Has all the Money Gone? - Brisbane

Has all the Money Gone? - Brisbane 25th October @ 6:15pm, Regatta Hotel.

Don't forget to RSVP today - for great advice on reaching your goals in the current financial climate.

Kerrianne Hebinger

Financial Planning Essentials

e: fpe@finplans.com.au

w: www.finplans.com.au

It's not all plain sailing

I had a fantastic day yesterday - the weather was superb, light winds that picked up over the afternoon, great company, and we were all chasing each other around bouys on boats  - perfect, right up until the time that 170kg boat was dropped on my foot. I was lucky - my foot is all shades of green & very tender, but no bones broken, and walking will be more of a  hobble for a few days.

The general ache down near the accelerator all the way home did have me thinking about the speed that it all happened at - there was no way I could have seen it coming, or avoided it.

Last week a friend of mine shared some of his frustrations over his current experiences with needing to make claims against his Income Protection insurance, and I share them here with his consent.

"We all know we need it and think we have it,  but how do we know if  we have the right coverage, and that the company we are covered with is morally legitimate. MY recent experience suggests they are only really  interested in shareholder returns and despite claiming to cover you for illness, death or floods, that they are experts in managing to weedleout of paying out, and you only find out when when you faced with such a crises.

Unfortunately, I have recently had experience in all these areas, and to my dismay an Insurance company I thought was respectable, is well kown as being litigous, have lots of fine print that even if you managed to read it, the wording is so obtuse that the real meaning of the clause is not clear. This well known company it turns out have a reputation for fighting every payout, their back office is slow and inefficent, so when you are waiting for a legitimate monthly payment they have been upto 6 weeks behind in sending it. This happens when you are so ill you cannot work."       

Insurance is essential, but insurance companies suffer from a poor public perception, that is caused by a few bad experiences usually with the same companies, and applied to all. It's a shame that those companies with a good reputation for handling claims well are tarnished with this brush, but claims are made at the lowest point in a persons life - when something has gone badly wrong - and it is unacceptable for an insurer to not step up to the plate and provide the support at the time when it is needed.

Not all insurance policies, or insurers, are the same -

Kerrianne Hebinger

Financial Planning Essentials

e: fpe@finplans.com.au

w: www.finplans.com.au

You can make a difference

The arrival of each new day brings opportunities to brighten your world.

"A goal without a plan is just a wish" - Antoine de Saint-Exupery

Kerrianne Hebinger

Financial Planning Essentials

e: fpe@finplans.com.au

w: www.finplans.com

Caring for Older Australians



At the instigation of Nick Sherry, the assistant Treasurer, an inquiry has been held to consider what reforms may be necessary to meet the many challenges of supporting Australia's ageing and diverse population.

"These key points were released with the Caring for Older Australians inquiry report on 8 August 2011.

Over one million older Australians receive aged care services. The range and quality of these services have improved over past decades, but more needs to be done. 

Future challenges include the increasing numbers and expectations of older people, a relative fall in the number of informal carers, and the need for more workers. By 2050, over 3.5 million Australians are expected to use aged care services each year.

The aged care system suffers key weaknesses. It is difficult to navigate. Services are limited, as is consumer choice. Quality is variable. Coverage of needs, pricing, subsidies and user co-contributions are inconsistent or inequitable. Workforce shortages are exacerbated by low wages and some workers have insufficient skills.

The Commission’s proposals address these weaknesses and challenges and aim to deliver higher quality care. The focus is on the wellbeing of older Australians — promoting their independence, giving them choice and retaining their community engagement. Under this integrated package of reforms, older Australians would:

• be able to contact a simplified ‘gateway’ for: easily understood information; an assessment of their care needs and their financial capacity to contribute to the cost of their care; an entitlement to approved aged care services; and for care coordination — all in their region receive aged care services that address their individual needs, with an emphasis on reablement where feasible
• choose whether to receive care at home, and choose their approved provider
• contribute, in part, to their costs of care (with a maximum lifetime limit) and meet their accommodation and living expenses (with safety nets for those of limited means)
• have access to a government-sponsored line of credit (the Australian Aged Care Home Credit scheme), to help meet their care and accommodation expenses without having to sell their home. A person’s spouse, or other ‘protected person’ would be able to continue living in that home when an older person moved into residential care
• choose to pay either a periodic charge or a bond for residential care accommodation
• if they wish to sell their home, retain their Age Pension by investing the sale proceeds in an Australian Age Pensioners Savings Account
• have direct access to low intensity community support services
• be able to choose whether to purchase additional services and higher quality accommodation.

