Today's video is the continuation of our last week's discussion about ways to improve your retirement planning.
Keep in mind that all those steps you can use at any point in your life
if you want to put in place some kind of financial plan.
If for whatever reason you missed my last week's video part 1
of 31 ways to improve your retirement planning, please watch it right now,
maybe even before you commence this video and then please return right here to continue Part 2.
This will be so much more logical for you.
My name is Katherine Isbrandt from About Retirement, I am Certified Financial Planner,
and you are watching About Retirement TV just about the only place
that will provide you with honest and open ideas how to be well prepared for your retirement
or if you have already retired, how to improve your retirement income, assets, and lifestyle.
So last week we discussed, 15 ways to improve our retirement planning
and today I want to share another 16 ideas that I have come up with.
Obviously, there would be tons and tons more, depending how detailed we want to become
but I think this is a very good start for the new year
which I hope you are planning to make it as one of the best years ever.
16. Be very sceptical of any investing advertised as tax schemes
This is how many investors lost a lot of money over the years
Australians are very tax-driven and this is how politicians win the elections,
they know what and how to promise to their voters.
This is how many heavily advertised investment schemes were introduced over the years,
where the only party making any profits were product providers
with most investors never even checking if such schemes were even approved by ASIC
and ATO for specific tax ruling
Fortunately, now there are less of those schemes happening but
that's due to strict regulations that we currently have in Australia and a very watchful eye of ASIC.
But often even legitimate schemes might not necessarily be of any value for you.
If the main goal of the scheme is to reduce your tax with actually not providing you
when any return, either in a form of income, or capital growth, bottom line, is you are losing money
So always do your due diligence before you invest any of your savings into any of those tax driven schemes.
17. Understand Australian Superannuation tax and legal system
This is a very big task and lots of information to learn not to mention
how to find the details that are exactly applicable to your situation
but if you can achieve this, you will be on your way to utilise every single benefit
legally and financially available to you.
This is exactly the reason why wealthy families rely on a good professional advice and superb service
18. Include the cost of assisting your aging parents and helping your adult children in your budget
and in your planning, this is what we call sandwich family.
Have you heard of the naming sandwich family yet?
That mostly applies to people aged 50 plus, but could be of any age really.
A sandwich family is the one that on one hand needs to care for the elderly parents
while on the other are still looking after their teenage children or children that are;
adults but refuse to leave home to start their own life and rely on your financial assistance.
My recommendation here is to find the best solution of care for your parents, there are lots of options
and some may not cost you all that much, but can be very beneficial for you and for your parents.
As far as your kids are concerned, of course, if you are happy for them to stay with you, do that ,
but treat them like adults.
If they work, and they should, unless they're studying but even then a part-time work experience is really recommended
they should contribute their share to family expenses,
to your bills, food, you can decide on their contribution value.
You are a parent, you will always be there for them, I am a mother, I would give anything to my son if there was a problem,
but as I said they need to learn their independent life and you need to look after your needs as well.
19. Don't withdraw from your retirement plan unless you really have to.
Every single dollar withdrawn from your retirement plan as an extra above what you really need,
will reduce longevity of your savings
It is not only the actual value withdrawn, but also loss of all future income and capital growth
that those funds could have earned over the years.
So just to put it into context, if today, at the age of 60 for example, you withdraw $20,000 to buy a better car,
because the one that you have although is it is in a good condition, well it bored you a little bit
and you need a change you have just depleted your future interest earned on that withdrawal by $60,775
based on 7% compound interest return over the period of 20 years
So bottom line is that should you kept that $20,000 in your pension fund,
at the age of 80 you would have had additional $80,775 in your retirement fund.
This amount of money can go a very long way
20. Plan for your long-term care
We have not been talking in detail about any expenses that you should consider in your old age,
when you might require additional medical or even personal assistance.
Whether it is provided at the Aged Care facility or at your home you cannot disregard those costs.
If you need any assistance in this area, either for your parent, or for your partner check out my website article
Aged Care Planning with Ease, but I will be devoting more time and more videos to this subject.
and if the matter is urgent please just contact me immediately.
21. Rebalancing portfolio
This one strategy can assist your portfolio performance more than you could ever expect
Rebalancing portfolio at the right time to its original asset allocation setup in your investment plan
can be very financially rewarding.
So you should implement doing this annually
or when the opportune time of market condition is presenting itself.
22. Check the performance of your investments or your super at least annually
I have been talking about this extensively in many of my videos.
Don't make rush decisions based on one year performance of your investment or your super or your pension fund.
Even if that one year was disappointing.
But annual checks are essential and if underperformance continues over a couple of years
then reassess if this is the right fund for you.
Having said that, make sure that your expectations are met with the type of the portfolio,
taking into account the investment risk.
And what I mean by that is if your portfolio has a conservative asset allocation
don't expect returns of a balance or growth fund or returns of the overall share portfolio
This is unfair comparison and you will end up being always very disappointed,
So make sure you compare apples with apples and not with oranges
for more information watch my video 11 steps to check your superannuation statement.
23. Check fees and charges included in your investment or your super.
Government has been on the hand for super and pension funds
that have been overcharging members for their accounts for couple of years now
for now, this new legislation applies to MySuper products so what we call default funds
but that will be extended to more superannuation products in coming years.
