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How to keep doing good once you’re gone

Most of us like to think that once we are no longer walking the Earth, we can still leave a legacy to mark our time here and contribute positively to those left behind. Doing so is not only possible but, as you’ll see below, fairly straightforward – providing you do some basic preparation beforehand. Seek the help of professional advice to ensure your plans can be enacted in full and deliver the best possible outcomes for everyone involved. Have your affairs in order Make things simpler for your grieving loved ones by having your wishes clearly outlined in writing, with specific instructions that leave no room for misinterpretation. Doing so makes your wishes easier to implement, faster to enact and reduces fights among your beneficiaries. Keep your will and other affairs updated as circumstances change too, so that everyone you want is included (such as kids and grandkids) and those you don’t, aren’t given an unexpected windfall (such as your ex or an adult child’s ex). Provide for everyone Providing for everyone is not necessarily straight forward, especially if you have a blended family. For instance, leaving your share of your home to your children from a previous relationship could lead to disagreements if your partner doesn’t want to leave. Instead, think about how your assets can be divided fairly without disadvantaging anyone. Children could be nominated beneficiaries of your superannuation and/or life insurance, leaving your home for your partner. Keep wealth flowing Certain structures can allow you to keep giving to your descendants long after you’re gone – offsetting their income and providing far greater wealth over time than any lump sum could achieve. A family or testamentary trust allows ongoing wealth creation through shared assets, with regular dividends paid out, creating a family legacy that can last for generations. Or a family company can allow a commercial entity to continue trading and growing as an asset. Manage tax impacts Implement tax-effective strategies that maximise how much your beneficiaries actually receive and minimise what the tax man pockets. While there isn’t an inheritance tax per se, beneficiaries can be hit with Capital Gains Tax (CGT) on asset sales plus transfer costs to put an asset into their own name – not to mention the ongoing maintenance and compliance costs of asset ownership. In some instances, your loved ones may benefit more if you sell assets now and leave them the proceeds, rather than leave them the asset – and its associated tax bill – once you’re gone. Ensure loved ones are home and housed Property is perhaps the biggest of all sources of wealth, yet it is increasingly difficult for younger people and singles to get (and stay) on the property ladder. Ensure everyone can reap the benefits of property ownership over their own lifetime, either by transferring ownership of properties in your name or contributing chunks of cash towards a deposit. However, it’s important to do so sustainably – gifting grandkids a large property they can’t afford to maintain isn’t going to work. Charitable donations Many people like to support charities and social causes once they are gone. Consider the end user here and what they stand to benefit from your donation – whether it be people, planet or both. It could be leaving a lump sum on your death, or regular ongoing donations from your estate. You may wish to do so anonymously, or include a message with your donation outlining your reasons why that particular charity/cause is important to you and what you hope the money will go towards. Donations may not necessarily be financial either – perhaps you have a valuable historic artefact that others could enjoy if donated to a museum? Organ donation The greatest gift of all is not money but life itself. So, consider whether organ donation is something you wish to do. While not suitable for everyone, and dependent on a range of factors including your age, health and religious beliefs, a single organ donor can save up to seven lives, as well as improve the quality of life of numerous others through eye and tissue donation. That is a lot of life you can give to others – and all without costing your own loved ones a cent! Helen Baker is a licensed Australian financial adviser and author of On Your Own Two Feet: The Essential Guide to Financial Independence for all Women. Helen is among the 1% of financial planners who hold a master’s degree in the field. Proceeds from book sales are donated to charities supporting disadvantaged women and children. Find out more at <a href="http://www.onyourowntwofeet.com.au/">www.onyourowntwofeet.com.au</a> Disclaimer: The information in this article is of a general nature only and does not constitute personal financial or product advice. Any opinions or views expressed are those of the authors and do not represent those of people, institutions or organisations the owner may be associated with in a professional or personal capacity unless explicitly stated. Helen Baker is an authorised representative of BPW Partners Pty Ltd AFSL 548754. Image credits: Shutterstock

Retirement Income

Is it worth selling my house if I’m going into aged care?

