Retirement Update > ISSUE 2
JUNE 2014
Jo Lamble
Maurice Patane
Maggie Beer
Jeff Bresnahan
Susan Ryan
Just the two of us
Budget blues
Eat well for less
Balanced funds set to deliver
Your right to work
retirement planning
superannuation
aged care pension government entitlements
YOURLifeChoices Retirement Update June 2014
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How Apia rewards your experience.
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FROM THE EDITOR
Welcome to YOURLifeChoices JUNE Retirement Update
R
etirement means different things to different people, but good health, stable finances, strong relationships, relevant activities and more than a sprinkling of fun, are all elements which will make it successful. If you’re not quite sure if you’re ready for retirement, either emotionally or financially, then our quick quiz on page 10 may give you an indication of how you are really tracking. Legislation to be introduced following the 2014/15 Federal Budget means that we all have to take a good look at our retirement plans, whether we have to work longer, save harder, or reconsider our current lifestyle. And while many will think the measures announced are particularly harsh, our no-nonsense financial planner, Maurice Patane has quite a different view, believing that we all have to take responsibility to ensure our own, and country’s, financial future.
Published by: Indigo Arch Pty Ltd Publisher: Kaye Fallick Editor: Debbie McTaggart Assistant Editor: SJ Fallick Copy Editor: Melanie Ball Advertising: David Fallick Designer: Word-of-Mouth Creative Phone: 61 3 9885 4935 Email: admin@yourlifechoices.com.au Web: www.yourlifechoices.com.au All rights reserved, no parts of this book may be printed, reproduced, stored in a retrieval system or transmitted, in any form or by any means, electronic, mechanical, recording or otherwise, without the permission in writing from the publisher, with the exception of short extractions for review purposes. IMPORTANT DISCLAIMER No person should rely on the contents of this publication without first obtaining advice from a qualified professional person. This publication is distributed on the terms and understanding that (1) the publisher, authors, consultants and editors are not responsible for the results of any actions taken on the basis of information in this publication, nor for any omission from this publication; and (2) the publisher is not engaged in rendering legal, accounting, financial, professional or other advice or services. The publisher and the authors, consultants and editors expressly disclaim all and any liability and responsibility to any person, whether a subscriber or reader of this publication or not, in respect of anything, and of the consequences of anything done or omitted to be done by any such person in reliance, whether wholly or partially, upon the whole or any part of the contents of this publication. Without limiting the generality of the above, no publisher, author, consultant or editor shall have any responsibility for any act of omission of any author, consultant or editor. Copyright Indigo Arch Pty Ltd 2014
On the issue of finance, Jeff Bresnahan of SuperRatings offers some general advice on risk versus return in a super fund and NICRI’s Craig Hall explains the different types of equity release products. We have the updated figures from the ASFA Quarterly Retirement Standard so you can calculate how your own budget stacks up. And Kaye has explored the lessons that have been learned by Mark Weir, a Storm Financial investor who is now being threatened with foreclosure on his home. Our regular updates on government, pension, health and technology offer a snapshot of ‘the need to know’, while in legal news, Rod Cunich of Slater & Gordon explains how to ensure your medical wishes are followed. We also have important details of the changes to aged care funding which take effect from 1 July 2014. And Age Discrimination Commissioner Susan Ryan explains your exact rights in the workplace. For accomplished cooks, or those stepping into the kitchen for the first time, Maggie Beer offers her recipe for Beef Stew with Olives and Orange – delicious. And if you’re planning to spend more time with your partner in retirement, relationship expert Jo Lamble has some sage advice for when it’s just the two of you. Updating your retirement choices, Debbie McTaggart Editor
YOURLifeChoices Retirement Update June 2014
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from the publisher
Ignorance is never bliss According to nearly 4500 respondents, the outlook is bleak.
CONTENTS From the Editor 3 From the Publisher 4 Retirement attitudes survey 5 Government update 6 Pension update 7 Retirement living costs 8 How does your spending compare? 9 Retirement quiz 10 Health update 13 Technology update 14 Your rights at work 15 Budget detail revealed 16 Aged care: July 1 update 18 Super update 20 Living wills explained 21 Deals and discounts 22 Eat well for less 23 Lessons learned 24 Equity release explained 26 Diary dates 27 The two of us 28 Find work after 50 29 Club YLC 30
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I
n the wake of this year’s Federal Budget we asked YOURLifeChoices’ 100,000 members their views on retirement, retirement income and retirement affordability. According to nearly 4500 respondents, the outlook is bleak. The infographic on the right shows some of the responses, but the story behind the graphs is even more worrying. The respondents to this survey comprised 56 per cent baby boomers (current age 50-67) and 44 per cent seniors, with 45 per cent fully retired, 20 per cent working unpaid (volunteering), 18 per cent working full time and 17 per cent working part time. A clear majority (60 per cent) of those who are already retired and on a full Age Pension confirm that the current payment is insufficient to lead a modest lifestyle. This is not an opinion – it is a factual response from people who have tried to live on the pension and found it wanting. Worse still, when we ask those who are yet to retire (of whom 75 per cent are likely to need a full or part pension), if they know how much the Age Pension pays, 76 per cent say ‘No’ and of the 24 per cent who replied ‘Yes’, a staggering 80 per cent stated the wrong amount. Ignorance is bliss, but not when it comes to your retirement income. Similarly, when it comes to confidence levels about having sufficient savings to fund a reasonable lifestyle, 62 per cent of our members were not confident at all. When asked why they thought they did not have enough, most felt that they had never earned enough to save the required amount (38 per cent) or had suffered unexpected economic hardship (35 per cent). Despite the introduction of compulsory super more than 20 years ago, the boomer cohort has clearly had
* YOURLifeChoices Retirement Attitudes Survey 2014 was conducted in June 2014, receiving 4303 responses to 19 questions.
YOURLifeChoices Retirement Update June 2014
insufficient time – and I would argue, government support – to create a reasonable retirement nest egg. And finally, the Budget. Yes, all those media polls seem to be supported by our survey responses, with 55 per cent agreeing that their retirement plans and lifestyle will be affected by the proposed pension changes. How will our retirees and pre-retirees deal with this? The overwhelming majority of respondents (68 per cent) plan to cut their household costs, while 19 per cent will work longer and 12 per cent hope to increase their income. So what do these results tell us about the state of retirement in Australia? Sadly, it confirms that 20 years of successive federal governments’ inaction on financial literacy for retirement means that most older Australians are severely underfunded for the extra years they will probably live. Not only do they have insufficient savings, but they also have little idea how to grow their nest eggs and believe cutting spending to be the only solution. Reversing the Future of Financial Advice (FoFA) legislation, to allow commissions for bank staff selling financial products and removing the need for financial planners to act in their customers’ best interests, is the worst policy at the time of greatest need. What we need, instead, is a bi-partisan approach to retirement income and the challenge of helping older Australians to help themselves. What do you think? Kaye Fallick Publisher
RETIREMENT INSIGHTS
What you told us YOURLifeChoices Retirement Attitudes Survey 2014
*Do pre-retirees know how much the Age Pension pays per fortnight?
*Will the pension changes proposed in Budget 2014 change your retirement?
*Are you confident your retirement savings are sufficient for a reasonable lifestyle?
Of those who answered ‘Yes’ 80% were incorrect.
How will it change?
Why?
• Work longer 19% • Try to increase income 12% • Reduce household costs 68%
• Never earned sufficient income to save enough 38% • Unexpected economic hardship 35%
No 76% Yes 55% No 62%
Is the Age Pension sufficient to lead a modest lifestyle?
No 60%
“Retirement should mean relaxing and enjoying the final years, instead its worry about food, bills, hospitals and cash flow. If I wasn’t already grey I soon would be.”
