Why understanding your risk tolerance can help build greater confidence for retirement

By Ninda Hendy

The content is produced by the Good Weekend in commercial partnership with MLC.
When it comes to our nest egg, some of us are happy to simply rely on the wonders of compound interest to grow the balance. Others, meanwhile, leave it up to their super fund to take a few calculated investment risks on their behalf, confident it will pay off later.

How we feel about the financial risks that we take to grow our superannuation is known as risk tolerance.

In simple terms, an investor with a high-risk tolerance is more likely to risk losing some money occasionally in order to get better long-term results.

An investor with a low-risk tolerance, however, tends to favour investments that are more likely to preserve their original investment.

Risk tolerance is determined by a combination of factors, including your financial experiences, investment goals, what sort of retirement you would like to enjoy and how much time you have to invest.

Understanding your individual risk tolerance is an important step in understanding how super works. Investing based on your tolerance can have a big impact on the money available to you later in life, so it’s well worth taking the time to understand it now.

Growing an appetite for risk

Sydney couple Kiri Yanchenko and Wesley Taylor, founders of Australian skincare brand Amperna, have poured everything they have into their business, both personally and financially. And they are serious about growing their super.

The small business owners contribute 10 per cent of earnings each month to their super to mirror what they would be receiving if they were employed, based on the current national super guarantee.

Yanchenko says her appetite for risk has improved over the years, after watching her parents fight to keep the family home back in the 1980s. At the time, interest rates were hovering at an eye-watering 17 per cent, so making mortgage repayments was tough. Conversations about money were rarely positive, she says.

“That experience definitely determined my appetite for risk. I grew up erring on the side of caution when it came to money,” Yanchenko says.

But her husband, Wes, had a different experience growing up, and together, they decided it was worth taking a few calculated risks with some help from a financial planner.

Their super is diversified into both international and Australian shares, property and cash investments – and it has paid off already, with the couple well on track to retire comfortably.

“At the moment, given our age and where we are in life, we have a higher risk tolerance. So, we’re investing in high risk options,” Yanchenko says, adding that
they have organised quarterly reporting from a financial adviser to keep a close eye on progress.

“There’s some movement in our super balance each quarter, but in our view the longer term financial rewards far outweigh the risks.”

Calculating risk

Determining someone’s risk appetite is an important part of the job for MLC principal financial adviser Pete Brewster. He does this by asking customers a series of questions, before recommending tailored investment solutions.

“With the right context we can understand what you want to achieve and how this fits with your risk tolerance,” he explains.

“It doesn’t make any difference whether you’ve got a lot or a little in superannuation. Either way, you need to understand how your approach to risk will impact your superannuation and investment balances.

“It’s about knowing yourself well enough financially to understand what you’re comfortable with and making sure the investments made on your behalf reflect your risk appetite,” says Brewster.

For example, asset types that investors with a high-risk tolerance might consider are Australian and international shares, residential and commercial property.

“It might even be appropriate for some who are still accumulating assets and have a long-term approach to borrow to invest or ‘gear’. These types of investments may come with a lot of uncertainty day to day, and some risks of short-term losses, with an aim to gain for profit in the medium to long term,” Brewster explains.

In contrast, investors with a lower risk tolerance typically seek more certainty and security, with the knowledge they can withdraw exactly what was invested at any time.

“Alternatively, assets like term deposits or fixed interest investments might be more suitable for people with a low-risk tolerance who are happier to receive a much lower return for their peace of mind, more certainty and less ‘ups and downs’ in the short term.”

It’s a valuable conversation for anyone to have. “Once your appetite for risk is understood, you can have more confidence around your financial future and make better decisions to build your nest egg,” Brewster adds.

Eric Blewitt, CEO of stockbroker AUSIEX agrees. Super is a long-term investment, so you should consider its performance over the longer term. It’s not conducive to apply short-term thinking by tracking the daily fluctuations of the market, he says.

As you get closer to retirement, your financial adviser can help you assess the risk profile of your investments. They can discuss how to best structure your portfolio, which may involve transitioning into assets that are more stable, but still produce good growth and income.