<div class="theconversation-article-body"><a href="https://theconversation.com/profiles/colin-zhang-1234147">Colin Zhang</a>, <a href="https://theconversation.com/institutions/macquarie-university-1174">Macquarie University</a> For senior Australians who cannot live independently at home, residential aged care can provide accommodation, personal care and general health care. People usually think this is expensive. And many assume they need to sell their home to pay for a lump-sum deposit. But that’s not necessarily the case. Here’s what you need to consider. <h2>You may get some financial support</h2> Fees for residential aged care are complex and can be confusing. Some are for your daily care, some are means-tested, some are for your accommodation and some pay for extras, such as cable TV. But it’s easier to think of these fees as falling into two categories: <ul> <li> an “entry deposit”, which is usually more than <a href="https://www.health.gov.au/sites/default/files/documents/2020/06/eighth-report-on-the-funding-and-financing-of-the-aged-care-industry-july-2020-eighth-report-on-the-funding-and-financing-of-the-aged-care-industry-may-2020.pdf">$A300,000</a>, and is refunded when you leave aged care </li> <li> daily “<a href="https://www.myagedcare.gov.au/aged-care-home-costs-and-fees">ongoing fees</a>”, which are $52.71-$300 a day, or more. These cover the basic daily fee, which everyone pays, and the means-tested care fee. </li> </ul> To find out how much government support you’ll receive for both these categories, you will have a “<a href="https://www.myagedcare.gov.au/income-and-means-assessments/#aged-care-home">means test</a>” to assess your income and assets. This means test is similar (but different) to the means test for the aged pension. Generally speaking, the lower your aged-care means test amount, the more government support you’ll receive for aged care. With full support, you don’t need to pay an “entry deposit”. But you still need to pay the basic daily fee (currently, <a href="https://www.myagedcare.gov.au/aged-care-home-costs-and-fees">$52.71</a> a day), equivalent to 85% of your aged pension. If you get partial support, you pay less for your “entry deposit” and ongoing fees. <h2>You don’t need a lump sum</h2> You don’t have to pay for your “entry deposit” as a lump sum. You can choose to pay a rental-style daily cost instead. This is calculated as follows: you multiply the amount of the required “entry deposit” by the maximum permissible interest rate. This rate is set by government and is currently at <a href="https://www.health.gov.au/sites/default/files/documents/2021/03/schedule-of-fees-and-charges-for-residential-and-home-care-schedule-from-20-march-2021_0.pdf">4.01%</a> per year for new residents. Then you divide that sum by 365 to give a daily rate. This option is like borrowing money to pay for your “entry deposit” via an interest-only loan. You can also pay for your “entry deposit” with a combination of a lump sum and a daily rental cost. As it’s not compulsory to pay a lump sum for your “entry deposit”, you have different options for dealing with your family home. <h2>Option 1: keep your house and rent it out</h2> This allows you to use the rental-style daily cost to finance your “entry deposit”. Pros <ul> <li> you could have more income from rent. This can help pay for the rental-style daily cost and “ongoing fees” of aged care </li> <li> you might have a special sentimental attachment to your family house. So keeping it might be a less confronting option </li> <li> keeping an expensive family house will not heavily impact your residential aged care cost. That’s because any value of your family house above <a href="https://www.health.gov.au/sites/default/files/documents/2021/03/schedule-of-fees-and-charges-for-residential-and-home-care-schedule-from-20-march-2021_0.pdf">$173,075.20</a> will be excluded from your <a href="https://www.servicesaustralia.gov.au/organisations/health-professionals/services/aged-care-entry-requirements-providers/residential-care/residential-aged-care-means-assessment">means test</a> </li> <li> you can still access the capital gains of your house, as house prices rise. </li> </ul> Cons <ul> <li> your rental income needs to be included in the means test for your aged pension. So you might get less aged pension </li> <li> you might need to pay income tax on the rental income </li> <li> compared to the lump sum payment, choosing the rental-style daily cost means you will end up <a href="https://www.smh.com.au/money/super-and-retirement/seek-help-when-weighing-up-how-to-pay-for-your-aged-care-20191202-p53g16.html">paying more</a> </li> <li> you are subject to a changing rental market. </li> </ul> <h2>Option 2: keep your house and rent it out, with a twist</h2> If you have some savings, you can use a combination of a lump sum and daily rental cost to pay for your “entry deposit”. Pros <ul> <li> like option 1, you can keep your house and have a steady income </li> <li> the amount of lump sum deposit will not be counted as an asset in the pension means test. </li> </ul> Cons <ul> <li> like option 1, you could have less pension income, higher age-care costs and need to pay more income tax </li> <li> you have less liquid assets (assets you could quickly sell or access), which could be handy in an emergency. </li> </ul> <h2>Option 3: sell your house</h2> If you sell your house, you can use all or part of the proceeds to pay for your “entry deposit”. Pros <ul> <li> if you have any money left over after selling your house and paying for your “entry deposit”, you can invest the rest </li> <li> as your “entry deposit” is exempt from your aged pension means test, it means more pension income. </li> </ul> Cons <ul> <li>if you have money left over after selling your house, this will be included in the aged-care means test. So you can end up with less financial support for aged care.</li> </ul> <h2>In a nutshell</h2> Keeping your house and renting it out (option 1 or 2) can give you a better income stream, which you can use to cover other living costs. And if you’re not concerned about having access to liquid assets in an emergency, option 2 can be better for you than option 1. But selling your house (option 3) avoids you being exposed to a changing rental market, particularly if the economy is going into recession. It also gives you more capital, and you don’t need to pay a rental-style daily cost. <hr /> This article is general in nature, and should not be considered financial advice. For advice tailored to your individual situation and your personal finances, please see a qualified financial planner. Correction: this article previously stated the amount of lump sum deposit will not be counted as an asset in the aged-care means test, as a pro of option 2. In fact, the amount of lump sum deposit will not be counted as an asset in the pension means test.<img style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important;" src="https://counter.theconversation.com/content/161674/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" /> <a href="https://theconversation.com/profiles/colin-zhang-1234147">Colin Zhang</a>, Lecturer, Department of Actuarial Studies and Business Analytics, <a href="https://theconversation.com/institutions/macquarie-university-1174">Macquarie University</a> Image credits: Shutterstock This article is republished from <a href="https://theconversation.com">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/is-it-worth-selling-my-house-if-im-going-into-aged-care-161674">original article</a>. </div>