* YOURLifeChoices Retirement Attitudes Survey 2014 was conducted in June 2014, receiving 4303 responses to 19 questions.
YOURLifeChoices Retirement Update June 2014
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Government update
Government update JUNE 2014 The beginning of the new financial year sees some significant legislative changes, many resulting from the Federal Budget 2014/15. So how will you be affected from 1 July 2014 onwards? Aged care reforms The second round of the Living Longer Living Better reforms which were announced on 20 April 2012 will commence on 1 July 2014. These will include: · income testing arrangements for home care packages · changed means testing in residential aged care · new accommodation payment arrangements for residential aged care · removal of the distinction between high and low care in residential care · expansion of the Australian Aged Care Quality Agency
See our article on page 18 for further detail of what these changes mean.
Fuel excise indexation* From 1 August 2014 the reintroduction of the indexation of fuel excise will commence and is expected to cost car owners, on average, 40 cents per week. The revenue raised is intended to establish a more stable source of Commonwealth road funding. You can find out more at ATO.gov.au.
Introduction of debt levy* The Temporary Budget Repair Levy will run from 1 July 2014 to 30 June 2017 and be payable by individuals who earn more than $180,000 per annum. The two per cent levy, will affect 400,000 taxpayers in the 2014/15 financial year. Find out more about the progress of legislation at APH.gov.au.
Restart* A new wage subsidy, Restart, will be introduced from 1 July 2014 to encourage businesses to employ those Australians, over 50 years of age, who have been on income support for at least six months. Employers who hire mature-aged job seekers on a full-time basis will receive a subsidy of $10,000 over 24 months, paid at incremental stages. You can find out more about Restart at Budget.gov.au. *These measures were announced as part of the Federal Budget 2014/15 and are subject to legislation.
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YOURLifeChoices Retirement Update June 2014
Pension update
Pension update March 2014 The cessation of the Seniors Supplement will see CSHC holders lose up to $876 per year, but indexation to the eligibility thresholds for the Age Pension may mean that more people may qualify for at least a part Age Pension. So, what other upcoming changes may affect your pension? Income and asset indexation Indexation of disqualifying asset and income limits, which occurs on 1 July, may mean that those who have narrowly missed out on an Age Pension may now qualify. For a single full Age Pension, the disqualifying income limit is now $160 pf and the disqualifying asset limit is $202,000. For full details of indexed limits, visit YOURLifeChoices - asset thresholds YOURLifeChoices - income thresholds
Cessation of Seniors Supplement Holders of Commonwealth Seniors Health Cards (CSHC) will cease to receive the Seniors Supplement from 1 July 2014; the June 2014 will be the final one. The cessation of the annual supplement, which amounts to $876.20 for singles and $660.40 for each eligible member of a couple, was announced in the Federal Budget 2014/15. Also announced in the Federal Budget was the indexation of eligibility thresholds for a CSHC. The indexation will commence in September 2014 and may mean that those previously excluded from receiving a CSHC due to income will now be eligible. For more information on Commonwealth Seniors Health Card, visit HumanServices.gov.au
Changes to overseas pension rules From 1 July 2014, the calculation which determines how much pension you will receive, should you decide to live overseas, will change. If you reside overseas for more than 26 weeks the amount of pension you receive may change, and thus is based upon your Australian Working Life Residence, i.e. the amount of years you have spent in Australia during which you have been of employable age. Should you leave Australia after 1 July 2014, you will need to have lived in Australia as an Australian resident for 35 years to receive a full Age Pension. If you have fewer qualifying years, i.e. 17, you will be paid a pro rata rate of 17/35ths. For more information about how the changes may affect you, visit YOURLifeChoices.com.au
Annual Carer Supplement The annual Carer Supplement of $600 will be paid on 1 July 2014 to those receiving an eligible payment. You may receive more than one Carer Supplement if you receive the Carer Allowance for more than one person in your care. Recent changes mean that, even if your eligible payment has been reduced to nil because of earnings, you will now receive the $600. Find out more about the Carer Supplement at YOURLifeChoices.com.au
YOURLifeChoices Retirement Update June 2014
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RETIREMENT LIVING COSTS
Your retirement living costs The Association of Superannuation Funds of Australia Retirement Standard – March quarter 2014 In April the Association of Super Funds of Australia (ASFA) released the ASFA Retirement Standard. This included a detailed weekly budget breakdown for singles and couples in retirement, supporting either a modest or comfortable lifestyle. ASFA has kindly allowed YOURLifeChoices to share this information (for the March quarter 2014) in the table below. Weekly expenditure Expenditure items
Comfortable single female
Modest single female
Comfortable couple
Modest couple
Building and contents insurance Rates Home improvements Repairs and maintenance Total housing
27.71 32.54 9.23 16.16 85.65
21.94 27.71 0.00 11.55 61.19
23.09 27.71 9.23 13.85 73.88
22.02 27.82 0.00 13.91 63.75
Electricity and gas Total energy
59.97 59.97
57.87 57.87
44.22 44.22
43.58 43.58
195.08 195.08
157.15 157.15
108.38 108.38
75.86 75.86
Bundle of home phone, broadband, mobile Total communications
33.67 33.67
16.85 16.85
26.46 26.46
9.63 9.63
Household cleaning and other supplies Cosmetic and personal care items Barber or hairdresser Music and CDs Newspapers and magazines Computer, printer, software Household appliances Pest control, alarm service Total household goods and services
25.10 2.99 20.08 2.10 8.04 4.12 11.53 12.33 86.28
15.06 2.88 8.65 0.00 1.87 4.12 2.92 0.00 35.50
18.07 6.73 14.43 0.31 7.85 4.12 9.82 12.33 73.65
10.04 1.93 4.83 0.00 2.35 4.12 2.92 0.00 26.18
Clothing Total clothing and footwear
57.08 57.08
28.54 28.54
38.05 38.05
17.58 17.58
Car transport and running costs Public transport Total transport
141.51 5.49 146.99
94.06 5.49 99.54
141.51 2.74 144.25
94.06 2.74 96.80
Health insurance Chemist Co-payment and out of pocket Total health services
76.57 22.51 39.50 138.59
61.41 3.07 11.91 76.39
38.96 12.42 27.15 78.52
30.70 1.73 7.15 39.58
Membership clubs TV, DVD, digital camera Alcohol consumed in home (or equivalent spent) Lunches and dinners out Cinema, plays, sport and day trips Domestic vacations Overseas vacations Sundry items Total leisure
9.61 1.78 40.12 80.24 13.45 76.87 53.79 29.67 305.51
1.93 0.89 15.04 24.97 18.74 36.51 0.00 11.52 109.60
4.82 1.78 25.07 59.95 6.72 65.33 36.51 22.76 222.94
0.96 0.89 10.03 29.98 5.77 18.25 0.00 7.68 73.57
0.00
0.00
0.00
0.00
Total weekly expenditure
$1,108.83
$642.64
$810.36
$446.52
Total annual expenditure
$57,817
$33,509
$42,254
$23,283
Food – groceries and other fresh food Total food
Gifts and/or alcohol or tobacco
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YOURLifeChoices Retirement Update June 2014
YOUR RETIREMENT BUDGET
How does your spending compare? What about YOU? Here is a handy table you can print out and complete to check whether your weekly, monthly and annual spending is similar to the different levels quoted in the ASFA Retirement Standard. Use it to work out if you are admirably thrifty – or need to trim your costs to keep within your budget level.