“After all, retirement for many is a 20-plus year outlook. You want your money to continue to grow in a stable manner, as well as being able to withdraw funds to enjoy your retirement,” says Blewitt.

“Planning for retirement is an important exercise that involves investment and tax considerations. It’s advisable to seek advice in both areas to set yourself up confidently for retirement.”

Source: MLC https://www.mlc.com.au/personal/blog/2021/10/understanding-your-risk-tolerance

If you have questions and would like your financial situation to be evaluated, please email us on ds@bluerocke.com with your contacts, for an exploratory meeting, at our cost, not yours.

5 ideas for generating passive income

‘Passive income’ – the term conjures up images of long days relaxing on a beach free of financial worries because your investments are generating enough for you to enjoy life without needing a job.

Maybe the term ‘replacement income’ is more accurate as it gives the idea of working towards eventually replacing the income you generate from your job. Thanks to super, we’re all working towards the passive/replacement income in retirement goal.

There are also people who aren’t prepared to wait until retirement for passive income. You may have heard of the Financial Independence, Retire Early (FIRE) movement, made up of people devoted to a program of extreme savings and investment that aims to allow them to retire very early, like 30 in some cases!1

That’s probably a stretch for most of us, but aside from growing money in super, here are 5 ideas for generating passive income.

1. Property investing

We all know about Australians’ love affair with real estate. According to CoreLogic, more than 2.2 million of us, or around 20% of us, are property investors.2

Buying an investment property probably means borrowing money. In the early years, the cash flow from rental income may not cover loan payments. Depending on the type of loan (assuming it’s a principal and interest loan, and not an interest-only loan), over time, the debt is likely to be paid down and the rental income go up, so that eventually the property will generate surplus cash.

Hold the property long enough and the debt is likely to be repaid and you can enjoy the full benefits of a passive income source.

Of course, there are downsides to owning property like council rates, insurance, repairs, and upkeep. There can also be issues with tenants, some of whom may not treat the property well. And you can’t sell a bathroom if you need to access part of your investment.

For those who don’t want the hassles associated with direct property ownership, there’s the option of investing in listed property funds, also known as Australian real estate investment trusts (A-REITs), providing exposure to commercial property.

In the case of A-REITs, all property management, tenancies, and sourcing new properties are the responsibility of the manager of the A-REIT. It’s also diversified across lots of different property sectors, and regions.

But values of A-REITs do fluctuate more because they’re listed on the share market. Investors are constantly buying and selling A-REITs every day and in doing so they’re revaluing them constantly. Unlike an investment property, which is sold once in a blue moon.

2. Share ownership

Shares are another passive income source. Companies generally provide income in the form of dividends.

It’s also easy to diversify your share investments, especially if you own managed funds giving exposure to Australian as well as global companies.

You can also invest in shares through Exchange Traded Funds (ETFs), which are listed on the stock exchange and offer exposure to many industries, companies, and countries.

Shares, whether directly owned, or indirectly owned through managed funds and ETFs, are generally liquid. You can usually buy and sell them quickly, and it usually doesn’t require a lot of money to start investing in them.

The ASX website as well as MoneySmart are good sources of information about share investing.

3. Investing in bonds/fixed income

Governments, as well as companies, borrow money from investors. Those borrowings are known as ‘bonds.’  In exchange for those borrowings, governments and companies make interest payments.

It’s because of the interest payments made by bonds that they are also referred to as ‘fixed income’ investments.

Government bonds, especially those associated with the governments of advanced economies like Australia and the UK, are generally considered to be less risky than bonds issued by companies. Bonds are typically regarded as being less risky than shares. That said, bond values can go up as well as down, so they’re not risk-free.

There are many types of bonds with different structures and time horizons. Bonds are issued to institutional investors, like super funds, and minimum investments are generally measured in millions of dollars.

However, bonds are made accessible to everyday investors through managed funds as well as bond ETFs.

4. Start a low-input business

Starting a business on the side, especially one that doesn’t require a huge amount of your time, could potentially be an attractive way of generating passive income.