Limits on the number of residential places and care packages would be phased out, while distinctions between residential low and high care and between ordinary and extra service status would be removed.

Safety and quality standards would be retained. An Australian Aged Care Commission would be responsible for quality and accreditation; and would transparently recommend efficient prices to the Government"

The entire report can be found at http://www.pc.gov.au/

Productivity Commission 2011, Caring for Older Australians: Overview, Report No. 53, Final Inquiry Report, Canberra

Kerrianne Hebinger;
Financial Planning Essentials
fpe@finplans.com.au

w: http://www.finplans.com.au/

Death - an expensive option

Without doubt, the laws surrounding Superannuation have numerous grey areas, and even after a couple of decades there continues to be debate over many aspects.

In July, the Australian Tax Office (ATO) released its view on when a superannuation income stream (a pension) commences and ceases. It would seem a fairly simple topic, but thanks to Capital Gains Tax and the tax free environment most pensions live in, it is now a hotly contested issue.

In its simplest form - the ATO have formed the view that as soon as you die, then you no longer can be paid your pension, and it also ceases. The big kicker here will be for those individuals with assets in super they've held for a reasonable period of time. Those assets will lose their tax free status prior to being paid out to a beneficiary, and will be assessable for Capital Gains Tax. So the next generation will potentially be poorer, and the Government coffers will be a happier place. 

To add insult to injury, they are also considering back dating this practice to 2007 - so if a pension has ceased and been paid out in the last 4 years, then there is some form of pain in the future in the form of administrative burden and additional tax.

Now, in defence of the Tax Office, they are merely the messengers. They can only interpret, and apply, the law that is written - they don't make the mess in the first place. At this stage this is only their preliminary view, there is room for debate, and many of the professional bodies have taken up the call.

I'll let you know what the final position is - in the meantime pop it under your hat for consideration.

Kerrianne Hebinger

Financial Planning Essentials

e: fpe@finplans.com.au

w: www.finplans.com.au

Where has all the Money Gone?

Join us at Southport Yacht Club, Gold Coast on the 13th October 2011 at 6.15pm.

Kerrianne Hebinger

Financial Planning Essentials

e: fpe@finplans.com.au

w: www.finplans.com.au

A great Retirement needs a long term plan

Australians are lovable for their "she'll be right attitude" and unwavering optimisim that the future will sort itself out.

This works reasonably well whilst you have the time, and income, to react to the ups and downs of life - not so well when you're nearing retirement.

There is no doubt that Australia's population is ageing, and that within the next couple of decades, there won't be sufficient worker bees to continue to support those heading into a quieter life.

In fact by the time 2050 rolls along, those aged 65 to 84 will have doubled in number, whilst those over 85 will rise from 0.4million to 1.8million. At present, health, age-related pensions and aged care spending, accounts for approximately one quarter of the government budget. This is estimated to rise to half by 2050. (1)

Most retirees existing solely on the age pension will tell that it's not a luxurious life - in fact, many barely make it from one pension day to another, and it causes no end of stress.

You may be thinking that 9% of your hard earned pay into super will surely be enough. It will help, but will it result in a balance of around $700,000 that will allow you draw $39,000 a year until you turn 90? (see my blog - How much do you need to Retire?) Is $39,000 a year enough to do what you want to do, and what happens if you live past 90?

If you're 50, thinking about retiring at 65, then you've reached a critical time when shoring up your retirement options needs to be a key factor in your financial plan for the next 15 years. Note - I didn't say "this year" or "at this time".

Sometimes there needs to be some hard decisions made early on to ensure success for the future. A long term plan will not only provide you a goal, but also a framework for making the short term decisions - and making sure they're the right decisions.

1. the 2010 intergenerational report - Australian Government - Treasury

Kerrianne Hebinger

Financial Planning Essentials

e: fpe@finplans.com.au

w: www.finplans.com.au

Shares - It was a hard day in the office

If "the sharemarket" was a new ride at a theme park, it would be overrun by the thrill seekers and those with stomachs immune to the sudden unexpected downward lurches and the equally awesome climbs to the stratosphere.

