Mercer actuary David Knox says the data used to determine the old age dependency ratio is “totally out of date” and overstates the severity of the problem.
From their inception, SMSFs have always attracted more than their fair share of criticism. Now it’s an ageing membership that’s being used to restrict their numbers.
How to find gold in retirement
Two career financial advisers have put their heads together to inform Australia’s growing number of retirees how they can plan a secure and happy retirement.
Jamie Nemtsas and Drew Meredith, the co-founders of Wattle Partners, a fee-for-service financial advice firm, have drawn on their many years of experience to write the golden years – essentially a tome explaining how to manage retirement.
They write that retirement is meant to be the most enjoyable and relaxing time of our lives, yet “most of us spend our entire working lives working towards the goal of an independent and exciting retirement”.
“We squirrel money away every month, pay off our mortgages as fast as we can and make sure we have enough insurance in place in case it all goes wrong,” the book continues.
But sadly, it often still goes wrong – even for people with significant nest eggs. “To be frank, far too many people are not enjoying their retirement to the level that they should, particularly given how hard they have worked during their lives.”
Meredith says much of the fault lies with the superannuation system that is geared for accumulation, not decumulation. “The APRA-regulated funds (compulsory superannuation began in July 1992) have focussed on the accumulation phase,” the book explains. “But now we’re starting to see a growing number of Baby Boomers entering retirement with sizeable assets but with precious little advice on how to handle it financially. You get a statement, and that’s just about it. [It’s estimated 670,000 people will retire over the next five years, taking the number of retirees to nearly five million by 2029.]
“Even people who, on the surface, are financially secure are often unsure about how to handle their finances now they are no longer earning an income. Can I apply for a pension? What health benefits am I entitled to? Are there other concessions I am entitled to? What’s the right asset allocation for my risk profile? How are bonds priced and can I trade them like shares? There are myriad questions, yet for many people they can’t get access to the appropriate advice.”
Meredith says the ambition behind the golden years was the realisation there was an “incredible need” for a dedicated retirement resource.
“Jamie and I want to provide retirees with an insight into some of the things, both expected and unexpected, that can take your retirement from ‘ho-hum’ to the ‘golden years’.
“So many people think that they or their families are different, but we can assure them that we have seen everything, and whatever their situation, they’re not alone. This book draws from thousands of meetings we have had with people over the years and includes case studies to highlight best-case scenarios to common pitfalls to avoid.”
To help readers better plan their retirement, Nemtsas and Meredith have devised a list of golden rules that address the way people invest in retirement as well as how you live in retirement.
They argue it’s critical to get the balance right – that there’s no point in being financially secure if you are not enjoying retirement.
“People really do worry about longevity risk, that they will outlive their savings. In our experience it’s often an unnecessary worry, with many people dying with larger balances than when they retired. But if that’s what’s keeping them awake at night, then it’s an issue that must be addressed. Although there’s obviously no perfect calculation, with the right advice you can reassure people that their nest eggs will suffice.”
As they write about one of their golden rules, “money is a means to an end. It’s a reward for your exertion across your career and should be used to enjoy experiences. Don’t let money control you; being controlled by money can be one of the biggest drags on happiness.”