Expenditure items
Weekly
Monthly
Annual
Building and contents insurance Rates Home improvements Repairs and maintenance Total housing Electricity and gas Total energy Food – groceries and other fresh food Total food Bundle of home phone, broadband, mobile Total communications Household cleaning and other supplies Cosmetic and personal care items Barber or hairdresser Music and CDs Newspapers and magazines Computer, printer, software Household appliances Pest control, alarm service Total household goods and services Clothing Total clothing and footwear Car transport and running costs Public transport Total transport Health insurance Chemist Co-payment and out of pocket Total health services Membership clubs TV, DVD, digital camera Alcohol consumed in home (or equivalent spent) Lunches and dinners out Cinema, plays, sport and day trips Domestic vacations Overseas vacations Sundry items Total leisure Gifts and/or alcohol or tobacco Total expenditure
YOURLifeChoices Retirement Update June 2014
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quiz
Are you ready to retire? It’s easy to believe you will have to work until you drop, and that a well-earned retirement is slipping beyond reach. But that’s not necessarily the case. Those who plan early usually achieve an enjoyable transition. So take the quick YOURLifeChoices 25-question quiz to see how ready you are for retirement. Answer Yes/No to the following questions.
quiz
Yes
Activities 1. Have you researched what you plan to do? 2. Have you included a work component in the mix? 3. Do you have hobbies? 4. Do you have activities which make you feel of value, apart from your day job?
Purpose 5. Do you know what your retirement will look like? i.e. have you considered how you will structure your week? 6. Do you have specific goals? 7. Does your partner also have goals? 8. Are these goals compatible or at least complementary? 9. Are you mentally able to ‘leave’ work? 10. Are you leaving because you want to? 11. Is this your decision (or someone else’s?)
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YOURLifeChoices Retirement Update June 2014
No
quiz
Yes
No
Money 12. Do you know how much weekly income you will receive in retirement? 13. Will your savings be sufficient to lead a reasonable lifestyle? 14. Have you discussed this with an accountant, financial planner or other financial specialist? 15. Do you know whether or not you will be entitled to an Age Pension? 16. Can you afford to remain in your current home? 17. Have you considered a transition into retirement (part-time work, part-time play?)
Relationships 18. Do you have close relationships? 19. Have you shared your retirement plans with your partner/nearest and dearest? 20. Are you in agreement? 21. Will you both be happy if one of you remains in the workforce and the other does not?
Wellbeing 22. Are you in good physical health? 23. Do you get regular checkups? 24. Are you getting regular (three times per week) exercise? 25. Is your mental health positive?
How did you go? If you answered “yes” to 18 or more questions, your transition to retirement is well underway.
And it’s not just about quantity, the quality of your responses is important, too.
“Yes” responses to 12-18 questions means you are moving toward a happy post-work life, but need to further address the questions to which you answered “no”.
Apart from assessing your overall score, consider your responses to questions 5, 18 and 20. These are critical considerations for those contemplating leaving full-time work—and if you haven’t answered “yes”, then do yourself (and those around you) a favour and stay at work until you can!
A “yes” to 12 or fewer questions means you have given little consideration to the later years of your life; now is as good a time as any to consider the big picture aspects of life after 50.
YOURLifeChoices Retirement Update June 2014
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sponsored message FROM Apia
Health insurance: an affordable solution
R
ecent changes to the way in which the Government’s private health insurance rebate is calculated, combined with insurance premiums increasing every year is forcing people to re-evaluate whether or not they can afford health cover. With concerns over changes to Age Pension indexation and the proposed increase in pension eligibility age, more people are evaluating what’s a necessary expense and what is simply a nice-to-have. When times are tight, it provides an opportunity to review your health cover and check if better value options are available. In addition to rising premiums and income concerns, a change in life stage also requires a different type of health cover to keep you living life at your best. It becomes increasingly important to locate cover which is specifically tailored to the needs of over 50s. For years Apia has known what’s important to the over 50s when it comes to insurance. And they’ve learnt a thing or two about what you need. Which is why Apia has introduced health insurance that’s specially designed for the over 50s. Features of the new health cover include: • cover for important things, such as heart surgery and joint replacements on hospital covers, whilst not paying for unnecessary cover like pregnancy • a wide range of Extras options • choice of Extras provider, visit the dentist or optometrist you’d like to see* • 75 per cent of the cost back every time you claim, up to your annual limit with Premium Extras • Up to four per cent discount if you choose to pay by direct debit from a bank account. Plus, waiting periods already served with your current fund will be recognised, so you can claim straight away^.
Health insurance is not just about lowering medical bills, it’s also important to maintain a sense of independence and control of your health needs. Why not choose the cover that suits you?
Choose the cover that suits. With a range of hospital and Extras cover, you now have the flexibility to choose the cover that best meets your needs and budget.
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Plus you can add ADVANCED EXTRAS Additional Extras like chiropractic and osteopathy to suit an active lifestyle.
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Making the switch is easy. If you want tailored cover, make the switch to Apia health insurance. Call us for a chat on 13 50 50 Or visit apia.com.au/health
This Apia health insurance is issued by nib health funds limited ABN 83 000 124 381 (nib) a registered private health insurer and is arranged by Australian Pensioners Insurance Agency Pty Ltd (Apia) ABN 14 099 650 996. *Provider must have professional qualifications recognised by the health insurer. ^Waiting periods apply for services not currently covered. Any benefits limits used with your current fund will apply to your Apia health insurance policy.
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HEALTH UPDATE
Health update June 2014 Discover the latest in health with YOURLifeChoices June health update. Find out how the new low-cost stroke screening program works, how young blood could reverse ageing and much more. Young blood reverses ageing Two new studies have shown that a transfusion of young blood may be able to halt, or even reverse the effects of ageing. The research shows that injecting elderly mice with young blood causes ‘recharges’ to the brain, new blood vessels to form, and improves memory and learning. Researchers are planning to begin human trials in the next two-to-three years. It is hoped that, these results of this research will lead to new therapies for ageing and drugs to treat disease such as Alzheimer’s.
Screening for stroke University of Sydney researchers may have found a way to screen those at risk of stroke using a simple echocardiogram (ECG) test delivered in pharmacies via an iPhone. The test is both fast and accurate, and can very cheaply diagnose atrial fibrillation, a condition which doubles the chance of premature death and causes a third of all strokes. Atrial fibrillation may present no symptoms before causing a stroke, and early diagnosis could save hundreds of lives each year. You can find out more at Sydney.edu.au.
Significantly reduce cholesterol A new study has shown that eating one serve of beans, peas, chickpeas or lentils per day can significantly reduce your ‘bad’ cholesterol, which therefore reduces your risk of heart
disease. Pulses can adequately replace animal proteins in food and, as an added bonus, they’re usually a low-cost option.
Poor diets hinder brain health The looming spectre of declining memory function is one of the most prevalent health fears of Australians when they consider growing older. Despite this fear, new research shows that Australians generally consume a diet lacking in essential nutrients for good brain health. Brain foods, such as fish, broccoli and red meat, are only consumed as a small percentage of the Australian diet. This lack of brain nutrition is concerning, as half of all over 50s surveyed admitted they are starting to struggle with their mental agility.
Treatment for gluten intolerance A team of scientists may have found a way to treat coeliac disease, gluten intolerance and Inflammatory Bowel Disease, which were all previously considered to be untreatable conditions. Elafin, a human protein most people produce, plays a key role in the way the gut reacts to gluten. Those with coeliac disease have less elafin than healthy patients, but researchers have developed a way to deliver elafin directly to the gut of coeliac patients, which significantly reduces the inflammatory reaction they have when consuming gluten.