Surrounding the ride would be those of us that have a better grasp of mortality - happy to smile indulgently at the insanity of those on the ride - but not getting on it for any money.

It's easy to weigh up the pros and cons of taking such a ride - after all it's right in front of you, as is all the information you need to make a choice that suits you. Hop on, or sit on the sidelines.

Unfortunately, decisions about the real sharemarket are not so easy. Every man and his dog has an opinion, getting to the basic facts is more difficult, it's often not driven so much by logic but emotion, and overwhelmingly people rely on the media to form the basis for their decisions.

It is worth remembering that the media is ultimately a business that needs to sell its product. To that end, they want to grab your attention, and the best way to do that is to sensationalise everything. I didn't see any headlines in great bold type saying Rio Tinto reports record first half earnings of $7.8 billion, up 35% on the 2010 first half although they did.

Take the headlines with a grain of salt, consider carefully well balanced non sensationlist articles, and seek some professional advice - you'll be surprised at how much more there is to the story.

Kerrianne Hebinger

Financial Planning Essentials

e: fpe@finplans.com.au

w: www.finplans.com.au

Insurance - why don't we get it?

Whilst I'm on a roll..

• Australian's are the great uninsured.
• We're happy (or at least see the value) to insure our houses and our cars.
• We even begrudingly pay health insurance premiums.
• We also seem to believe we're immortal.

Here's the reality:

• You have a more then 60% chance of being disabled for more then 1 month during your working life and a 1 in 3 chance of being disabled for more then 3 months (1)
• There are 60,000 strokes each year (2)  - an average of one every 10 minutes. 42.5% result in disability
• 684,000 people are estimated to have chronic heart disease (2)
• Around 108,000 new cases of cancer are diagnosed each year and 109 people die due to cancer related illness each day (3)
• 1 in 5 people aged 16-85 have experienced a mental disorder at some time in any 12 month period (2)

and there's much, much more.

Life/TPD, Trauma and Income Protection Insurance are the most important investments you can make.

1 - Interim report of the Disablity Committee - Institute of Actuaries of Australia 2000

2 - Australia's Health 2010, Australian Institute of Health and Welfare, December 2010

3- Cancer in Australia, an overview, Australian Institute of Health and Welfare, December 2010



Kerrianne Hebinger

Financial Planning Essentials

e: fpe@finplans.com.au

w: www.finplans.com.au

Insurance - it's all in the fine print

Let me just start by saying - Insurance companies do pay out - they really do.

Unfortunately in the rush to make it easier for everyone to get insurance cover, not all the relevant information is always being covered at the time the policy is applied for, and often is not being assessed properly to start with.

Whilst this appears to make getting insurance in place easier, it can lead to some extremely stressful experiences at the worst possible time - when you're trying to make a claim.

To ensure you are in the best possible position at claim time make sure that:

• you read the product disclosure document carefully

• take particular note of the paragraphs that say something like

 " when we assess a claim we will also rely on any information you have disclosed to us as part of your application. Where we have not verified information at the time of application we reserve the right to verify it at the time of the claim."         and

"You have a duty to disclose to the insurer every matter that you know, or could be reasonably expected to know, is relevant to the insurer's decision whether to accept the risk of the insurance, and if so, on what terms"

• Don't assume that if you've completed an application and they haven't asked exactly the right question that will draw an answer from you about an issue you know about that it will be alright - it won't.

Insurance is invaluable - especially when the unexpected occurs and times get tough. Make sure it counts.

Kerrianne Hebinger

Financial Planning Essentials

e: fpe@finplans.com.au

w: www.finplans.com.au

National campaign to showcase the best that Financial Planners can be

Released by the Financial Planning Association Australia - 20th July 2011

The Financial Planning Association (FPA) will continue to reinforce its role as the leading voice of professional financial planning for members and to the benefit of all Australians with an advertising campaign taking place in national and regional media in September.

The campaign, funded by member contributions, aims to raise awareness among all Australians that not all financial planners are the same and positions FPA members as financial planners working to professional and ethical standards much higher required by law. In particular, Certified Financial Planner® professionals are positioned as working to the highest global standards in financial planning.

