Shirley turned 75 earlier this year. She had a very happy birthday.
Happier than it might have been had she not had a serendipitous meeting 12 years ago with a new financial planner.
That planner’s foresight is now paying off in spades. At the time she met him, Shirley was 63 and already using a ‘financial planner.’ Although ‘planner’ was perhaps overstating things a bit. Her financial ‘plan’ was to live on a Centrelink part pension and periodically withdraw all of her private superannuation by the age of 70. Then she was going to live on the aged pension for the rest of her life. Her plan had been to run out of money by her 70th birthday.
That was five years ago now.
The new adviser had better ideas. He sat down with Shirley and looked across her whole situation. He realised that she was only claiming a part aged pension, as she was managing her assets in completely the wrong way and it was mucking up the assets test. She also had a strange concentration of her wealth (around $170,000) in some highly risky assets. What was even worse, she was paying a fortune to the ‘adviser’ who had arranged all this for her.
We put ‘adviser’ in inverted commas like that because, in fact, her ‘adviser’ was working for someone else. He belonged to an institutional ‘dealer group’ of advisers, owned ultimately by a big bank, and his real job was to ensure that she kept her wealth within the clutches of the institution for which he was working.
To cut a long story short, Shirley’s new adviser assisted her to move her super to a self-managed super fund, which then invested in a combination of a simple cash management account and a couple of index funds. Low-risk, conservative and – most importantly – low cost. She commenced a pension from the SMSF that also allowed her to increase her Centrelink benefits, and in combination the income stream from her fund and the increase in Centrelink benefits gave her almost as much to live on each year as she had previously been withdrawing from her super each year.
Fast forward to now and Shirley still has almost $170,000 in her super fund. She is as wealthy now as she was 12 years ago – even though she has not worked a day since then.
But that is not what made Shirley’s 75th such a happy birthday – although 170,000 unexpected dollars surely did not hurt. What made it a really happy day is that she spent it in the UK, where she was visiting her daughter and two grandchildren. It was not quite the party that Queen Elizabeth threw, but it was still a wonderful day. And this was not a one-off. She has visited her family every year since she met her new adviser. Usually, she also tacks on a trip to somewhere else along the way. This year it is Spain.
This summer she is going one better. She is buying her daughter and one of the grandchildren an airfare to Australia. They will spend Christmas together at her place. First time ever.
After that Shirley is off to India for a month.
Until she met her new adviser Shirley thought that trips like this would be beyond her. Remember, the plan was to spend all of her money by the age of 70, and then stay put here in Australia.
Shirley did not get started with her new adviser until she was 63. Imagine how good things could be if she had started when she was 53, or 43, or 33. Time means money, especially when it comes to retirement planning. It is never too soon to start.
So, why not come and see us and let us show you how you can make the most of your retirement. Who knows where you might be able to celebrate your own 75th birthday.