YOURLifeChoices Retirement Update June 2014
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Tech update
TECHNOLOGY UPDATE JUNE 2014 Technology moves so quickly it can be difficult to keep up. Learn the top five tech trends you need to know so you’re not left behind. 3D printing pen
Fitness bands
The constantly evolving world of 3D printing has produced another nifty device which allows you to sketch threedimensional images in mid-air. The LIX pen was launched recently on Kickstarter, a website which allows small companies to fund their developments by asking for support on the internet, rather than trying to find investors. LIX was searching for the equivalent of $54,000 of funding and has already received over $1,000,000 of support, with thousands of people ordering pens before they’ve even been produced.
The simple clip-on pedometer has all but lost its Darwinian struggle against the fitness tracker band. The fitness band is a device you wear like a watch and which can perform a number of functions, usually related to your fitness or health. For example, counting your daily steps to ensure you complete a certain level of exercise. This modest device is now merging with smartphone technology and recent devices from brands such as Samsung, LG, Nike and Sony are offering new features including notifications from your smartphone and touch technology.
Click here to see the LIX pen in action, taking sketching to a new level.
Click here to read our review of a FitBit fitness band.
Tape breaks storage world record
30-second smartphone charger
Cassette tapes might be making a comeback, but with a complete overhaul of the out-dated technology. Sony has made vast improvements to the storage capabilities of tapes, making them able to store 74 times more data than previously. To put this into perspective, a cassette tape could now store roughly 50 million songs. Sony’s plans for its new storage technology are currently focused on large businesses and archiving rather than consumer electronics. So while it’s unlikely that you’ll be able to buy one of these tapes anytime soon, the improvements will have a dramatic effect on cloud storage and data storage devices.
Israeli start-up company, Storedot, revealed a new battery technology at the Think Next symposium in Tel Aviv, Israel in April. The new prototype biological battery is capable of charging a Samsung Galaxy S4 smartphone in less than 30 seconds. Charging the S4 battery to full capacity currently takes approximately two hours.
Click here to read about Sony’s new record-breaking technology.
Click here to read more about Storedot’s new battery.
Australian Government considers website blocking Online piracy in Australia is an issue which has been plaguing the Government for some time, and it is now considering blocking websites that it believes are used to pirate content online. Google delivered a recommendation to the Australian Government earlier in the year warning that “draconian anti-piracy measures could prove counterproductive”. Click here to read more on TorrentFreak.com.
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YOURLifeChoices Retirement Update June 2014
Retirement Rights
Your right to work … and your rights at work
Experience – and sometimes wisdom – comes with older age so why retire if you still have much to offer your employer? Age Discrimination Commissioner, Susan Ryan, explains your rights and what you can do if you are wronged at work.
T
oo often, older Australians who are still working start to be asked rather unsubtly when they think they’ll retire. Some older Australians report feeling forced into retirement by constant negative references in their workplace to the fact that they are getting older. These kinds of experiences can constitute unlawful age discrimination. Our research, Fact or Fiction? Stereotypes of Older Australians, found that one in ten business respondents have an age above which they will not recruit – and the average age is 50 years. This was supported by the 35 per cent of Australians aged 55-64 years and 43 per cent of Australians aged 65+ who reported experiencing discrimination because of their age – being turned down for a position being the most common type of discrimination. Age discrimination can happen directly: you might be refused training by an employer because it’s assumed you will retire soon; or you aren’t considered for a job because it’s assumed you don’t have
up-to-date skills. In a recent landmark case taken to court by the Fair Work Ombudsman, the court found that an employer who formally advised an employee that he had to leave because he had turned 65 was found to have broken the law. The employee was awarded significant compensation and had his costs met by the discriminating employer. Discrimination can also arise indirectly, through policies or practices that unfairly impact upon people of a particular age group. Age discrimination is not always unlawful. It may be lawful when acts are done to comply with Commonwealth, state or territory laws; or when a person’s age means they are unable to perform the inherent requirements of a job. Older workers now have the right to request flexible work arrangements. Under new amendments to the Fair Work Act 2009 (Commonwealth), those over 55 can ask their employer for a change in working arrangements. Employers may only refuse on reasonable business grounds. If you feel like you have experienced discrimination, you may want to deal with the situation by raising it directly with the person or people involved or with a supervisor or manager. You may also make a complaint to the Australian Human Rights Commission (AHRC).
At the AHRC, approximately two thirds of the complaints that we receive in the area of age discrimination are employment related. For substantial complaints that go to conciliation, 76 per cent were resolved successfully. For example, a 52-year-old woman was employed as a travel agent for nearly five years. She alleged that she was not given opportunities for career development because of her age, and that she was excluded by other staff in the workplace. Following conciliation, her former employer agreed to provide her with substantial financial compensation. At the end of the day, all people have the right to work and to seek work without discrimination on the basis of their age. MORE You may like to read the AHRC’s guide Your Rights at Retirement. Limited stocks of hard copies will be available on request (ph 1300 369 711). If you experience age discrimination you may make a complaint to the AHRC. Complaints are confidential and free of charge. Phone the Complaint Info Line on 1300 656 419 or email complaintsinfo@humanrights.gov.au
YOURLifeChoices Retirement Update June 2014
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FINANCE Q&A
Budget blues: the details revealed YOURLifeChoices no-nonsense financial planner Maurice Patane explains Budget 2014 and why it receives his seal of approval.
H
ow often have you heard the following conversation? “ I really want that.” “We can’t afford it.” “But I really want it.”
But here’s the thing. A budget doesn’t lock us into a situation – that’s why we have a new budget each year. Instead, it provides a framework with which we make future financial decisions.
Underlying this exchange is a lack of understanding of what is important to each individual. The person who wants something may see no reason why it’s not an option to make the purchase. So you can imagine the frustration which is created by saying, “We can’t afford it.” However, if both people have the same understanding about their finances, the conversation changes.
Our Federal Government has taken the time to assess where we are, so that we don’t waste any more time guessing where we could go. We know the only thing in life that is inevitable is change. Most of us fear change and are uneasy about it, because we think we are going to be worse off than we were before. And in some cases that is true. We all want things to stay the same, but to get better.
The government is telling us we can’t afford it. The current situation is simply not sustainable, with over 80 per cent of the population over age 65 accessing the Age Pension. Add to this our ageing population, and retirement affordability will continue to be an issue. Our nation is failing in the most fundamental of all basic principles – spend less than you earn.
To illustrate, I think about Dave in the movie Dave, when the US president is very ill. To ensure that the nation remains calm, Dave, his look alike, is asked to take on the role of the president. What transpires is a greater understanding of both points of view, followed by balancing of the books which ensures everyone’s needs are met.
A budget doesn’t lock us into a situation – that’s why we have a new budget each year. Most people I meet hate budgeting. They think it’s boring and leads to challenging conversations about the future. Budgeting forces us to take the time to determine what is important to us and the sacrifices we may need to make. In the same way that we are unable to build a personal financial plan without the foundation of a budget, the same applies to our country’s finances.
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YOURLifeChoices Retirement Update June 2014
As with most Australians, I grew up believing that the Age Pension was ‘a right’. It represented a return of our taxes and other contributions we have made to society and the economy. This perception has been ingrained in almost all Australians and we continue to believe that it is our right. But the latest budget has reinforced that the conceptual link between retirement and the Age Pension has to be broken.