The advertisements, developed by Sydney advertising agency Banjo, are expected to appear on national free-to-air metropolitan, regional and national TV, mainstream and regional newspapers and online, throughout September.

To date, over 2,000 FPA members have been consulted on the proposed advertising approach and the TV advertisement is now in post-production following filming last month.

“This campaign is critically important to our members, especially our 5,800 Certified Financial Planner® professionals, who deserve respect and recognition for the very high standards they work to. Just as important, though, it will provide consumers with a way to find a much-needed trustedn adviser to manage their finances. Because of this, the campaign serves our members and the national interest in a powerful way,” FPA CEO Mark Rantall said.

“We are on track to roll this out later this year and are very excited about the creative we’ve already seen and the strong support from early consumer testing.”

To drive the new brand and advertising campaign the FPA has appointed Lindy Jones as its new General Manager of Marketing. Ms Jones brings to the role over 17 years’ experience in business development and marketing roles in financial planning and funds management in Australia and overseas, notably the UK.

That includes experience as Marketing Director for Deutsche Bank in Europe and the UK, launching retail funds for Macquarie Bank in London and, most recently, in a key business development role at Co-operative Financial Services in the UK. Ms Jones has also worked privately as a marketing consultant to the financial services industry.

“Bringing Lindy on board at this stage marks the next logical step in our development and our continuing campaign to raise the professionalism, standing and profile of our members and our
organisation,” Mr Rantall said.

“We’re excited about the upcoming launch of the new FPA advertising campaign and we believe that someone with Lindy’s credentials and wide ranging industry experience will help us promote both the benefits of financial planning to the wider community and the advantages of seeking an FPA member when seeking advice.”

Kerrianne Hebinger

Financial Planning Essentials

e: fpe@finplans.com.au

w: www.finplans.com.au

It's not just about the money

Over the course of the last 200 years or so psychiatrists have been keeping track of what events in our life cause us the most stress. The list has changed as our way of life changes, but ultimately the top reasons for stress remain the same.

Death or serious injury/illness of a spouse or family member always ranks No 1 followed closely by other family issues - Divorce, Separation, Infidelity, becoming a single parent, a new baby, assuming responsibility for a sick or elderly family member.

Financial issues such as foreclosure on a mortgage, becoming unemployed, general financial stress, loss of income through illness or accident form a core component of the top 20 concerns we have.

What might be surprising is that Retirement usually ranks in the top 10 and not just because of concerns over how you might afford it. The transition from fully occupied with constant contact with other people on a daily basis, to perhaps only seeing your significant other each day, and being solely responsible for occupying your daylight hours can be huge.

The emotional and social impacts of these life events should be considered in equal measure to the financial outcome.

Kerrianne Hebinger

Financial Planning Essentials

e: fpe@finplans.com.au

w: www.finplans.com.au

Investment Doubts

I don't know about you, but I'm finding the sheer volume of opinions being broadcast from every direction very akin to trying to detect a single cicada voice from the millions that invade our summer evenings. Every voice is loud and strident, all talking about the same thing, but each with a different opinion varying wildly from - we're on the edge of recession,  through to a highly optimistic that we're on the edge of a great recovery.

I've had more then one conversation in the last few weeks with investors concerned about where the markets are going. The over-riding fear seems to be that the markets will tank to the same degree that we saw only a couple of years ago cutting investment values by up to half again. Confusion and uncertainty abounds about what, if anything, should be done.

I am not blessed with the predictive powers required to tell you with any certainty what the future holds. 

I can suggest that if you're losing sleep, or your current investments are leaving you feeling out of control or stressed, then you should consider how appropriate they are for you at this time.

The really complex financial universe can be broken down into some very simple rules that work just for you.

Don't forget that your super is also an investment that you own!

Kerrianne Hebinger

Financial Planning Essentials

e: fpe@finplans.com.au

w: www.finplans.com.au

Gotta Laugh

"People are living longer than ever before, a phenomenon undoubtedly made necesssary by the 30 year mortgage" - Doug Larson

"Despite the cost of living, have you noticed how it remains so popular?"

and a  joke to round it off.