Retirement Income

The biggest faux pas for self-funded retirees

Whether you have been retired for some time or are still looking forward to the time you can step back, chances are there are important considerations you may have overlooked. From planning and pensions to family and housing, these are the biggest self-funded retirement mistakes I come across, and some insights into how to avoid repeating them: <ol> <li>Lack of a plan</li> </ol> Not having a retirement plan is perhaps the most basic faux pas, but often the most costly. A detailed plan should cover things like: <ul> <li>When you AND your partner will retire </li> <li>Where you will live (you may want to downsize, relocate, seek assisted living)</li> <li>Anticipated living costs (living situation, health, lifestyle)</li> <li>How you will spend your time (hobbies, travel, volunteering, time with family)</li> <li>Strategies to maximise investments and superannuation</li> <li>Tax minimisation strategies</li> </ul> Remember: failing to plan = planning to fail. <ol start="2"> <li>Poor planning</li> </ol> Having a plan is the starting point, but it won’t get you far if it’s incomplete, not updated as circumstances change, or omits critical factors. For couples, not considering age differences is a big mistake. One partner retiring before the other can have big shifts on financial and tax dynamics and even the relationship itself. Then there is end-of-life care, particularly if the younger partner is still working. Not building in a safety buffer is another no-no. Too many retirees have been caught out by the high inflation of recent years, having calculated their anticipated income needs on much lower living costs. Balance short-term and long-term goals: being overly conservative early on can limit your financial situation down the track. And no plan is complete without contingencies for worst case scenarios – insurances, protections, back-up options. <ol start="3"> <li>Insecure housing </li> </ol> Government data has long shown major differences in quality of life for retirees who own their home versus those who don’t. Homelessness or insecure housing, the mercy of the rental market, and inability to customise your home as you age or if you need specialised support with disability or health issues are some of the challenges renters face. Furthermore, public estimates of how much the average Australian needs to retire typically assume home ownership – meaning rent is not part of that calculation. That’s a huge living cost you may not have factored into your retirement planning. <ol start="4"> <li>Unclaimed pensions</li> </ol> Contrary to popular belief, self-funded retirement and claiming a pension are not mutually exclusive. You may be eligible for a part-pension, calculated pro-rata according to the value of your assets and other income. Claiming a part-pension, no matter how small it may be, reduces how much income you need to draw down from super – making it last longer. Don’t fall into another common trap when applying – overestimating your assets. It’s easy to assume your non-monetary assets are worth more than what they really are, reducing how much pension you receive or negating your eligibility altogether. <ol start="5"> <li>Depleted Bank of Mum and Dad</li> </ol> With home ownership increasingly out of reach for younger adults, the Bank of Mum and Dad is often sought to bridge the gap. How you do so will impact your own situation. Giving more than you can afford can leave you overstretched. Missed loan repayments could see you fall behind on your own bills. Not putting agreements in writing can lead to disputes down the track. Having a loan guarantee called in could see you homeless. Be wise about decisions you make here and don’t let heartstrings cloud your judgement. <ol start="6"> <li>Suffering in silence</li> </ol> Elder abuse is a sad but significant problem. Given they have money in the bank, self-funded retirees are often the most vulnerable. Its effects can be far-reaching, impacting your mental and physical health, financial wellbeing, social interactions, and quality of life. Be aware of <a href="https://www.oversixty.com.au/finance/retirement-income/are-you-a-victim-of-elder-abuse-without-even-realising-it">the signs that something isn’t right</a>. If you recognise it happening to you – or someone you know – speak up and seek help. <ol start="7"> <li>Forgoing professional advice</li> </ol> How much of the above details did you already know? Chances are, not all of them. And that’s just the tip of the iceberg. Money is a complicated business and you simply don’t know what you don’t know, which is why seeking independent, tailored advice from a professional is so important. A good financial advisor can help you identify new opportunities and manage risks you may not have considered, limit expenses and also work with your accountant to minimise your tax. Helen Baker is a licensed Australian financial adviser and author of On Your Own Two Feet: The Essential Guide to Financial Independence for all Women. Helen is among the 1% of financial planners who hold a master’s degree in the field. Proceeds from book sales are donated to charities supporting disadvantaged women and children. Find out more at <a href="http://www.onyourowntwofeet.com.au/">www.onyourowntwofeet.com.au</a> Disclaimer: The information in this article is of a general nature only and does not constitute personal financial or product advice. Any opinions or views expressed are those of the authors and do not represent those of people, institutions or organisations the owner may be associated with in a professional or personal capacity unless explicitly stated. Helen Baker is an authorised representative of BPW Partners Pty Ltd AFSL 548754. Image credits: Shutterstock

Retirement Income

Retirement doesn’t just raise financial concerns – it can also mean feeling unmoored and irrelevant