Businesses like laundromats, vending machines, even do-it-yourself car washes, come to mind.

Be clear that low-input doesn’t mean no-input. If you’re going to continue with your ‘day job’ while investing in these kinds of businesses, you’ll be hiring people to do things like restocking vending machines, and keeping laundromats clean and washing machines and dryers in good condition.

5. Be an Airbnb host

COVID-19 has been a massive hit to the travel and holiday market, including short-term Airbnb stays.

The upside is that the restrictions we’ve become accustomed to for health and safety reasons, will eventually end, and life will migrate to something resembling what we remember as normal. That should be a huge boost for the travel industry.

So, if you have an investment property, rather than renting it out for long-term tenancy, you could make it available for shorter stays through Airbnb and reap the benefits. Of course, you don’t even need an investment property to be an Airbnb host. Some people rent out a spare room in their house or apartment.

Other possibilities
In a world where technology has become so accessible, easy-to-use, and low cost, there are many more ways to try and generate a passive income than the five mainstream ideas mentioned.

There are people doing everything from creating their own YouTube content, to blogging, building and selling websites, and being online reviewers for products ranging from food to cars, and much more.

Taking action to develop passive income can help to add to the earnings from your 9 to 5 job or be the first step towards replacing the income from your job altogether.

It’s about your goals and motivations. All you need to do is get started.

If you have questions and would like your financial situation to be evaluated, please email us on ds@bluerocke.com with your contacts, for an exploratory meeting, at our cost, not yours.

Article Source: https://spotlight.morningstarhub.com.au/the-power-of-compound-interest/?utm_source=eloqua&utm_medium=email&utm_campaign=thought_leadership_research&utm_content=31686


How to help your parents and still save for retirement

How to help your parents and still save for retirement

The financial impact of COVID may have cut into your parents’ retirement savings, or perhaps they just simply didn’t save enough to last the distance.

Whatever the reason, if you’ve now found yourself with parents you need to help, you may be wondering how this will affect your own retirement plans.

So, here’s a few things you can do to help both you and your parents improve your chances of retiring comfortably.

Analyse your parents’ assets and savings

It can be tough to start a conversation about money with your parents, but it’s one of the most important conversations you can have to understand their retirement savings.

Having access to their financial information will give you a better understanding about their situation. More importantly, you’ll know if you’re going to be required to help them financially.

Ideally you want a clear picture about their current assets, savings and debt status plus an understanding of their income and expenses. There are budget planners and phone apps you can use to help get control and visibility around spending habits. You may also want to use a retirement calculator to give an idea of how long their money will could last.

If you find they don’t have enough income to support their retirement, there may be things they can implement to change it. This could include cutting down expenses, moving to a more affordable home or renegotiating their debt. It’s very important to make sure they are maximising any social security entitlements they may have too.

Review their health insurance

Healthcare costs are becoming increasingly onerous so it may be advisable to review your parents’ health insurance. It’s important they have enough cover for medical expenses, long-term care and other retirement costs.

Seek professional help

Enlisting the help of an expert, such as a financial adviser, may alleviate some of your pressure.
Better yet, financial advisers can assist in developing appropriate strategies to ensure you’re meeting your own retirement goals as well as your parents. They can also investigate what tax concessions, or other government benefits, your parents may be entitled to.

Perhaps most importantly, a financial adviser can help you take a holistic view. They can look at your parents’ situation and your own and work out strategies that optimise both outcomes over the long-term.

For example, you may need to reduce your current spending to help your parents retire more comfortably. That’s a short-term cost to you – but if it means your parents can keep important assets like the family home, you may benefit from that in the long-term. A financial planner –trained, impartial and able to see the big picture – can be a big help.

Set clear boundaries

It’s an admirable thing to help your parents but be clear about what that help consists of – for example it’s one thing to help out with their bills occasionally, but it’s another to have your name placed on loan documents!

If that isn’t the type of help you had in mind, it’s important to communicate that – and stick to it.