Please watch my video "Fees you pay in super" to have full clarity as to what type of fees most superannuation funds charge.
24. Review charges and cover for insurance in or outside of superannuation.
I have not really been discussing insurance in any great length on this channel
as this has never been requested but also as we progress in life the need for insurance reduces
But if you still have insurance you really need to understand the cover provided as opposed to the cover required
cost payable as opposed to your affordability.
If you require insurance should it be within super or outside?
There are many things that need to be taken into consideration before you apply or cancel your insurance,
so if insurance is what you need feel free to reach out so we can review what you have and what you need
25. Have a realistic expectation for your retirement.
Well what can I say unfortunately we love to believe in miracles
Well for example I cannot save today but I will make it out next year or the year after, well that never happens.
or my money will last me forever because my super fund is the best
and has always been provided the best returns. Well, good luck with this one.
Nobody can predict the market so please start being realistic with your calculations, with your budget that you set up
with the amount of money that you spend and how much you actually will need in the future
Once the money is gone it is gone and your retirement might take a completely different turn
26. Always include inflation in your retirement calculator
When using any calculators, please ensure that CPI (Consumer Price Index) is included.
This will ensure that whatever financial outcome the calculator gives you will be subject to inflation
meaning a real value of money in the future.
27. Age Pension is a bonus, not certainty, don't rely on it, but do what you can to get the most out of it.
This is my work’s bread and butter, on daily basis, I try to find ways how I can improve my clients Age Pension
Why? Well not because I want our government to pay for your lifestyle,
but because I know very well that this is a guaranteed portion of your income once you are eligible.
The more you receive from the government the less of your own money you have to spend,
hence you are protected with your savings for longer.
But Age Pension should be a bonus, don't sacrifice all your savings, all your assets, just to get it
It is still better to own and control your $2mil portfolio with no Age Pension
then to give the 2mil to your kids just to get Age Pension of $25K.
That is just a ridiculous exchange in my book.
28. Utilise every single benefit you can that is available to you from the government
There are many ways how you can benefit from our government's policies.
strategies that can reduce your tax, boost your superannuation savings, and support you financially for longer.
Watch my video "Improve your super and reduce tax" as well as "End of Financial Year Zero Risk 50% Return"
Easy strategies and yet, so many don't do it.
29. Understand the importance of Estate Planning
this is another area that is a huge topic to discuss, I have only scratched the surface with couple of videos
but they're still worth watching.
"Wills, are they really necessary?" and "Super Death Nomination gone terribly wrong".
The second video will tell you exactly why Estate Planning is so very important but obviously,
it is not limited to creating a Will or providing Death Benefit nomination to your superannuation trustee
The more complicated your life has been, the more you should pay attention to estate planning
and employ specialists to assist you, if you wish your assets to be distributed to right beneficiaries in the right way.
30. Do not forget about Aged Care costs in your retirement planning
I have mentioned Age Care before. We tend to live longer and longer, medical progress
keeps us alive for much longer than we might anticipate. But what if you run out of money?
What if you need to use services of Age Care facility
but you don't have any savings to pay for it. This is a big drama for many,
this is why I stress greatly to save aggressively before you retire
and spend modestly once you no longer have a job related income
There are many ways to assist you in reducing ongoing Aged Care fees,
so if this is your problem, please contact me, but the fact remains
that you do need to include Aged Care expenses in your planning as well.
31. Always, always work with professionals - accountant, lawyer, financial planner, mortgage broker.
Google is just not enough
This has always been my motto, I save where I can on things that don't matter or are all of less importance.
But I never try to cut down on expenses on any professional service that I need.
Good advice, service and support are blessing.
Not only you will have things done correctly from day one, so no fixing, updating, explaining.
It will be done for your best benefit. There is no trial and error situation.
A good financial planner will help you to improve your income, capital growth, avoid costly mistakes
improve asset security, peace of mind, very often can help you to have access to government benefits
that otherwise, you may not be able to access. So always use the best professional that really has your best interest in heart.
So voila! This is the list of 31 ways to improve your retirement planning
As I said before this list could be extended to many many more points
but some of them I have already discussed in my previous videos, hence the links
and others we will discuss in more details in the future.
If there is a topic that you believe is really important and somehow i missed it.
Please let me know in the comments below the video, I would really love to hear your opinion and ideas on that topic as well
So please don't be shy and let's have an open conversation.
Many people watching this channel are very likely in a similar situation to yours
So by answering your question this might help another person as well
If you enjoy this video, please like it, share it, and subscribe to my channel.
So you know when my next video is arriving
If you want to find more information just jump on my website AboutRetirement.com.au where you can find all my video,
lots of articles all related to the issue of retirement, investing, Age Pension, Aged Care and lots more
And now as usual, please continue watching those informative videos
Fist recommendation is previously mentioned
"Improve your super and reduce tax"
to know how to benefit from those government
provided strategies for super.
The second recommendation are videos
about estate planning: "Wills, are they really necessary?"
and the answer of course is: yes
but listen to the reasons why.
I will be speaking with you in the next video, see you soon.