FINANCE Q&A
Did you know that when the Age Pension was introduced in 1909, the male life expectancy at birth was 55, which was 10 years below the Age Pension age? The aim was to provide financial assistance to people who lived longer than the average. A male born today has a life expectancy of just under 80 years, which is 15 years beyond Age Pension age. There are a number of changes the government proposes in relation to Centrelink and Department of Veterans’ Affairs (DVA) payments which will commence at different times over the next few years. The issue which has caused most debate is the increase in the qualification age for the Age Pension, to 70 by 2035. The good news is that if you are aged over 56 at 1 July 2014, this proposed change will not affect you. And, if you are younger than 56, you have time to adapt by taking action to secure your financial future. Another budget proposal includes a co-payment of $7 per visit to a general practitioner from 1 July 2015. Let’s put this into perspective. This will be a total of $70 per annum for concession card holders and children under age 16 both of which will only be charged for the first 10 visits in a year. Patients who are not bulk-billed will have their Medicare refund reduced by $5. The government has also proposed a $5 increase for pharmaceuticals on the PBS scheme, with
pensioners paying an additional 80 cents per script. These changes may impact on your expenditure, although it should also be noted that $5 of this amount is proposed to be paid into a new Medical Research Future Fund. Other proposed changes refer to the pausing of various thresholds for three years from 1 July 2015. This will reduce offsets and increases surcharges. For example, the private health insurance tax offset is income tested and by freezing the threshold, a larger group of people will have their offset reduced. There will be a similar outcome on the Medicare levy surcharge, which is levied on Australian taxpayers who are not covered by a complying private hospital policy, and who have income above certain thresholds. While the above changes may have a direct impact on your expenditure, it is anticipated that there will also be an increase in the cost of petrol as a result of the reintroduction of fuel excise tax indexation from 1 August 2014. This will have an indirect impact on the cost of goods transported. It is proposed that the extra tax collected will be used to fund roads. Changes to means testing thresholds will reduce access to Centrelink and Veterans’ Affairs entitlements over time. Such changes include: • a three-year freeze on the lower income and asset test thresholds for pensions from 1 July 2017;
• a three-year freeze on income and asset test thresholds for allowances from 1 July 2014. This will cancel the alignment of lower asset thresholds for pensions and allowances; • resetting deeming thresholds from 20 September 2017 down to $30,000 for a single person, $50,000 for a couple combined and $25,000 for each member of a non-pensioner couple. From 20 September 2017, indexation of Centrelink and DVA pensions is proposed to be linked only to CPI. Currently, payment rates are indexed to the rise in CPI and then benchmarked against a percentage of the Male Total Average Weekly Earnings. To put this into perspective, between 2005 and 2011 average wages increased by 23 per cent, compared to a CPI increase of 17 per cent. Wage increases have driven six of the past 10 pension increases, so pegging pension indexation to CPI only is likely to see lower levels of indexation and greater financial stress for those who rely on the Age Pension. MORE Do you have a question for Maurice? Then send it to us now. Maurice Patane Access Financial Management AFSL 229760 Ph (03) 9500 9988 Email info@accessfm.com.au
YOURLifeChoices Retirement Update June 2014
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Aged Care Update
Aged Care Funding Explaining 1 July changes Following on from the Living Longer, Living Better reforms announced in April 2012, the next round of aged care changes will be implemented on 1 July 2014. So, how will these changes affect you?
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ith 16 per cent of Australians over 65 years, and this figure expected to jump to 23 per cent by 2050, now is the time to make changes to ensure we have an aged care system which is sustainable, accessible and affordable for the consumer. A series of reforms over the coming years will be aimed at doing just that. Some have been introduced already and the next round, scheduled for 1 July 2014, will include new rules for income-tested care fees, greater transparency on aged care costs, means testing for residential care costs and more choice in where and how a consumer can receive care. These changes generally do not apply to anyone who has already entered residential care, or undertaken a Home Care Package before 1 July 2014.
Charges for Home Care Packages From 1 July 2014, the rules for income-tested care fees are being strengthened so that people who have the financial capacity to pay will be asked to contribute to the costs of their care. Any Home Care Packages commenced after 1 July 2014 may be subject to one or both of the following costs: • a basic daily fee which is equivalent to 17.5 per cent of the single basic Age Pension ($133.98 per fortnight based on current pension rates) • a n income-tested fee if your income is over $24,731.20 (single person threshold, March 2014 rates) There are caps on how much you have to pay in income-tested fees and once you have reached the following caps,
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YOURLifeChoices Retirement Update June 2014
the Australian Government will pay your share direct to the provider: • $5000 per annum for part pensioners • $10,000 per annum for self-funded retirees • $60,000 lifetime limit If you think you may be liable to pay towards your Home Care Package, you can call MyAgedCare on 1800 200 422, or from 1 July you can visit the website, to receive help with estimating the fees and charges payable. You will need to have details of all your income and financial information to hand.
Transparency on residential aged care costs To simplify the selection of a residential aged care facility and to give consumers a better idea of costs involved, the MyAgedCare website lists the maximum accommodation price which a provider may charge for each type of room and a clear description of accommodation features and standards. This information will also need to be clearly stated in any documentation, including their own website, provided by the aged care facility.
Means-tested residential care fees The Department of Human Services will undertake an assessment of a consumer’s assets and income for new entrants to residential aged care on or after 1 July 2014. This assessment will be used to calculate how much the Australian Government will pay to providers as a subsidy, the amount a resident will be asked to pay as a means-
Aged Care Update
There is an annual limit of $25,000 on how much residents can be asked to pay as a means tested care fee, with the Australian Government paying the fees for the remainder of the year once the limit is reached. A lifetime limit of $60,000 also applies, and again, the Australian Government will pay the fees directly to the provider once this limit is reached.
Choice of how to pay for accommodation and services Recognising that everyone’s financial situation is different, new arrangements on how payments for accommodation are made will be in place for those entering care after 1 July 2014. New residents have 28 days after entering to decide to pay a refundable accommodation deposit,
a daily accommodation payment or a combination of both.
Removal of low and high care distinction in residential care To provide consumers with greater choice, the distinction between low and high care will be removed, meaning there will no longer be different rules for each level of care. While consumers will have the choice of services (subject to availability), the funding for care services will be subject to an assessment of each person’s care needs under the Aged Care Funding Instrument. MORE MyAgedCare.gov.au Department of Social Services YOURLifeChoices aged care explained
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tested care fee and whether the resident will receive any financial assistance towards their accommodation costs. The basic daily fee can also be asked to pay a basic daily fee equivalent to 85 per cent of the single basic Age Pension.