Invest in your own retirement

There are retirement calculators you can use to see if you’ll have enough saved to maintain the standard of living you’d like in retirement.

If you find you need to make financial adjustments to increase your retirement savings, one option could be to contribute more to your super on a regular basis using your before-tax or after-tax income. There are tax benefits that come with this too.

For example, if you contribute some of your after-tax income or savings into super, you may be eligible to claim a tax deduction. This means you’ll reduce your taxable income for the financial year and potentially pay less tax, while adding to your super balance. It’s a win-win.

These types of contributions are capped at $25,000 per financial year however. If you choose to contribute over this amount, you may be required to pay more tax.

Bottom line: We all want to help our parents if they’re struggling financially, but it’s important to think of your own situation too. And don’t forget, money isn’t everything—one of the best things you can do for your parents is to spend quality time with them while you’ve got it!

If you would like competent advice in this area,  please email us at ds@bluerocke.com with your contacts, for an exploratory meeting, at our cost, not yours.

Article source: https://www.mlc.com.au/personal/blog/2021/03/how-to-help-your-parents-and-still-save-for-retirement

Retirement – Fears and expectations

By Richard Dinham, Head of Client Solutions and Retirement, Fidelity International

For many, the word ‘retirement’ is associated with the idea of extended holidays to far-flung locations or spending quality time with grandchildren. And while the new-found status of “retiree” sits well with some, for others it’s a different story. It all depends on how smoothly the transition into retirement progresses. There are, in fact, a range of financial, emotional and psychological fears that are often linked to retirement – for good reason.

Australians spend most of their working lives saving for their retirement so that when the time comes to retire, they can lead a comfortable life. However, many people are uncertain about what to expect in retirement, and the issues they may face are not always just financial. For many investors, financial planners play a pivotal role in providing technical advice, guidance and peace of mind before, during and after the retirement process. But there are also the emotional and psychological impacts of transitioning to retirement to be considered.

Despite the best laid plans and the most strongly held expectations, around half of Australians do not retire for the reasons they think they will, nor at a time of their choosing.

Research from CoreData found that around 50 per cent of Australians retire early due to unexpected circumstances and within timeframes they did not choose. The reasons range from health issues to unemployment to providing care to loved ones. This can result in retirees feeling out of control and impacted not only financially, but emotionally as well.

Retirement planning is not a ‘one size fits all’ approach. But no matter what an individual’s needs are, solid financial planning allows for a smoother transition and helps alleviate the uncertainty of retirement.

Common fears and expectations associated with retirement 

While it is not surprising that pre-retirees with no superannuation savings are worried about funding their retirement, they are not the only cohort concerned. Despite healthy superannuation balances, CoreData’s research shows that close to two-thirds of pre-retirees are worried about being able to fund their retirement, with only a small percentage feeling very optimistic that they will have adequate financial resources to do everything they want in retirement.

In fact, more than half of those with retirement balances of between $750,000-$1 million say they worry about funding their retirement. These concerns only recede once an individual has accumulated more than $1 million in savings.

Encouragingly though, 43.9 per cent of pre-retirees expect to live a reasonable retirement life, understanding that not all of their desires will be fulfilled. Only four in 10 retirees say that their actual retirement lifestyle is aligned with what they expected, and three in 10 say their retirement lifestyle exceeds their expectations.

Successful retirement factors

A successful retirement involves more than just money. Certainly, money allows for many of the things that make life worth living, but it is not enough on its own. Other important factors in a successful retirement include, mental and physical health, having realistic expectations and owning a home.

Retirement satisfaction occurs when a retirement lifestyle matches the retiree’s expectations. Not every retiree has expectations of a luxurious retirement lifestyle, but all of them expect basic needs to be addressed.

While pre-retirees are concerned about whether they will be able to fund their retirement, once a person is retired, the concern turns to whether they will run out of savings later in life.

Around one in eight say their greatest worry is they will outlive their savings, and close to 10 per cent are worried about affording the costs of high-quality aged care facilities. While the welfare system allows for a basic level of income, budgeting for discretionary expenditure can cause stress.