The Australian Federal Police sent three photographs of a man wanted for tax evasion to their Irish counterparts, saying that they had reason to believe that he had escaped to Ireland. The photos were front face and two side shots.

Three weeks later, the Irish police sent back a message: "We got the fellow in the middle, but we are still looking for the other two."

Kerrianne Hebinger

Financial Planning Essentials

e: fpe@finplans.com.au

w: www.finplans.com.au

Lost Super

In Australia, there are an estimated 5.8 million super accounts worth approximately $18.8 billion dollars currently separated from their owners. 

It can be challenging enough to fund retirement,  without losing money that belongs to you along the way.

The Federal Government are doing their bit - they've recently introduced legislation to enable super funds to use Tax File Numbers to identify the owners of these lost souls, and are intending to introduce laws enabling consolidation of the various accounts by January 2012.

Kerrianne Hebinger

Financial Planning Essentials

e: fpe@finplans.com.au

w: www.finplans.com.au

How much do you need to Retire?

The Association of Superannuation Fund of Australia Ltd (ASFA), last week released updated figures on what you'll need to fund your retirement.

For those wanting a comfortable retirement which will allow you to participate in recreational activities, travel occassionally, and generally enjoy a standard of living that involves new clothes, a good car, and required updates to domestic objects such as fridges and electronic equipment, you'll need $54,562 per year for a couple, and $39,852 per year for a single.

An annual income of $31,263 per couple and $21,587 for a single  will cover the basics but not much more.

If you'd like to look at the report in detail you'll find it here:

http://www.superannuation.asn.au/mr110714/default.aspx

Planning for Retirement is not so much about planning for not working, but rather organising your financial situation so that you can choose how you want to live.

Kerrianne Hebinger

Financial Planning Essentials

e: fpe@finplans.com.au

w: www.finplans.com.au

Proposed changes to Super Contributions

Amongst the many things the Govt constantly fiddles with is how much you are allowed to contribute to your super fund. In this years budget they're at it again, and are now proposing that:

       If you are 50 years or older,

• and have a total super account balance of $500,000 or greater, they will only allow you to contribute $25,000 in pre tax dollars.

• If your account balance is less then $500,000 then you will be able to add up to $50,000.

This is due to take effect from July 1, 2012 which leaves you with this year to consider your options and take action to keep your account balance under the $500,000 mark so that you can continue to take advantage of the higher contribution limit.

This measure is only a proposal and has not yet made it to legislation, and may not come to pass, but I would at least start looking at your options, because you may run out of time to get eveything in place if it does.

Kerrianne Hebinger

Financial Planning Essentials

e: fpe@finplans.com.au

w: www.finplans.com.au

Super Wars

I find it utterly bizarre that the financial services industry can spend so much of its' energy effectively self destructing. For an industry who's entire reason for being is to support and improve the well being of others, it is just staggering that it is so hostile internally.

There are multiple issues in dispute, but the super funds seem to have taken out their own special license to wage public warfare, and they have blazed a trail of destruction and confusion that rivals (and at times is very akin to) a pack of 6 year olds rampaging around on a treasure hunt in a lolly shop.

Superannuation will form a major part of the funding for retirement, and will most likely become the second largest asset you own, second only to your house.

In the end there is no black and white - it's not grey either.

Of the three main options for super - industry funds , retail funds, and your own self managed super fund - the best one is......the one that suits you.

It's that simple.

Your super is an investment you make all your working life, and will depend upon for 20-30 years later on.
It's not about expensive advertising campaigns and sensationalist headlines.

It is about you.

Kerrianne Hebinger

Financial Planning Essentials

e: fpe@finplans.com.au

w: http://www.finplans.com.au/

Flood Levy

If you earn over $50,000 of taxable income in a year the tax man will be asking for a small contribution to assist in paying for the rebuilding required in the aftermath of the recent natural disasters.

The actual contribution required will depend on your taxable income:

• The first $50,000 will not be affected.
• Income between $50,001 and $100,000 will be taxed at half a cent
• Income over $100,000 will be taxed at $250 plus 1c for each $1 over the $100,000

It started on July 1 2011, and should finish on 30 June 2012.