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YOURLifeChoices Retirement Update June 2014
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Super Update
Balanced funds set to deliver Superannuation is an incredibly useful way of saving for your retirement – but how do you know if you’re in the right fund? Jeff Bresnahan of SuperRatings helps you to navigate through the complexities of superannuation. Top Ten Balanced Investment Options* Over Last 5 Years Fund and Option Description Telstra Super Corporate Plus – Balanced REST – Core Strategy Russell SuperSolution Employer – Russell Balanced Portfolio Plum – Pre-mixed Moderate AMIST Super – Balanced Commonwealth Bank Group Super – Mix 70 UniSuper Accumulation – Balanced AustSafe Super – Balanced CareSuper - Balanced AustralianSuper – Balanced
5yrs to 31 May 2014 (% p.a) 10.9% 10.6% 10.4% 10.4% 10.3% 10.3% 10.1% 10.0% 9.9% 9.8%
*SR50 Balanced Index investment Options with between 60% and 76% of assets in growth style investments. All results are net of fees and tax**
Q. I am 59 and thinking of retiring in the next few years. I realise I can (currently) access my super (tax-free) at age 60, but think this might be premature, as I only have about $250,000 saved. It occurs to me that it may be smarter to work a little longer, pay more into super and move my funds from the extremely conservative portfolio to one with a little more risk, but higher returns. So I am wondering what the up and downsides of this action might be – i.e. how do I weigh up super fund risk versus return as I approach my retirement? A. The general consensus is that it is in your best interests to work for as long as possible in order to maximise contributions to super and grow your account balance to as high a figure as possible. With people generally living much longer, individuals who are nearing age 60 are likely to be invested for another 20 or 30 years and so should retain a superannuation or pension balance. With the recent increase to $35,000 per annum in the concessional
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contribution caps for individuals over the age of 59 at 30 June 2013, a great opportunity exists for individuals to maximise their contributions to superannuation, whilst potentially reducing the income tax they will pay on their salary (via what is known as a salary sacrifice arrangement). With this in mind, were you to be able to work for another five years, you could contribute up to an additional $175,000 into your super account which, with reasonable investment returns, could result in you doubling your super balance over that time. In terms of increasing the risk of your super investment, given the long timeframe you are likely to be invested for when you do retire, there is no need to adopt an extremely conservative portfolio. You must remember though, that any increase in the risk profile of your investments will also lead to a greater potential to lose money, where investment markets fall. To maintain some capital protection whilst trying to maximise investment returns, many retirees use a Capital Stable or Conservative Balanced portfolio in which to invest their pension assets. These portfolios tend to use an allocation of between 30 per cent and 50 per cent to growth assets (Australian shares, international shares and property) while also investing between 50 per cent and 70 per cent in defensive assets (fixed interest and cash). Where your portfolio is invested in something more conservative than this, you may wish to consider changing this allocation, provided you are comfortable with the additional risk you are taking on. In saying this, you should also take into account that investment markets have provided historically high returns in recent years. The SuperRatings Pension Capital Stable Index shows that the average superannuation fund returned 9.1 per cent for the year ending 30 June 2013 and has also returned an average of 7.9 percent over the 11 months to 31 May 2014 (refer to SuperRatings’ SuperSavvy website at www.supersavvy.com.au for more information on investment returns), resulting in some analysts suggesting a correction may be coming. Whilst it is nearly impossible to time investment markets, it may be best to phase in over a period of time any increase in your investment in higher risk assets rather than doing it all at once. Read SuperRatings disclaimer
YOURLifeChoices Retirement Update June 2014
Legal news
Time to make a living will How do you determine what medical treatment you do or do not receive? Can family or doctors override your wishes? Rod Cunich explains.
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• identify circumstances unacceptable to you arising from applying life-sustaining treatment
For example, a quadriplegic residing in New South Wales refused to accept lifesustaining artificial hydration and nutrition. The court found he had the right to refuse, even though it would lead to his death.
• nominate a ‘person responsible’ who consults with treating doctors concerning your wishes when you can’t
n Australia, we don’t have a right to end our own life. But every mentally competent adult has a legal right to accept or refuse medical treatment - even if the refusal of that treatment leads to their death.
How do I give such directions if I’ve lost mental capacity? The answer is simple: prepare written directions in advance – whilst you still have capacity. A document which sets out your medical preferences is known by a number of different names. The term ‘Living Wills’ is common but they are also referred to as ‘Advanced Health Care Directives’ or simply ‘Health Care Directives’. An advanced health care directive may: • set out limitations on medical treatment you wish to have or indicate that you wish to have full measures to prolong life • stipulate medical treatment preferences, including those influenced by religious or other values and beliefs
• identify how far treatment should go when your condition is ‘terminal’, ‘incurable’ or ‘irreversible’ (depending on terminology used in specific forms)
• include other non-medical aspects of care that are important to you during your care. They all have the same objectives: • to protect your right to refuse unwanted medical treatment • to protect your right to receive desired medical treatment • to ensure you receive relief from pain and suffering to the maximum extent that is reasonable in the circumstances. Commonly, these documents only stipulate treatment limitation preferences, but they can include any of the matters referred to above. Any medical professional providing treatment contrary to your health care directive is exposed to charges of assault, claims of negligence and/or breach of contract. If you have appointed a guardian, he or she is bound to follow the directions set out in your health care directive. In the absence of a health care directive your guardian has a free hand in deciding what treatment you do or do not receive. In some states these directions are included in medical powers of attorney or guardianship documents. In other jurisdictions they aren’t and have to be separately prepared.
MORE Rod Cunich is National Practice Group Leader for Wealth Protection, Succession & Estate Administration at Slater & Gordon. For more information visit the Slater & Gordon website at: www.slatergordon.com.au Or visit ehealthspace.org The information provided by Slater & Gordon in this article is general in nature and should not be relied upon as legal advice. Legal advice should be sought for specific matters.
YOURLifeChoices Retirement Update June 2014
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Discounts and deals
Discounts and deals Have more fun for less money with these 10 great deals and discounts on travel, dining, health, entertainment and motoring. Entertainment
Travel
If you or your friends are movie buffs, join Cine Buzz for seniors for free and enjoy movie tickets for just $8. www.eventcinemas.com.au
If you and your travel partner are travelling to New Zealand you can now use your Seniors Card to access discounts from participating New Zealand businesses. www.supergold.govt.nz
Dining
Experience Australia’s great rail journeys with up to 55 per cent off the standard adult fare in Red Service Day/ Nighter seat and up to 32 per cent off the standard adult Gold Service Fare when using your Seniors Card. www.greatsouthernrail.com.au
Find out if there are any restaurants in your area offering deals whether it’s money off or meal specials. www.groupon.com.au/deals If you are passing through Cottesloe in WA, drop into the Albion Hotel and receive 10 per cent off both lunch and dinner menus. www.albioncottesloe.com.au
Activities If you are travelling to Victoria, Seniors Card holders can enjoy free entry to the Melbourne Museum, Immigration Museum and Scienceworks. www.seniorsonline.vic.gov.au
Motoring Senior Card holders will appreciate national car rental with Redspot Sixt and save 10 per cent off the all inclusive drive away rate. www.redspot.com.au
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YOURLifeChoices Retirement Update June 2014
Stay at Best Western Hotels all over the world and receive a 10 per cent discount for over 55s. www.seniortravelexpert.com/hotel-deals Travelling to the country’s capital city? Enjoy 10 per cent off accommodation at Crowne Plaza Canberra. Simply call and quote ‘ACT Seniors Card Directory Offer’. www.crowneplazacanberra.com.au
Health Have your hearing checked with a free hearing test from one of the 160 Hearing Life Clinics across Australia. Find your nearest centre and see if you are eligible for a free hearing aid. www.hearinglife.com.au
Eat well for less
Eat well for less Our favourite chef Maggie Beer believes that good, healthy food should be available to all, especially older Australians. This month she shares with us her delicious recipe for a winter-warmer stew, full of flavoursome ingredients including olives, orange and red wine.
Beef Stew with Olives & Orange INGREDIENTS
METHOD
1/2 cup extra virgin olive oil 2 brown onions roughly chopped 1 clove garlic chopped 1/4 cup plain flour for dusting 3kg chuck steak diced 2 cups red wine 200g kalamata olives pitted 2 orange peels 30g thyme leaves 40g rosemary leaves 1/2 cup Vino Cotto 400ml Beef Stock 1/2 cup flat leaf parsley roughly chopped 20ml extra virgin olive oil
1. Pre-heat a fan forced oven to 130°C. 2. Place a heavy cast iron pot over a medium-high heat and add half the amount of the olive oil. 3. Once hot add the onions and sweat off for 4-5 minutes or until soft, stirring every 30 seconds to ensure that the onions do not burn, then add the garlic and cook for another 2-3 minutes. Remove the onion mixture from the pot, place into a bowl and clean out the pot. 4. Return the pot to the heat and add half the remaining volume of olive oil. 5. Very lightly dust half the amount of beef with the flour, then brown this off in the pot once the oil is hot. Then continue to brown off the remaining beef including the half which is not dusted with flour. Once each batch is browned off place onto a plate while you cook the next batch. You will have to brown the beef off in batches so that you do not over crowd the pot and prevent the meat from stewing.