<div class="theconversation-article-body"><a href="https://theconversation.com/profiles/marianne-janack-681018">Marianne Janack</a>, <a href="https://theconversation.com/institutions/hamilton-college-2966">Hamilton College</a> Most discussions of retirement focus on the financial aspects of leaving the workforce: “<a href="https://www.dol.gov/sites/dolgov/files/EBSA/about-ebsa/our-activities/resource-center/publications/top-10-ways-to-prepare-for-retirement.pdf">How to save enough for retirement</a>” or “<a href="https://www.businessinsider.com/personal-finance/investing/when-can-i-retire">How do you know if you have enough money for retirement</a>?” But this might not be the biggest problem that potential retirees face. The deeper issues of meaning, relevance and identity that retirement can bring to the fore are more significant to some workers. Work has <a href="https://www.theatlantic.com/ideas/archive/2023/03/work-revolution-ai-wfh-new-book/673572/">become central to the modern American identity</a>, as <a href="https://www.theatlantic.com/atlantic-editions/">journalist Derek Thompson bemoans</a> in The Atlantic. And some theorists have argued that work shapes what we are. For most people, as business ethicist <a href="https://www.luc.edu/quinlan/faculty/algini.shtml#:%7E:text=About,the%20Society%20for%20Business%20Ethics.">Al Gini</a> argues, one’s work – which is usually also one’s job – <a href="https://doi.org/10.4324/9780203950555">means more than a paycheck</a>. Work can structure our friendships, our understandings of ourselves and others, our ideas about free time, our forms of entertainment – indeed our lives. I <a href="https://www.hamilton.edu/academics/our-faculty/directory/faculty-detail/marianne-janack">teach a philosophy course about the self</a>, and I find that most of my students think of the problems of identity without thinking about how a job will make them into a particular kind of person. They think mostly about the prestige and pay that come with certain jobs, or about where jobs are located. But when we get to <a href="https://plato.stanford.edu/entries/existentialism/">existentialist philosophers</a> such as <a href="https://plato.stanford.edu/entries/sartre/">Jean-Paul Sartre</a> and <a href="https://plato.stanford.edu/entries/beauvoir/">Simone de Beauvoir</a>, I often urge them to think about what it means to say, as the existentialists do, <a href="https://philosophynow.org/issues/115/On_Being_An_Existentialist">that “you are what you do</a>.” How you spend 40 years of your life, I tell them, for at least 40 hours each week – the time many people spend at their jobs – is not just a financial decision. And I have come to see that retirement isn’t just a financial decision, either, as I consider that next phase of my life. <h2>Usefulness, tools and freedom</h2> For Greek and Roman philosophers, <a href="https://search.worldcat.org/title/Work-what-it-has-meant-to-men-through-the-ages/oclc/780872063">leisure was more noble than work</a>. The life of the craftsperson, artisan – or even that of the university professor or the lawyer – was to be avoided if wealth made that possible. The good life was a life not driven by the necessity of producing goods or making money. Work, Aristotle thought, was an obstacle to the achievement of the particular forms of excellence characteristic of human life, like thought, contemplation and study – <a href="https://classics.mit.edu/Aristotle/nicomachaen.7.vii.html">activities that express</a> the <a href="https://classics.mit.edu/Aristotle/nicomachaen.8.viii.html">particular character of human beings</a> and are done for their own sake. And so, one might surmise, retirement would be something that would allow people the kind of leisure that is essential to human excellence. But contemporary retirement does not seem to encourage leisure devoted to developing human excellence, partly because it follows a long period of making oneself into an object – something that is not free. German philosopher Immanuel Kant distinguished between the value of objects and of subjects by the idea of “use.” Objects are not free: They are meant to be used, like tools – their value is tied to their usefulness. But rational beings like humans, who are subjects, are more than their use value – <a href="https://search.worldcat.org/title/5796114">they are valuable in their own right</a>, unlike tools. And yet, much of contemporary work culture encourages workers to think of themselves and their value <a href="https://www.simonandschuster.com/books/Bullshit-Jobs/David-Graeber/9781501143335">in terms of their use value</a>, a change that would have made both Kant and the ancient Greek and Roman philosophers wonder why people didn’t retire as soon as they could. <h2>‘What we do is what we are’</h2> But as one of my colleagues said when I asked him about retirement: “If I’m not a college professor, then what am I?” Another friend, who retired at 59, told me that she does not like to describe herself as retired, even though she is. “Retired implies useless,” she said. So retiring is not just giving up a way of making money; it is a deeply existential issue, one that challenges one’s idea of oneself, one’s place in the world, and one’s usefulness. One might want to say, with Kant and the ancients, that those of us who have tangled up our identities with our jobs have made ourselves into tools, and we should throw off our shackles by retiring as soon as possible. And perhaps from the outside perspective, that’s true. But from the participant perspective, it’s harder to resist the ways in which what we have done has made us what we are. Rather than worry about our finances, we should worry, as we think about retirement, more about what the good life for creatures like us – those who are now free from our jobs – should be.<img style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important;" src="https://counter.theconversation.com/content/233963/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" /> <a href="https://theconversation.com/profiles/marianne-janack-681018">Marianne Janack</a>, John Stewart Kennedy Professor of Philosophy, <a href="https://theconversation.com/institutions/hamilton-college-2966">Hamilton College</a> Image credits: Shutterstock This article is republished from <a href="https://theconversation.com">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/retirement-doesnt-just-raise-financial-concerns-it-can-also-mean-feeling-unmoored-and-irrelevant-233963">original article</a>. </div>

Retirement Income

"Ridiculous": Debate erupts over whether grandparents should be paid to babysit

Any parent knows how difficult it is to get your child into daycare or preschool. With limited spaces across the country and rising costs, many are turning to their families for help. Many rely on grandma and grandpa to help out with the kids, and while some say they'd happily do it for free, others think it's time to put a price on it. According to a Nine.com.au poll 42 per cent of Aussies believe that grandparents should be paid for babysitting, while 58 per cent of them believe there's no need to pay grandparents for their services. However, the question is more complicated than a simple yes or no, with many explaining that it depends on the circumstance. "If grandparents are babysitting for special occasions or at their request then I don't think they should be paid. Most would do it for love and time with grandkids. If grandparents are providing child minding then that's different. If it's a regular occurrence then yes they should be paid," explained one person. "Grandparents should be paid to babysit if they are required for more than two full days a week," echoed another. "Grandparents should be paid, it is cheaper than creche and the kids won't be as sick mixing with a batch of others," a third wrote. For many there's a big difference between babysitting on a weekend or a one-off day versus during the week. "Being paid as a grandparent to babysit in my opinion is ridiculous, however if a grandparent is enlisted to provide child care more than two days a week so that parents can work, I think a payment in some form isn't unreasonable, even if it's a surprise gift intermittently," one wrote. "I babysit my grandchildren while my daughter works she pays me $20 for petrol, but if they want to go out and I babysit then she doesn't pay me which I'm OK with," added another person. The parents and grandparents' financial position was also a big factor. "I think the grandparent babysitting for payment is a personal thing. Some parents can really afford it, some are struggling and the grandparents do it to help out," one explained. Image: Shutterstock