Having adequate savings in place allows for a degree of flexibility when it comes to discretionary spending and provides a stronger sense of control.

When planning for retirement there are two core factors that determine the amount of savings a retiree needs – life expectancy and projected expenses. Individuals need to consider these, along with other factors including marital status, health and home ownership, when determining how much saving a retiree needs in order to enjoy their desired lifestyle.

Staying healthy

Early retirement is often seen in a favourable light and is eagerly planned for, however 28 per cent of Australians retire early (and unexpectedly) due to health-related issues. Almost half of all retirees consider their health as their greatest worry in retirement.


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Research from the Australian Centre from Financial Studies found those who retire early due to health issues are likely to have lower incomes and so are more likely to have lower superannuation balances. By default, they are also most likely to incur additional health-related expenses in retirement.

Maintaining a healthy lifestyle and addressing potential health issues early are therefore important factors to consider when planning for retirement.

Owning a home

Unsurprisingly, owning a mortgage-free home provides a greater sense of security and retirement satisfaction. Research from the Australian Housing and Urban Research Institute found older people with secure long-term accommodation tend to have better physical and mental health too.

Home ownership is also intrinsically linked to retirement readiness and satisfaction. Those who own more than one property with no mortgage typically experience retirement success. Single property owners also enjoy a high level of retirement satisfaction. In contrast, individuals who own no property score the lowest in terms of retirement satisfaction.

Retirement is one of the single largest changes in an individual’s life and it comes with a host of financial, emotional and psychological fears. A sound financial plan can help manage associated fears and expectations and most importantly, ensure the transition into retirement is as seamless as possible.

Need advice on planning your retirement?

Contact Dev Sarker at ds@bluerocke.com for an exploratory meeting today!


Source – https://www.fidelity.com.au/insights/investment-articles/fears-and-expectations/

10 Australian women share their number one money tip

A smart saving strategy is just one element of achieving financial security – you also need a deliberate plan to manage and make the most of what you have.

Here, 10 money-savvy women share one tip that’s helped them get their finances into a healthier state.

1. Don’t put all your eggs in one basket

Millionaires know that diversification is the key to building wealth – they typically have multiple income streams. If you’re serious about securing your financial future, it makes sense to follow their lead. There are plenty of options – think property, shares, bonds, superannuation, your own business or a ‘side hustle’. Treat your finances as a portfolio and start to spread the opportunities and the risk, even if it’s on a small scale, and you’ll be on your way.

Emma Isaacs, Founder and Global CEO, Business Chicks

2. Develop smarter spending habits

I was never bothered about budgeting until I fell pregnant and wanted to take a year off with my baby. Cutting back on expenses was a shock to the system but only because I wasn’t used to it. Develop smarter spending habits – comparing prices, finding cheaper alternatives, setting budgets for activities and outings and so on – and it soon becomes possible to live on a lower income without feeling like you’re missing out. Continuing to do those things, even after I returned to work, has made a big difference to our financial position.

Jade Cerfontyne, Project Manager

3. Seek advice – and follow it!

I spent my twenties and thirties with my head in the sand when it came to money. That finally changed when I was in my early forties and my accountant sent me to see a financial planner. If you’re not comfortable managing money and you don’t know where to get started, professional advice can be so valuable. Work with them to create a plan and start following it. Doing this has helped me to see where I’m heading financially for the first time in my life, and that’s very empowering.

Dale Pope, Founder, Dance by Dale Pope

4. Set aside regular money-management time

It’s easy to tell yourself you’ll get your affairs in order when you have a moment. In my experience, that moment can be a long time coming. Make a date with yourself to do it – and keep it! Mine is an annual ‘money in March’ session where I evaluate my position, review my spending and budget, and set goals for the year ahead and plan how I’ll achieve them. It can take as little as a couple of hours to get on top of things. If you want to ensure your money is working as hard as it can for you, then it’s time you can’t afford not to spend.

