An unexpected or forced retirement may come from ill health, an accident, retrenchment, caregiving demands or a number of other circumstances. This post is the first of two, with the follow-up post next week. Both are looking at strategies for handling unexpected retirement.
It’s worth checking out the latest YourLifeChoices Retirement Affordability Index produced by YourLifeChoices and The Australia Institute. Its aim is to help you understand how much money you currently need to live at various levels and lifestyles in retirement.
Australia’s social security system delivers income support payments to those unable to provide adequately for themselves. That includes retirees. We don’t earn entitlements to social security because we’ve been taxpayers, but because we lack financial resources and are currently unable to work, or are retired.
The evidence is in. Those who seek help from a financial planner/advisor will feel more confident about their finances for retirement than those who don’t.
In the last Australian Federal Budget, an amendment to the taxation law will allow eligible Australians over the age of 65 to sell their existing home and put up to $300,000 of the proceeds into superannuation. While it’s pleasing to see tax relief built into the system, there haven’t been any changes to regulations concerning the Age or Service Pension. This means that only some people will be able to take full advantage of the new rules. Some could be worse off financially.
There’s no attempt to do the sums involved with granny flats here because each case is different. The aim is to point out the numerous financial issues surrounding Centrelink assessments. This means you need to have a formal, legally drafted agreement in place, referred to as a Granny Flat Agreement.
Earlier this year, 53-year-old hospital worker Mavis Wanczyk phoned her boss and told him she wouldn’t be back at work. Ever. She’d just won the biggest, undivided lottery jackpot in US history. The problem is that Mavis has a 70 per cent chance of losing it all within a few years.
The headline captured my attention: ‘Advisor clients 39% a year better off in retirement—research’. It’s talking about a 39 per cent better income in retirement, which could be the difference between you having a comfortable retirement and one where you struggle.
I mentioned in Part 1 that there are a set of ‘old rules’ that applied before the ‘Living Longer Living Better’ reforms were introduced by the Federal Government on July 1, 2014. Those who decide to live in a Residential Aged Care home enter into a contract with the company. The contracts are different for those who entered a home before the reforms were introduced, and for those who fell under the ‘new rules’.
Most of the important things money can’t buy are obvious, but worth reflecting on. They’re a reminder of life priorities—and retirement priorities.