When we see a Retire Right client for the first time, often the most important question on their mind is “Have I got enough money to Retire?” Clearly becoming “Financially Free” is a critical component to a successful retirement but in our view it is only half the challenge.

Although the amount of money you have in retirement can determine the lifestyle you enjoy, an equally as important question is “What are you retiring to?”

We all understand what we’re retiring from, the 5 day 9 – 5 working work week (or maybe more), the early wake-ups and binge coffee drinking to get us through the day, the stress of work deadlines and the continual pile of work that magically appears on our desk day to day. When thinking of that, retirement seems like a dream come true, who wouldn’t want to retire?

But often a common occurrence is for people to struggle after the initial elation associated with having what seems to be a long holiday subsides. After longing for retirement for potentially up to 40 years there’s suddenly no routine, you’re now free 7 days a weeks, and there’s only so much Golf you can play, Netflix you can watch and you can’t mow the lawns or trims the hedges every day.

To quote a client, “my family knew I was battling when I stained the deck for a second time in 12 months”.

For many there is not only the battle of filling in your time, there is also the challenges associated with a sense of purpose and value. Once again for over 30 years peoples work has given them a sense of purpose in life and they have been valued, but in an instance this stop. The challenge is to replace work with activities that you enjoy and give you the same purpose.

Another often overlooked component of Retirement which we wrote about in our CPE article was the “Retired Husband Syndrome” and this is another challenge for many couples, particularly when one partner has developed their own social network and weekly routine while the other has been at work for the past 30 odd years.

Jenny is often heard telling clients that her mother told her father early on in his retirement “that she married him for better or for worse, but not for lunch”. Being around your partner 24/7 can often be a challenge for a couple until they form their own individual routine and activities.

These “non-financial” challenges often rear their heads 3, 6, 12 or 24 months down the track so in our view it is as critical to put strategies in place to overcome these challenges early to ensure that you are prepared, just like the strategies you put in place to overcome the financial challenges of Retirement.

Retirement can be the most exciting period of your life, for some they take it as an opportunity to take-up hobbies that they’ve put aside during their working life, learn something new like a second language, or even take a chance to try something they thought they never would or didn’t think they’d have the time too. You now have 7 days a week to do with what you will, and from our experiences, we find clients transition the best into retirement when they have a pre-determined view of what their retirement will look like. Clients who decide to “wing it” once work stops, generally find the transition much harder. In many instances those who have successfully transitioned into retirement are busier in retirement than they have ever been.

Thinking about retirement can be very daunting, and for most it all revolves around that question “Have I go enough money to Retire?” Our experience as a Retirement Coach for our clients highlights that this question isn’t what is most important, but instead mapping out your ideal retirement looks like, is the most critical, the rest just tends to follow.

So the challenge we throw out is to ask if you were to look back at yourself 20 years after retiring, what would have had to have happened for you to sit back and say that the last 20 years of my retirement has been fantastic!

– Warren Hanna –

Most of us can only dream about leaving our work forever to do as we please. For those who are close to retirement however, this can be a time of excitement and relaxation. Spending countless days at the golf course or with our community groups, families and friends sounds like heaven on earth. The transition from full time work to full time play however may have some unforeseen pitfalls. Here are 5 facts about retirement that you should consider before retiring.

Time
One of the first things retirees quickly discover is that they have too much time on their hands with nothing to do. Playing a round of golf with mates or enjoying a drink at the bar will only fill up a certain amount of time in the day and you can’t go doing the same thing every day. Retired couples and singles alike will quickly become very unhappy once they run out of things to do.

Having ideas in your head about what to do in retirement is one thing; however actually doing them is another. Some experts are suggesting retirees have a day to day plan on what they want to do and even seek an adviser leading up to retirement. You will never be as busy as you were pre-retirement so it’s important to map out ongoing hobbies, part time work and social events before embarking on retirement.

Retired husband syndrome
Many couples get very excited about retiring together, travelling the world together and spending a lot of time together. If this is you then consider the fact that you and your other half may have been together for the past 30 years working full time. Aside from weekends and holidays, you never have to see each other for more than a couple of hours in the morning and night. Now all of a sudden you see each other 24 / 7 and may even start to discover that you can’t stand being together for a prolonged period of time. Determining your own hobbies, goals and friends will assist to avoid “retired husband syndrome’. Again, seeking help from an adviser may also assist in preparing you and your loving partner for retirement.

Not having enough money to fund retirement
Once retired you might have the goal to travel, see the world and complete your bucket list, unfortunately you might not have the funds to do so. Travelling can become very costly. A single international trip can set you back several thousand dollars if not more. By the time your second trip comes around you may find that your retirement funds are not adequate and you’ll need to start tightening the belt. Having a good financial planner early on can prepare you and set realistic goals for your retirement. This way you will have a clear expectation of what you can afford in retirement and prevent any nasty surprises once you’ve retired.