Helen Murdoch, MLC General Manager, Workplace Super

5. Don’t leave your financial future in someone else’s hands

During the course of a long marriage, I allowed my former husband to manage all the money matters. That meant I had an extremely steep learning curve when the relationship broke down and I had to take responsibility for myself and my four sons. Maintaining ownership of your finances through your life is the smartest thing you can do, regardless of whether you’re single or in a relationship. Your financial future is too important to leave in someone else’s hands.

Anthea Woodhill, Flight Attendant

6. Pause before you purchase

In today’s world, there’s a lot of pressure to buy everything new and it’s killing our finances. Most fashion purchases are only worn a handful of times and many women discard clothes after a single wear, or even unworn. The best solution to wasteful impulse purchasing is to write down the thing you think you want and wait – for 24 hours, or two days, or longer. Whatever works for you. I call it PauseB4UPurchase. If you practise it regularly, you’ll be left with a lot more in your wallet for the things you really want and need.

Rachel Smith, Author of Underspent: how I broke my shopping addiction and buying habit without dramatically changing my life

7. Set your sights on buying your own home

There are lots of ways to build wealth but, in the long-term, the security of your own home is hard to beat. Striving to get a foothold in the property market, however modest, while you’re young is something you’ll really thank yourself for a couple of decades down the track. My friends were shocked when I bought a house at 21, but I am where I am today because I took that first step.

Joanne Ke, Self-funded retiree

8. Educate yourself about the financial products you use

It’s difficult to manage your money effectively if you don’t understand the way things work. Getting to grips with the financial products you use – your mortgage, personal loans, credit cards and superannuation – will help you make better decisions. Get good information that explains it in a straightforward way and you’ll find it’s not as complex as you expect. If you don’t take control, you may end up losing some of your own money – I don’t think any of us want that!

Jenny Rolfe-Wallace, Financial Educator and Founder of Sprout Education Group

9. Stash as much as you can into super

Working for many years for a company that made additional contributions on my behalf helped me to accumulate a healthy super balance. It’s made a big difference to the lifestyle I can enjoy in retirement. That’s what super is really all about – freedom and choices – and that’s why keeping it front of mind from the start of your working life is so important. Sixty comes around very quickly and if you don’t make building your balance a priority, it may not happen.

Melanie Schwarzman, Self-funded retiree

10. Make money management a daily activity

Starting my own business was a calculated risk, and maintaining tight control of my finances has helped me to make it a success financially. I look at my bank account every day and allocate all the money I earn to different accounts, for different purposes. Know exactly where you stand with your finances at all times and there’ll be no nasty surprises. That’s a really good feeling!

Georgia Norton Lodge, Founder, Georgia Draws a House

If you are unsure and would like an evaluation of your situation, please email us on info@bluerocke.com or ds@bluerocke.com with your contacts, for an exploratory meeting, at our cost, not yours.

Source – https://www.mlc.com.au/personal/blog/2020/10/10_australian_women

Retirement: where to start

While many of us dream about the day we finally get to give up work and reap the benefits of our blood, sweat and tears, we often struggle to plan for it.

After all, in the scuffle of immediate priorities, saving and planning for retirement don’t always make it to the top of the pile.

But there’s a good chance you could be spending almost as long in retirement as you will be working. So, if you really want to end up with the retirement you envision, there are some things you can start doing right now.

1.  Determine how much you’ll need

Determining how much annual income you’ll need to maintain your lifestyle in retirement is key and will depend on the type of lifestyle you want in retirement. For example, the types of holidays and frequency,
where you’d like to live and your recreational activities.

Once you’ve estimated what your annual retirement income might be, you can start thinking about where you’ll be able to access it from such as your super, part-time work, or social security entitlements. You’ll also be able to determine your total amount of savings needed to meet your desired lifestyle.

A comfortable retirement

If you’re after a comfortable retirement lifestyle which includes a good standard of living and recreational activities such as some overseas travelThe Association of Superannuation Funds of Australia (ASFA) recommends that couples would need an annual income of around $61,909, while for singles this would be approximately $43,687.