Retirement Income

Retirement tips for Australians without a full superannuation safety net

Most people who commenced paid work before the 1992 launch of compulsory employer contributions won’t have enjoyed money going into their retirement fund for the full duration of their working lives. Others have spent most or all of their adult lives as caregivers – stay-home parents, carers for elderly parents or relatives living with disability. Unquestionably valuable work, yet sadly unpaid – meaning no superannuation. Then there other factors impacting retirement savings – the gender pay gap, periods of unpaid leave, unemployment, working abroad, being a low income earner and more. So don’t think you are alone if you don’t have enough in superannuation for a comfortable retirement. Consider the following options to fall back on instead of, or as well as, your super: Age pension This is the most obvious alternative. What fewer realise, though, is that you may still be eligible for a part-pension, even if your assets exceed the eligibility threshold for the full amount. Claiming a part-pension will stretch what super you do have further. Plus, the related concession card entitles you to a range of discounts, reducing your living costs. Don’t overestimate the value of your assets under the pension means test – potentially denying yourself a legitimate source of income. Semi-retirement Consider transitioning to part-time work instead of retiring outright, allowing you to reduce your workload while still generating both income and employer contributions into your super. This could include self-employment – many retirees begin building a business out of their hobby or do paid consulting work within their industry (often a much higher hourly rate than as a permanent employee). Your home If you own your home, chances are you are sitting on a pile of equity. Yes, you would need to sell and move in order to unlock those funds. But it’s tax-free money. And it can be as much of a lifestyle opportunity as a financial one: downsize to a home with less maintenance needs; relocate nearer to grandkids; enjoy a seachange or treechange. Downsizer provisions also allow you to contribute a chunk of the proceeds into your superannuation over-and-above voluntary contribution caps. Investments Certain investments can deliver a lucrative passive income stream, which you can use in lieu of – or alongside – income from super. Think investment property rents, share dividends, even renting out your car/caravan/boat when you’re not using it. Or you could sell investments you own and use the proceeds to top up your super, which is typically more tax effective than holding as cash. Family business/trust If you have a family business or family trust, you may be able to draw down a regular income from it if structured correctly. Doing so over time from operating profits/investment returns, rather than as a lump sum, means a trust can continue as normal without being forced to sell assets or be wound up, while a business can continue trading under family ownership without the remaining directors having to find the cash to buy out your share (though this may be another option to explore with them). Living costs Your living costs are quite different in full-time retirement compared to full-time work. Goodbye to many commuting, clothing, personal grooming, professional development, registration/certification, lunches and coffees, and work-from-home expenses. Hello to greater energy bills (more time at home and no more remote working tax deductions), travel and lifestyle spending. Don’t overlook the power of updating your household spending and investments plan to reflect this new reality, cancel work-related outgoings and cut unnecessary spending. Timing Perhaps the most far-reaching, yet most commonly overlooked, aspect around retirement is timing. For instance: <ul> <li>the later in the financial year you retire, the more employment income you have accrued – potentially pushing you into a higher tax bracket and ballooning your tax bill.</li> <li>the proceeds from investments differ depending on when in the market cycle you sell them.</li> <li>retiring early may reduce employment bonuses, leave payouts, share option entitlements etc.</li> <li>both spouses/partners retiring simultaneously may reduce overall employment earnings, while conversely unlocking greater opportunities to do things together (like travel, shared hobbies, visiting family).</li> </ul> A qualified financial adviser can help you work through your various options and alternatives, allowing you the peace of mind to enjoy your golden years comfortably – whether that is with or without superannuation. Helen Baker is a licensed Australian financial adviser and author of On Your Own Two Feet: The Essential Guide to Financial Independence for all Women. Helen is among the 1% of financial planners who hold a master’s degree in the field. Proceeds from book sales are donated to charities supporting disadvantaged women and children. Find out more at <a href="http://www.onyourowntwofeet.com.au/">www.onyourowntwofeet.com.au</a> Disclaimer: The information in this article is of a general nature only and does not constitute personal financial or product advice. Any opinions or views expressed are those of the authors and do not represent those of people, institutions or organisations the owner may be associated with in a professional or personal capacity unless explicitly stated. Helen Baker is an authorised representative of BPW Partners Pty Ltd AFSL 548754. Image credits: Shutterstock

Retirement Income

Is Paris 2024 really achieving its goals for gender equality?