6. Once all the beef is browned off, return the pot to the heat and deglaze with the red wine. Reduce this down by half then add the cooked onion mixture, beef, olives, orange peel, thyme and rosemary. Deglaze with Vino Cotto and add beef stock. 7. Bring the mixture to a gentle simmer then place a lid on the pot and place into the pre-heated oven and cook for 6 hours or until the meat is tender. 8. Remove from the oven and if you find there is quite a bit of liquid strain most of this off into a pot and place over a high heat and reduce by half, then pour this back over the cooked meat and gently stir through. 9. To serve place onto a serving dish or bowl, sprinkle with chopped parsley and drizzle with extra olive oil. We hope you enjoy Maggie’s recipe and, if you’d like to use her branded version of the products mentioned, you can find them in your local supermarket, or by visiting MaggieBeer.com.au.
YOURLifeChoices Retirement Update June 2014
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LESSONS LEARNED
Lessons Learned Mark Weir Mark and Ann Weir were just two of more than 3000 Storm Financial investors whose life savings disappeared after the GFC. They are now facing foreclosure on their family home. So what lessons have they learned from this stressful life event?
Put simply, we owed the bank $170,000. It was a massive shock…
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hen the Global Financial Crisis (GFC) hit at the end of 2008, Storm Financial had captured the imagination the banking industry to the extent that the Commonwealth Bank (CBA) had established a dedicated BSB and branch number for Storm clients who wanted to tap into the equity in their family home and to take out margin loans to invest. An agreement had been reached with the CBA to confirm that the bank would work with Storm to ensure the safety of its investors. This gave Storm investors like us consolation that, if the markets turned sour, we wouldn’t lose our homes. But the volatility of the GFC was something to which the young Turks in the banks hadn’t previously been exposed; they weren’t around in 1961 or 1987 and didn’t understand that such volatility could occur. The first we knew of the closure of the Storm fund was from a phone call in December 2009 from the geared investments department of Colonial, telling us, “Your portfolios has been sold,
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YOURLifeChoices Retirement Update June 2014
but there was insufficient equity to cover the margin loan”. Put simply, we owed the bank $170,000. It was a massive shock as, all through the previous year, we had been in constant contact with our financial planner and were told not to worry, that ‘everything was under control’. Luckily we still had a self-employed superannuation policy from my days in the taxi industry and we hadn’t placed these funds into the Storm investment. We closed this fund to pay our debt and, by selling at the bottom of the market, ensured we lost another several hundred thousand dollars. We had drawn down further equity in our home to invest in Storm and so had a further debt of $580,000. Since then we have used our remaining superannuation and a part pension to cover our obligation to Westpac bank. I maintain that Westpac was complicit in the Storm collapse. It had a ‘Storm-specific’ envoy in the Townsville branch, whose designated role was to help people ‘gear up’ to invest in Storm.
Photo: Barry Leddicoat / APN
LESSONS LEARNED
I believe that Westpac is now trying to foreclose on my home loan because of my activity with the Storm Investors Consumer Action Group. Ann and I are accumulating debt of $1000 per month, even though we had paid off 60 per cent of this loan back in July 2012. It is only the interest which is accumulating.
I still have great faith in the financial planning profession. Life is not always kind to you. Our mantra, first and foremost, is to set an example for our children. We have needed to dredge the depths of our characters to get up every day and carry on. But neither of us has become cynical.
So what is my life lesson?
Yes, our circumstances have changed profoundly. We have been robbed of a range of options. But this has simply reinforced the importance of family. Our two sons have given us five grandkids in five years – an immensely grounding experience. They are our lifeblood and our lifeline.
If I never again have to engage in a dispute with a bank or enlist the services of a lawyer again, it will be too soon. Across 40 years of marriage, including raising two sons, my wife and I had never had to contend with any single issue as stressful as this. I was the second youngest of nine children of a dairy farmer. There wasn’t much to go around and I resolved I wouldn’t be in the same position. So my working life has been devoted to ensuring that we would have a financially independent retirement and we would leave something for our children.
I believe that the financial services industry, in particular the banking sector, has a stranglehold on community and the fact that it is allowed to operate this way is scandalous. We need to have a people’s bank capable of delivering a better level of social justice.
My advice to others is simple. Seek out the services of a reputable financial planner so that you can put your savings to the best use possible. Look after your health. And always approach life in moderation. MORE At the time of writing, Mark had received a final letter from Westpac stating it would send documents for foreclosure. He has since joined a class action against the bank, filed in April 2013. Storm Investors Consumer Action Group was formed in 2009 to seek justice and restitution form the banking and financial services industry for those who felt they were misinformed or mistreated by banks and/or advisers.
YOURLifeChoices Retirement Update June 2014
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Money Explained
What is equity release? and is it right for me? An increasingly popular source of retirement income is the equity in the family home – but do you really fully understand the options? Craig Hall from NICRI explains this complex income stream in plain English.
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quity release is the collective term for products which allow older Australians to remain in their homes while providing access to equity in their property without having to make repayments or fulfil the contract with the provider until a ‘trigger event’ occurs. While such products may seem the answer to all your money issues, it’s worth noting that any money released may affect your pension eligibility, so it’s important that you tread carefully and seek proper, independent financial advice before signing any paperwork. Recently, the market has expanded with some providers returning, having previously withdrawn, and new providers who have developed their own products. Some different types of equity release products are:
Reverse mortgages A reverse mortgage is a loan provided where interest and other costs accumulate and repayment is not required until a trigger event occurs. Providers can lend up to a regulated maximum percentage of the value of the secured property, based on the age of the youngest borrower/ homeowner. The proceeds can be taken as a lump sum, regular payments or a combination of both.
For Government Income Support (GIS) purposes the first $40,000 of the drawn proceeds which remains unspent is assessed after 90 days, while any unspent drawn amount above $40,000 is assessed immediately.
Shared sale proceeds arrangement Older Australians can enter into a partsale transaction and receive a lump sum cash payment in exchange for a share of their property’s future value. The facility is available for eligible property types in certain locations. The amount received is a smaller percentage of the present value of the share being sold because the householder retains all ownership rights and responsibilities for the rest of their lives. Assessment for GIS is the same as reverse mortgages.
Property option A property option enables access to the future capital growth of the home as an income stream. The homeowner agrees to sell their home to an investor at an agreed value, at a future time of their choosing, in exchange for a monthly income from the investor. It is possible for the homeowner and investor to share in the capital growth of the property, however, this reduces the amount of the monthly payments the owner receives. The homeowner retains full ownership of, and responsibility for, the property until the eventual sale and change of title takes place. Payments received are not assessed as income for GIS.
Pension Loans Scheme (PLS) Property owners of Age Pension age who do not receive a pension because their income or assets exceed the allowable limits, or receive a part Age Pension, can borrow amounts up to the maximum allowed for the payment being received and which is secured against their property. If the debt is secured against an assessable asset, the actual pension payment may increase as the net value of the asset reduces, thus reducing the ‘top up’ or borrowed component.
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YOURLifeChoices Retirement Update June 2014
Tips • Check with the Department of Human Services to see if releasing equity in your property will affect your Government Income Support entitlements. • Check if the loan is portable in case you wish to move house in the future. • Ask the provider what your obligations are as far as maintenance on the property is concerned. • Ensure that your insurance cover is adequate. • Check if the provider is prudentially regulated and financially sound. • Find out what your rights are if something goes wrong and a dispute arises. • Find out what restrictions an equity release product will have on you in the future, for example if you wish to renovate or need to move into aged care. • Ask the provider questions about the company such as how long it has been in business, can it give you any customer feedback and how can you deal with it in the future. The National Information Centre on Retirement Investments Inc (NICRI) is a government funded, independent consumer agency providing information to the general public on investment products.