Based on you owning your own home, having investment earnings of 6% per year and receiving a partial Age Pension, they estimate that the additional lump sum savings you’d need at retirement to supplement your income and achieve this amount of annual retirement income would be around $640,000 for a couple, while singles would need around $545,000.1

A modest retirement

If a simple retirement lifestyle­—that’s slightly better than being on the Age Pension—is more on the cards, ASFA estimate you would need a much smaller lump sum at retirement. However, the amount you’ll need depends on your investment returns and the amount of Age Pension that you’re entitled to.

Based on your circumstances, you’ll need to determine what Age Pension or other social security benefits you might be entitled to in the future and ensure that your other sources or retirement income will be adequate to fund your desired lifestyle.

Rising cost of living

Keep in mind that while you’re likely to have fewer expenses in retirement—you won’t be contributing to your super, you might pay less tax and may have paid off your mortgage—inflation can eat away at your retirement savings.

For instance, if you choose to invest conservatively by having your portfolio solely focused on defensive assets like cash and bonds, your returns may not be enough to offset the rising cost of living.

2.  Determine how long it will need to last

Once you have an idea of what your retirement lifestyle will cost, the challenge is to ensure your cash lasts the distance—however long that may be.

While no one can predict how long they’ll live, if we use the average life expectancy of 84.9 for males and 87.6 for females2, you can estimate spending around 20 years in retirement assuming you retire around 65.

3.  Are you on track to reach the lifestyle you want?

The next step is to evaluate how much you’re likely to have by the time you retire, if you continue with your current savings strategy.

And this will come down to a variety of factors including:

  • Whether you own your home
  • Value of your super and other investments
  • Return you earn on those investments and income from other sources
  • Your spending habits.

To understand where you currently stand, you need to add up any savings/assets you hold inside and outside of super minus your debts. Then factor in your future earnings and what you can save from those earnings. There are retirement calculators available to help with this.

4.  Not on track?

If you find that you may fall short in achieving your desired lifestyle on your projected savings, don’t panic. There are things you can do to turn your situation around.

Make additional super contributions

You can add more into your super on a regular basis using your before or after-tax income. Contribution caps are limit to the amount you’re able to contribute each year without paying additional tax.

If you make a personal contribution, you may be eligible to claim a tax deduction too. This means you’ll reduce your taxable income for the financial year and potentially pay less tax, while adding to your super balance. It’s a win-win!

Delay retiring or work part-time

If you’re flexible with your retirement date, one alternative is to consider delaying your retirement by continuing to work, or working part-time instead of retiring completely. Holding off your retirement, even for a few years, could significantly increase your retirement nest egg. And transitioning to by working part-time can help you prepare – financially, socially and emotionally – for what is a major change in your life.  Even if you’re continuing to work part-time, you might still be eligible to receive a social security payment or benefit – such as a partial Age Pension to help supplement your reduced income.

Reduce your debt

Having no debt, or very manageable debt, will reduce your money worries in retirement. You may want to consider a plan to proactively clear your debt by reducing the amount you owe, thereby strengthening your financial position when you retire. However, it doesn’t always have to be all or nothing in terms of diverting your available funds to reducing debt or contributing to super for your retirement.

Speaking to a financial adviser can help determine the best way forward, to manage your debt leading into retirement, while also making sure your retirement goals are on track.

5.  Seek professional support

Obtaining independent advice from a financial adviser can help you design a financial plan to achieve your retirement lifestyle goals—whatever they are.

Advisers can also guide you in deciding which investment options may help maximise your retirement income. Most importantly, they can help you plan for a retirement that suits you – whatever that looks like.

At BlueRocke, our goal is to make you wealthier than you can be on your own. With appropriate advices, you may have a potentially improved financial position over time. Contact Dev Sarker today at 1300 717 136!


1 ASFA Retirement Standard – June 2020 https://www.superannuation.asn.au/resources/retirement-standard
2 SuperGuide: How long you can expect to live and what it means for your super – January 2020 https://www.superguide.com.au/retirement-planning/life-expectancy

Source: https://www.mlc.com.au/personal/blog/2020/09/retirement_where_to_start