Entitlement to social security
At the moment the Australian pension age is age 65.5 and increasing with each year. During retirement some retirees aren’t aware of what social security benefits they’re entitled to. Even if you are receiving funds from your Superannuation benefits, you may still be entitled to a government age pension (subject to the income and asset tests). Having a good financial adviser by your side will ensure you’re kept up to date regarding any social security payments you’re entitled to.

Losing your identity from not being at work
For those of us who are passionate about our profession, this becomes our identity. Anytime your friends or family think of Engineer, Accountant or Doctor, they think of you. So it’s no surprise that once you retire you may feel like you’ve lost your identity, which may lead to discontent and even depression. Without the daily interaction of your work colleagues your mental and even physical health may start to deteriorate. Retirees who are not very active tend to decline rather quickly mentally and physically. Joining up to the local gym, taking up classes and just continuing to meet new people will have a longer lasting effect for you.

Financial independence gives you the freedom to make your own choices, speak to the team at JBS to start your retirement journey today.

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Over the next few years the age at which you can begin to start receiving the Age Pension will gradually increase from age 65 to age 67 (depending on your birthdate), with most people now having to be 65 and a half before they can access the Age Pension. Every time the Age Pension age increases or there’s talk of it increasing, you’ll hear all over the media people who now can’t retire because they have to wait a few more years before they can access the Age Pension.

Unfortunately for some, the Age Pension will be critical to fund their retirement, but the Age Pension age doesn’t need to be your Retirement Age. There’s a few things you can do to help reduce your reliance on the Age Pension and retire when you want to retire, our motto is that we’d rather you be working because you want to, not because you have to.

Super Contributions – Your employer pays 9.50% of your wage into Super as a Super Guarantee Contribution (SGC), but if your cash flow allows for it, you can top that up through a Salary Sacrifice arrangement or making Personal Concessional Contributions, up to an annual cap of $25,000 (which includes your SGC). This allows you to boost your Super Savings while at the same time helping you save tax personally.

You also have the opportunity to put up to $100,000 in as a Non-Concessional (After-Tax) Contribution and even up to $300,000 utilising the bring-forward rule in one year (if you haven’t made large contributions previously). Depending on your Super Fund, this can be a transfer of any cash you may have or even other assets such as shares. Remember that the new $1.6mil balance rules need to be taken into consideration.

Depending on your income, if you make a Non-Concessional Contribution the government may give you a Government Co-Contribution up to $500 on a $1,000 contribution (you can contribute more, but the co-contribution is based on a maximum $1,000). If your income is below $36,813 for FY18 you will receive the full $500 Co-Contribution, and you will receive a pro-rata amount if your income is above $36,813 but below $51,813.

Consolidate your Super – For some you may have multiple Super accounts, each time you start a new job your employer may start a new Super Fund for you if you haven’t given them the details of your existing Super Fund. If you’ve got multiple Super accounts it may be worth consolidating them into the one account which may help to reduce the total fees you’re paying on your Super accounts. However, you need to be careful that when you rollover any Super into another account you will lose any insurance you may hold.

Review your Insurance – Most Super accounts come with default insurance cover, and insurance is a very powerful tool to protect you and your family in case something happens to you. For those later in life, who are empty nesters, paid off the mortgage and are close to retirement, your need for cover may not be as important as someone who’s just starting a family and recently taken on a mortgage. Although insurance may be needed, it is always worth reviewing it on a regular basis to ensure your level of cover is appropriate and you’re paying for what you need, as the premiums come out of your Super balance. In some circumstances it may also be worthwhile holding some of your insurance cover outside Super.

JBS can help provide a full review of your Superannuation and Insurance and help you put strategies in place to ensure that you’re working because you want to, not because you have to. We’d rather you work towards your Retirement Age.

– Peter Folk –

It’s been more than 6 months since the Superannuation reforms came into force on the 1st of July 2017, and now with the Christmas break over and done with and most likely back to your day to day routine, now is as good a time as any to re-focus on your Superannuation.

One of the more prominent changes to Super that came into effect was the removal of the concessional tax treatment of Transition to Retirement Pensions (TTR Pension). Pre 1 July 2017 any money held within a TTR pension received a 0% tax rate on any income or realised capital gains, however post 1 July 2017 money held within the TTR pension is taxed at 15% (same as accumulation).

However, any funds that are held within an Account-Based Pension still receive the 0% tax rate (for balances up to $1.6 million). Unless you’ve met a condition of release, such as attaining age 65, you’re unable to commence an Account-Based Pension. The most common conditions of release are:

– Reaching preservation age (currently age 57 – depending on your date of birth) and retiring
– Reaching age 65

For superannuation purposes, a member’s retirement depends on their age and future employment intentions. A person cannot access Superannuation benefits under the retirement condition of release until they reach preservation age. At this stage, the definition of retirement depends on whether the person has reached age 60.

