, and should we be doing anything to protect the purchasing power of our nest eggs?
This time its different
Retirees are right to be concerned about the economic impact of the lockdown in Greater Sydney. But that doesn’t necessarily mean we’ll see a repeat of the devastating market freefalls of March 2020.
Dumb things we do
Human beings are hardwired to make poor decisions when it comes to investing. Our natural tendency is to buy at the top of the market cycle and sell at the bottom. Unfortunately, that quickly destroys wealth.
The good news is that financial planning advice can help. Advisers provide structure and discipline that can overcome our natural inclinations and emotions.
Super outcome: Changes finally law
New arrangements for super will mean less members’ money wasted in fees and more accountability for member outcomes.
Upsize your super with a downsizer contribution
Booming house prices in the Central West are presenting unique opportunities for retirees looking to cash in and boost their super.
This month’s Budget announcement that the home downsize provisions are being extended means that younger retirees can benefit with more tax-free super when they need it most.
Federal Budget: What, me worry?
This year’s Federal Budget is a socially responsible, big spending one aimed at embedding the economic recovery. With interest rates already set at emergency levels, it makes sense for Treasury to step up and stimulate the economy.
But that big spending will come at a cost to future generations as the ballooning debt will eventually need to be repaid.
Finding purpose beyond work
Talk to any super fund and they will say that anyone approaching retirement should boost their super balance, but in our experience, there’s more to a successful retirement than having lots of money saved up in your super account. And there are better ways for a pre-retiree to prepare than to just boost their super.