<div class="theconversation-article-body"><a href="https://theconversation.com/profiles/rachael-jefferson-297850">Rachael Jefferson</a>, <a href="https://theconversation.com/institutions/charles-sturt-university-849">Charles Sturt University</a> The <a href="https://olympics.com/en/paris-2024">Paris Olympics</a> has proudly proclaimed to be the first games in 128 years to offer gender equality. This has been achieved by the <a href="https://olympics.com/ioc/news/genderequalolympics-paris-2024-making-history-on-the-field-of-play">International Olympic Committee (IOC)</a> providing an equal number of quota places for female and male athletes, while also increasing the number of women in coaching, broadcasting and sport governance roles. However, gender equality in sport is not just about the numbers – it involves dismantling systemic patriarchy piece by piece. <figure><iframe src="https://www.youtube.com/embed/uaCIpFiN6us?wmode=transparent&start=0" width="440" height="260" frameborder="0" allowfullscreen="allowfullscreen"></iframe><figcaption>The Paris games will feature the highest proportion of women in the history of the Olympics.</figcaption></figure> <h2>Female athlete participation</h2> The ratio of female-to-male athlete parity is significant in the Paris Olympics, given <a href="https://www.theguardian.com/commentisfree/2021/jul/28/the-guardian-view-on-women-and-the-olympics-the-athletes-caught-up-now-the-ioc-must">women were banned from the first games in 1896</a> and only permitted to compete in small numbers in “female-appropriate” events four years later. There was a steady increase in female participation as the games became more popular through the 20th century. However, it was not until 1979 that the right of women to participate in sport was formally included in the first international convention (United Nations) on <a href="https://www.ohchr.org/Documents/ProfessionalInterest/cedaw.pdf">the elimination of all forms of discrimination</a> against women. It took another 33 years for women to be allowed to <a href="https://library.olympics.com/default/zoom-femme-et-sport.aspx?_lg=en-GB">compete in all events</a> on the Olympic program in 2012. At the Paris Olympics, <a href="https://www.statista.com/statistics/1090616/olympics-share-athletes-by-gender-since-1896/">50% of competing athletes are women</a>, and the Australian team has its <a href="https://www.health.gov.au/ministers/the-hon-anika-wells-mp/media/australia-supports-unesco-push-for-gender-equality-in-sport?language=en">highest ever proportion of women (55%)</a>. <h2>Women’s visibility</h2> The IOC has been working hard at shaking off its patriarchal reputation for the past three decades or so. Two major milestones were the establishment of the <a href="https://olympics.com/ioc/gender-equality/gender-equality-through-time">Women and Sport Working Group</a> in 1995, and the <a href="https://www.europarl.europa.eu/RegData/etudes/BRIE/2019/635560/EPRS_BRI(2019)635560_EN.pdf">amending of the Olympic Charter</a> a year later to include advancing women in sport as an Olympic principle. Despite this progress, women’s Olympic events have often been <a href="https://revista-apunts.com/en/media-representation-of-women-athletes-at-the-olympic-games-a-systematic-review/">sidelined by the media</a>, enabling male athletes to enjoy greater publicity (and associated sponsorship) than their female counterparts. The long-established scheduling of events <a href="https://www.jou.ufl.edu/insights/gender-based-sports-coverage-a-quarter-century-of-prime-time-summer-olympics/">offers male athletes peak viewing times</a> across the globe, thereby consigning many women to the margins. In Paris, this <a href="https://olympics.com/ioc/news/genderequalolympics-paris-2024-making-history-on-the-field-of-play">gender discrimination</a> has been disrupted to better the balance. Combat and strength sports are now based on weight categories, permitting the women’s and men’s events to alternate instead of having men’s events available in the popular evening slot. The women’s marathon – only introduced to the Olympics in 1984 – will <a href="https://worldathletics.org/news/news/key-information-athletics-paris-2024-olympic-games">also conclude the athletics program</a> instead of the men’s for the first time. <h2>Media representation</h2> Amplifying women’s voices and stories from the games has been a key objective for the Paris Olympics. The IOC has been instrumental in this endeavour via its <a href="https://olympics.com/ioc/gender-equality/portrayal-guidelines">2024 Portrayal Guidelines:</a> gender-equal, fair and inclusive representation in sport. These guidelines have led to a large increase in