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