Here's the link to the Tax Office website if you'd like more information.

http://www.ato.gov.au/individuals/PrintFriendly.aspx?ms=individuals&doc=/content/00216565.htm

Some quality time spent at the beginning of each financial year can make a significant difference to the amount of tax you pay each year.

Kerrianne Hebinger

Financial Planning Essentials

e: fpe@finplans.com.au

w: http://www.finplans.com.au

Property in Super - Borrowing

There's a lot of general interest in the concept of purchasing a residential investment property inside superannuation, particularly over the last couple of years when the stockmarket has given the roller coasters at the theme parks are run for their money.

To add to the enticements of an investment that most people feel they understand (at least they can see it), and that has been fairly stable for decades, the banks have been working on developing options whereby a super fund can borrow to buy.

A few quick pointers:

• This is only an option if you have a Self Managed Super Fund (SMSF)
• On average you can borrow about 70% of the value of the property so you need a balance in your super fund of at least 30%.
• You need to contribute enough to your SMSF to ensure that all the expenses and the mortgage repayments can be met.
• If something goes wrong the bank will only be able to sell the house in question to recoup their funds. These loans are set up as 'non-recourse' and prevent access to other assets the super fund may have.
• It is possible that if you have enough funds outside super, that you can be the lender to the super fund, but the same rules apply to you as to any other commercial lender. 
• Your SMSF will own the property - not you.
• Your fund is required to hold its assets solely to provide a retirement income and is, generally speaking, unable to provide any current day entitlements. This means that no-one in your immediate or extended family, or who is in any way related to you, will be able to use the property.
• There can also be issues with renovations/repairs whilst the property is funded through borrowings.

Let me know if you're thinking about getting into an investment property in super, or you already have one and would like to chat about any concerns you have.

Kerrianne Hebinger

Financial Planning Essentials

e: fpe@finplans.com.au

w: http://www.finplans.com.au/

Life after Death

An interesting conversation with my best friend last night started whilst discussing the variable nature of the 8 week old who has invaded her house, and much to her surprise, (said child also being the first) totally turned her life upside down. What started out as our usual light and breezy catchup spiralled quickly into a serious, and rapid, planning session when I blithley asked her if she'd updated her will, and had a Power of Attorney and insurances organised to support the major changes that had occured in her life in the last year - namely marriage and newborn.

"No" was quickly followed by OMG!

The impact if anything were to happen to either partner (or both) would be significant not only to the immediate family of mum, dad and child, but also potentially to their support network - grandparents, aunts, uncles and friends.

Most of us consider what might happen if mum or dad were no longer around, but who will take on the responsibility & cost of raising this child  - as you would want them raised - if something were to happen to both parents? Unfortunately these events do happen, and more and more grandparents in particular, are finding themselves starting again, raising young children and guiding them through their education until at least age 18, at a time when they were expecting to have more time to themselves and take life a bit easier. Even more sadly, if the parents didn't have appropriate insurance and clear wills, this can also become an increasingly stressful time as the guardians seek to cover the costs of raising a child when their income levels are dropping significantly - sometimes with a pension only.

Needless to say, my friend has a list of things to do today.

She and her husband need to:

• think about who they would be comfortable with raising their son
• make sure that person is aware of what their preferences for his life are, and is prepared to take on this awesome responsibility
• also consider how to protect the financial legacy left to their son if they are unable to raise him. You want to be absolutely certain that the funds left are used to the benefit of the child.
• Get Life/TPD, Truama, and Income Protection insurances sorted out so that if an unexpected event occurs, money is not one of the issues they have to deal with
• Gather a list of what they own/owe, and talk to a solicitor about how that should be distributed, taking into consideration all the possible combination of events
• Organise an Enduring Power of Attorney with medical clauses to ensure that control of their assets remains in their hands if one of them is incapacitated.

Our sole focus today is protecting this precious child and ensuring that his future is well cared for.

If you have young children in your extended family, speak with the parents, or show them this blog if that's easier, and encourage them to consider everything we've discussed. 

Take 5minutes in your busy day - think about what you may need to do, then start - today.
If you would like some help with that just let me know.

Kerrianne Hebinger

Financial Planning Essentials

e: fpe@finplans.com.au
w: http://www.finplans.com.au

Welcome

Welcome to the Financial Planning Essentials online blog.
www.financialplanningessentials.com.au