MORE Request the NICRI booklet ‘Accessing the Equity in Your Home’ phone 1800 020110 or email nicri@nicri.org.au. Seniors Australian Equity Release Association – www.sequal.com.au Mortgage and Finance Association of Australia – www.mfaa.com.au
Diary Dates
Diary Dates
July – September 2014 It’s a challenge to stay on top of important events so here are some key dates over the next three months with a few quirky ones, just for fun! July 13-19 July National Diabetes Week: Learn the early warning signs of diabetes to reduce your risk. 18 July Nelson Mandela International Day: Take a moment to remember the vision and impact of Nelson Mandela. 27 July Parent’s Day: If you are one or yours still live at home, take time out to celebrate your children. 30 July
I nternational Day of Friendship: Friends are the family you get to choose, so why not show your friends how much they mean to you.
August 4-11 August
Dental Health Week: So time to understand the benefits of oral health.
13 August International Left-handers Day: For all you lefties out there, today is your day to be celebrated. 21 August
S enior Citizens Day: A day to recognize contributions from senior citizens.
22 August Daffodil Day: Wear a daffodil and share hope for a brighter, cancer-free future by raising funds for cancer research, prevention and support services. 24-30 August Hearing Awareness Week: Don’t let poor hearing reduce your fun. Book a free consultation today!
September 1-5 September Jean Hailes Women’s Health Week: A week to promote and support physical and emotional health and well-being for Australian women. 5 September
I nternational Day of Charity: Be generous; dig deep as even one dollar can help those in need.
8 September Literacy Day: Literacy is a fundamental human right and the foundation for lifelong learning. Support everyone’s right to literacy. 11 September R U OK? Day: Asking ‘are you ok?’ may start the conversation that could change a life - or even save it. 20 September Eat an apple day: One a day is meant to keep the doctor away! 21 September International Day of Peace: Let’s recognize the efforts of those who have worked hard to end conflict and promote peace, it’s also a day of ceasefire – personal or political.
YOURLifeChoices Retirement Update June 2014
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RETIREMENT
Just the two of us
Reinventing your relationship post retirement More time together is part of the retirement dream, but it’s worth remembering that familiarity can breed contempt. Some simple guidelines may ensure you don’t regret your decision to spend more time together says Jo Lamble.
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hether you’ve been together for five or 50 years, when you are facing more time at home together, there are challenges to negotiate. Many couples long to be free of the rat race. They make plans to travel, take up a hobby or move to the beach. Some look forward to being able to spend time with the grandchildren. Others have the golf course or art classes on their minds. But how do you manage your number one relationship? Here are some of the things you may wish to consider:
they don’t want to leave their base. The decisions we make in one emotional state (pre-retirement) may not be the same decisions we make in another (postretirement). It’s far better to explore all the options, but delay the final decision until you have actually stopped working.
Emotional decision-making
Grandparenting
It’s wonderful to dream about how your life will look when the time comes to stop working. But be careful not to lock yourselves in. Many couples make decisions to sell their house and move, only to find that when the time comes,
Some retirees head straight into full-time grandparenting duties and others are on call for when their adult children need them. Problems can occur when one grandparent wants to spend all their time with the grandchildren and the other doesn’t. Resentment can build up if the needs of the grandchildren are put ahead of the retirees’ relationship. The trick is to find the right balance between enjoying your newfound freedom and having a close relationship with the grandkids. If possible, try not to lock into permanent arrangements and remember that you have earned the right to have flexibility in your later years.
Retaining independence Healthy relationships are borne of two individuals who are successfully negotiating a life together. Just because you have more time to spend together doesn’t mean that you should give up your own interests and do everything as
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YOURLifeChoices Retirement Update June 2014
a couple. As has always been the case, relationships are stronger if you can enjoy your own friends and time apart, and have plenty of shared interests and friends. Problems can arise if one person has fewer outside interests than the other, so allow a period of adjustment for both of you to strike the right balance.
Maintaining good physical and mental health You may have been lucky enough to get through life without any serious health issues. But now is the time to put your physical and mental health high on your agenda. Regular check-ups and screenings bring peace of mind – for your partner, if not for you. Start that exercise program, learn to eat more healthily, practice those mental challenges and feel secure in the knowledge that you are doing everything you can to make the most of these fabulous years together. MORE Answers to everyday questions about relationships by Jo Lamble JoLamble.com
Remaining Relevant
Finding work after 50
If you’re approaching 50, you will probably have to work until 70 before you can consider claiming the Age Pension. Here Kaye Fallick shares 10 great tips for ‘funemployment’.
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ge discrimination is real and the statistics are tough. Workers aged 55 plus spend, on average, one year finding work after losing a job, so making a career move sooner rather than later may be the key to job success. While the job market may be tough, there are many ways older Australians can improve their chances of finding work in their chosen field.
1. Analyse your skills and experience, remembering to include community work, your own personal attributes and hobbies. Then include this workrelevant experience into a ‘template’ CV which can easily be tailored to a specific role as needed. 2. Create or update your social media status, particularly on Facebook and LinkedIn, so you can be easily located by prospective employers. 3. Consider project work – there are great new websites listed in the MORE box which can help you earn pocket money while a ‘real’ job appears. 4. Be flexible – there is no such thing as a perfect job, so compromise is often necessary in order to stay in the workforce. Remember it is always easier to get a job when you HAVE one. 5. Age discrimination is illegal. If you believe you have been knocked back based purely on your age, then contact the Australian Human Right Commission (AHRC) for mediation. 6. Volunteering gigs can be great confidence boosters as well as a way to learn new skills and meet interesting people instead of enduring the loneliness of long-term unemployment.
7. After years of being an expert in a particular area, it may be time to think about sharing your knowledge as a teacher – find out if local adult learning centres or TAFE institutes are hiring. 8. Look at where jobs of the future are predicted to be; health care, aged care, education, construction and retail will be in demand for the next few decades. Do you have skills in these areas? Or could you consider retraining? 9. Ensure your technology skills are current. If not, your local community centre or library may offer low or no-cost classes. And f you’re offered training by your current employer, grab it, even if you think it may not be relevant to you at the moment. 10. As another very famous mature aged worker (Winston Churchill) once said, “Never, never, never give up!’’ Complacency is possibly the biggest factor in failing to remain relevant in the workforce and adapting your skills to fit the needs of current or future employers. If you’re happy in your work that’s great, but make sure that you don’t get caught out when your skills are no longer needed. MORE Airtasker.com.au WhatNext.com.au Humanrights.gov.au
YOURLifeChoices Retirement Update June 2014
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CLUB YLC
$50 voucher free for YOURLifeChoices members YOURLifeChoices understands that splashing out on fine wine is not always possible on a limited budget. Because we believe that everyone deserves a treat now and again, we have partnered with Naked Wines to give you a $50 voucher to enjoy its carefully selected wines. The good news is that, if you don’t love the wines, they’ll give you a refund in full. Naked Wines launched in 2012 with the aim to quietly revolutionise the Australian wine industry. During that time Naked Wines has recruited 40,000 customers of which 25,000 are ‘Angels’, who now help fund 18 independent winemakers and uncovered some real stars who would’ve had to give it all away if it wasn’t for the Angel funding.
Naked Wines crowd funding model benefits the two most important people in the wine industry, the consumer and the winemakers. By funding the winemakers upfront it allows them to focus solely on making great wine, rather than travelling around Australia trying to sell it. In turn the consumer benefits as they are getting great wines at a discounted price (because Naked funds the winemakers directly, they pass the savings straight onto their customers). The consumer also gets to try different wines, as the winemakers aren’t being told what wines to make by a supermarket salesman.