the number of female staff in broadcast roles and production teams in Paris. And <a href="https://olympics.com/ioc/news/olympic-broadcasting-more-women-in-key-broadcast-roles-at-paris-2024">female-targeted training camps</a> in 2023 provided by the Olympic Broadcasting Services (OBS) have been a timely institutional transformation. Improved media representation of female athletes is also a priority, focusing on how they are visually captured and presented in all forms of media and communication. This helps to reframe persistent patriarchal narratives about how sportswomen must <a href="https://theconversation.com/uniform-discontent-how-women-athletes-are-taking-control-of-their-sporting-outfits-164946">maintain their femininity</a> to be worthy recipients of the <a href="https://vc.bridgew.edu/cgi/viewcontent.cgi?article=1269&context=grad_rev">male gaze</a>. Regrettably, this is still a work in progress for some commentators such as <a href="https://www.skynews.com.au/business/media/you-know-what-women-are-like-eurosport-commentator-bob-ballard-sacked-for-sexist-remark-after-australias-freestyle-relay-win/news-story/739bc7a0efaf9d7007250ab0c4313f15">Bob Bollard, whose recent sexist “makeup” remark</a> went viral when he was reporting on the gold medal win for the Australian women’s 4x100m freestyle relay team. After the Bollard incident, Yiannis Exarchos, the <a href="https://www.scmp.com/yp/discover/news/sports/article/3272286/paris-olympics-camera-operators-told-avoid-filming-women-sexist-way">OBS chief, swiftly reminded</a> mostly male camera operators to refrain from any sexist filming of female athletes. He said the problem was mainly down to “unconscious bias”, with camera operators and TV editors tending to show more close-up shots of women than men. <h2>Leadership and infrastructure</h2> Female under-representation in the IOC is well documented. There were <a href="https://www.europarl.europa.eu/RegData/etudes/BRIE/2019/635560/EPRS_BRI(2019)635560_EN.pdf">no women in the IOC from 1896 to 1981</a> before Flor Isava Fonseca (Venezuela) and Pirjo Häggman (Finland) were co-opted as the <a href="https://stillmed.olympics.com/media/Documents/Olympic-Movement/Factsheets/Women-in-the-Olympic-Movement.pdf">first two female IOC members in 1981</a>. In the IOC’s most recent election in July, the number of <a href="https://olympics.com/ioc/news/ioc-session-in-paris-elects-two-new-vice-presidents-and-eight-ioc-members">female members rose to 42.3%</a> – more than a 100% increase in the past decade. Following a long overdue <a href="https://unwomen.org.au/paris-2024-olympics-a-new-era-for-women-in-sport/">IOC rule change in 2020</a>, the traditional male flag bearer in the Olympics Opening Ceremony was accompanied by a female. Gender issues arise with elite sport coaches too – <a href="https://olympics.com/ioc/female-coaches">only 13% of coaches</a> at the 2020 Tokyo Olympics were women. In Paris, it is estimated <a href="https://www.telegraph.co.uk/olympics/2024/07/27/female-coaches-misogyny-olympics-paris-2024-equality-wish/#:%7E:text=At%20the%20Tokyo%20Olympics%20in,10%20coaches%20will%20be%20female.">one in ten coaches are female</a>. Outrage about <a href="https://abcnews.go.com/GMA/Culture/nikes-olympic-track-womens-uniforms-criticized-athletes-sexism/story?id=109267006">sexist Nike uniforms</a> and the <a href="https://theconversation.com/the-olympics-and-fifa-are-trying-to-better-support-mum-aletes-what-are-australian-sports-doing-233218">lack of facilities for “mum-aletes”</a> until the 2024 games both highlight the incessant institutional hurdles elite sportswomen encounter. <h2>A new era for female athletes</h2> The Paris games are a springboard for much needed systemic change in the minutiae of Olympic policies and practices. Female athletes are no longer victims of vast patriarchal conspiracies to lock them out of this male-dominated arena. They’ve gained ground and are kicking sexism to the touchline with relish. We all need to welcome in this new era.<img style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important;" src="https://counter.theconversation.com/content/235665/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" /> <a href="https://theconversation.com/profiles/rachael-jefferson-297850">Rachael Jefferson</a>, Lecturer in Human Movement Studies (Health and PE) and Creative Arts, <a href="https://theconversation.com/institutions/charles-sturt-university-849">Charles Sturt University</a> This article is republished from <a href="https://theconversation.com">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/is-paris-2024-really-achieving-its-goals-for-gender-equality-235665">original article</a>. </div>