If you’re under age 60, then meeting a condition of release is a bit harder, effectively you generally have to completely cease employment and have the intention never to again work more than 10 hours per week. However, if you’re over age 60 (but under age 65), simply having a change of employment post age 60 means you may be able to satisfy a condition of release, opening up an opportunity to move your Super wealth into the tax-free pension environment.

For example, let’s say John (age 62) works full-time in a Supermarket, but for 6 weeks he was contracted to work on the Weekends as a Labourer. After 6 weeks John has stopped work as a Labourer, because of this John has now met a condition of release and can move his Superannuation savings into the tax-free environment. However, any later contributions made (employer and personal) and earnings will be preserved (i.e. can’t be accessed until a new condition of release is met).

Based on the above, if you’ve been operating a TTR Pension and potentially could meet a condition of release, you may be able to continue to receive the tax-free pension on your Superannuation benefits. Here at JBS we can help assess your options in relation to meeting a condition of release.

– Peter Folk –

For me a Bucket List is a critical factor in any Retirement Plan. Writing down your “bucket list” no matter how crazy, significantly increases the likelihood of Retiring Right.

Over the past few months we have had some of our clients send photos of their adventures around the world as they enjoy their retirement dreams.

We have had Paul drive across America with a long time school friend.

Densie & David go skiing in Whistler and visit Downton Abbey.

Peter & Debbie say goodbye to their employers and book trips to Ski the French Alps, visit family in the UK and even enrol to go back studying in the New Year on their return.

Phil & Linda who rented out their house for 12 months and have no permanent place of abode as they initially travelled around Australia before heading to Asia; eventually heading to Europe while the World Cup is on in 2018.

These are just a snippet of the numerous clients that we have all around the world living out their dreams and ticking off their bucket list.

It is fantastic to be able to share in our client’s success, but these results didn’t just happen overnight. In every case our clients have been planning and working towards these goals for years and in some cases tens of years.

Over the years I have helped hundreds of clients Retire Right and in my experience the clients who have written down their bucket list and regularly referred back to it; are kept accountable and tracked their progress towards their goals, are the ones who you see in these photos.

Early on in my own career a wise Retire Right client once said to me, I’m an overnight success after 20 years, so learn from him and START NOW.

We are approaching a great time of the year to complete some reflection and planning and I challenge you to come up with your own Bucket List. Be bold, aim high and start now as the earlier that you start, the more likely your dreams are to achieve.

For the record, the number one thing on my bucket list is to go the US Masters with my son and my dad. My wife and daughters are welcome, but my daughters are a little young to tell if they will like golf and I already know my wife’s answer….

What I wish for you is the opportunity to Retire Right so start the conversation.

– Warren Hanna –

Sometimes when you read an article that resonates with you, well you just have to make a video about it!

In Warren’s latest #RetireRight video he shares some of the take outs from an article on Brandon, a 34 year old young man who achieved financial independence at the age of 34 and freaked out on his first day of retirement.

“Brandon wrote that financial independence was something I talked about and thought about so much that it just became this abstract concept in my mind and didn’t relate to anything in real life. It was a long-term goal that I guess I never actually pictured achieving.”

Check out Warren’s video where he discusses some of the learnings that are critical to giving yourself a choice about retirement. Here is the link to the article where Brandon is featured.

You’re never too young and never too old to start thinking about your retirement!

– Warren Hanna –

Many young Australians are continually facing more and more financial challenges and hurdles as they enter adulthood.  Many are trying to save to buy their first home, travel the world, buy their first car, paying off their HECS debt, or all of the above.

As parents there are few little things that you can do to help teach your children about finances, which will go a long way for them in the future.  One of the most important is to teach your children how to do a budget or how best to save their money.

It can even be a worthwhile exercise including your children when it comes time to doing the family budget, this way they’ll learn that nothing comes for free and the things that they enjoy (such as their flashy smart phone) costs money, even if it’s paid for by the bank of mum and dad.

When you give your children their pocket money a good exercise can be to sit down with them and see if there’s something they wish to buy or spend their money on.  Once this has been determined you can then help them set a goal and savings plan. Teaching this at a young age can help them become disciplined with their money and set them up for the future when they need to save for the bigger things (such as their first home).

When it comes time to buying their first car or home they’ll most likely need to borrow money to help them (especially in the case of the home), so it’s worthwhile teaching them about debt and how it works. It may sound silly but introducing them to how debt works will help them understand that when the time comes they’re not just going to be given free money, but they’ll have an obligation to pay that money back plus interest.  You’re older children may understand this but the younger ones may not quite grasp this.

At JBS we have wide range of services to help clients achieve financial freedom. For the younger clients we have a Cash Coach program to help with savings and budgeting and a Retire Right program which is tailored towards our older clients to help with the transition from working life. These services help our clients overcome their biggest financial challenges and achieve their goals.  We even offer services to our clients children to help them on their journey.

– Peter Folk –