Caring

"Dignified retirement": Aussies set for $21k cash boost

The average Australian is set to receive a $21,000 cash boost following a change to superannuation contributions. From July the superannuation guarantee increased from 11 to 11.5 per cent, meaning that the compulsory superannuation payments made by employers have risen. This means that an average worker earning around $72,000 would pocket an extra $21,000 at retirement as a result of the permanent increase, according to an analysis by the Treasury Department. “Wages growth and tax cuts are putting cash in people’s pockets now, and our increase to the super guarantee will put cash in people’s pockets for the future,” Treasurer Jim Chalmers said. “This will make a meaningful difference for millions of Australians who deserve a dignified retirement. “The superannuation guarantee has increased three times under our government.” The government has been progressively increasing the super guarantee rate until it hits 12 per cent, which will come into effect from July 2025. The concessional super contributions cap - the amount that you can invest into your super each year without copping extra tax and includes employer payments - also increased on July 1, up from $27,500 to $30,000 per year. In addition to this, the after-tax super or non-concessional super contributions cap has also been increased from $110,000 to $120,000. Image: Shutterstock

Retirement Income

Your parents’ income doesn’t determine yours – unless you’re ultra rich or extremely poor

<div class="theconversation-article-body"><a href="https://theconversation.com/profiles/catherine-de-fontenay-5631">Catherine de Fontenay</a>, <a href="https://theconversation.com/institutions/the-university-of-melbourne-722">The University of Melbourne</a> Australia is among the strongest global performers in terms of income mobility between the generations, according to a new <a href="https://www.pc.gov.au/research/completed/fairly-equal-mobility">Productivity Commission report</a>. The country’s long-term economic growth has led to each generation earning more than the last, on average. Our report finds 67% of the so-called <a href="https://www.businessinsider.com/xennials-born-between-millennials-and-gen-x-2017-11">“Xennial”</a> generation – those born in 1976–1982, on the cusp of the Millennial/Gen X divide – earn more than their parents did at a similar age. This is particularly true of those born into poorer families. <hr /> <iframe id="NsmB3" class="tc-infographic-datawrapper" style="border: 0;" src="https://datawrapper.dwcdn.net/NsmB3/" width="100%" height="400px" frameborder="0" scrolling="no"></iframe> <hr /> When we look at where people rank in an income distribution, the picture is a little less rosy. While children with parents at the bottom or top of the income scale are more likely to remain there, almost 15% of people with parents in the lowest income decile, remain there while just 6% move to the top. And those living in poverty - who often include renters, people from migrant backgrounds who don’t speak English at home and single parents - face some of the biggest barriers to improving their economic lot. <a href="https://www.pc.gov.au/research/completed/fairly-equal-mobility">Fairly Equal? Economic mobility in Australia</a>, released on Thursday, measures intergenerational income mobility by examining the relationship between a person’s income and the eventual income of their children. <h2>Measuring inequality</h2> Most countries anxiously monitor income distribution and economic mobility amid concerns inequality may be increasing. And countries with high inequality tend to have low mobility: the rungs of the social ladder are far apart making it difficult to move up to the next level. If mobility is low, the consequences are serious. Low mobility is discouraging, unproductive and unstable. If young people have little chance of achieving their aspirations, their wellbeing is affected. <a href="https://ideas.repec.org/p/cor/louvco/2023026.html">Social unrest is more likely</a>. And the abilities of young people from less affluent backgrounds are under-used. The next tech entrepreneur Steve Jobs may never be discovered, and many other opportunities are lost. In Australia we are used to thinking of ourselves as having inequality and mobility somewhere between Scandinavia and the US; but that comparison is not as comforting as it used to be, if inequality and mobility are worsening in the US. Our report considers people’s income mobility over the course of their lives, and across generations. If income mobility is low, people will struggle to recover from initial disadvantage, and those born into privilege will be financially secure. First we look at whether people move in the income distribution; there is a surprising amount of movement. And we look for evidence people can access opportunities throughout life, after setbacks. <h2>Recovering from setbacks</h2> There is not much evidence of recovery after a person experiences a severe illness or a job loss, perhaps because the causal factors are still at work. More encouragingly, the income of women who experience separation <a href="https://melbourneinstitute.unimelb.edu.au/__data/assets/pdf_file/0020/4815110/HILDA-User-Manual-Release-22.0.pdf">does increase</a>, eventually restoring the buying power of their household. This is in part due to well-targeted government support. For intergenerational mobility, we extended the dataset developed by <a href="https://www.aeaweb.org/articles?id=10.1257/jel.20211413">an analytical dataset</a> to measure the influence parents’ income had on the income their offspring were likely to earn. We found Australia’s intergenerational mobility is actually higher than the <a href="https://onlinelibrary.wiley.com/doi/10.1111/sjoe.12197">Scandinavian</a> countries, and second only to <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3662560">Switzerland</a> among comparable studies. <hr /> <iframe id="5DFB9" class="tc-infographic-datawrapper" style="border: 0;" src="https://datawrapper.dwcdn.net/5DFB9/" width="100%" height="400px" frameborder="0" scrolling="no"></iframe> <hr /> In all countries studied there was some link between parents’ income mobility and that of children, because parents pass on tastes, ambitions and abilities. And there was greater correlation between the incomes of mothers and daughters, and fathers and sons than with parents of the opposite gender, perhaps because of role model effects. <hr /> <iframe id="BJ4hD" class="tc-infographic-datawrapper" style="border: 0;" src="https://datawrapper.dwcdn.net/BJ4hD/" width="100%" height="400px" frameborder="0" scrolling="no"></iframe> <hr /> While Australia’s strong income mobility between generations is remarkable, it’s concerning there is less mobility among those at the very bottom and top of the income distribution scale. The fact children born into the poorest families were more likely to remain in the lowest deciles, while those born into the top earning families tended to remain in the top deciles, suggests privilege is often passed on. People who grew up in frequently poor households were <a href="https://melbourneinstitute.unimelb.edu.au/__data/assets/pdf_file/0009/3537441/HILDA-Statistical-report-2020.pdf">three time more likely</a> to be poor at age 26 to 32 than those who never experienced poverty. <hr /> <iframe id="SxHBo" class="tc-infographic-datawrapper" style="border: 0;" src="https://datawrapper.dwcdn.net/SxHBo/" width="100%" height="400px" frameborder="0" scrolling="no"></iframe> <hr /> And consistent with <a href="https://www.aihw.gov.au/getmedia/37c2c8b7-328c-41e1-bace-87ed7a551777/australias-welfare-chapter-2-summary-18sept2019.pdf.aspx">other studies</a> we found children whose family received government payments were twice as likely to receive support as adults, compared with those whose families received no help. <h2>Movement in the middle</h2> Taken together, these results suggest some segmentation of opportunities. In the middle of the income distribution, there are opportunities to get ahead, and individuals’ careers are not restricted by their families’ circumstances. At the bottom, things are a lot more “sticky”, and finding opportunities to permanently escape poverty is more difficult. Some of this boils down where people live, peers, school quality and local job options. Researchers <a href="https://www.aeaweb.org/articles?id=10.1257/jel.20211413">Deutscher and Mazumder</a> (2023) have shown regional economic conditions have a big impact on mobility, and we show remoteness limits movement out of poverty. Overall, the mobility picture is extremely good news for most Australians. But this should not blind us how difficult it is to move out of poverty, especially for those in remote areas. Identifying where mobility fails to deliver allows us to focus our policy response.<img style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important;" src="https://counter.theconversation.com/content/234158/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" /> <a href="https://theconversation.com/profiles/catherine-de-fontenay-5631">Catherine de Fontenay</a>, Honorary Fellow, Department of Economics, <a href="https://theconversation.com/institutions/the-university-of-melbourne-722">The University of Melbourne</a> Image credits: Shutterstock This article is republished from <a href="https://theconversation.com">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/your-parents-income-doesnt-determine-yours-unless-youre-ultra-rich-or-extremely-poor-234158">original article</a>. </div>

Money & Banking

"Tax the boomers": Outrage over elderly couple's complaint after $1m Lotto win

A "greedy" elderly couple have been rinsed online after complaining about losing their age pension payments after they won the Lotto. The couple, aged 73 and 67, wrote into <a href="https://www.smh.com.au/money/super-and-retirement/we-won-the-lottery-but-lost-our-pension-could-we-have-prevented-this-20240702-p5jqga.html" target="_blank" rel="noopener">Sydney Morning Herald</a>'s financial advice column with Noel Whittaker to ask how they could've prevented losing the government funds and still kept hold of their million-dollar winnings. The couple's submission read, "We are a couple... both retired and receiving the full aged pension. We recently won $1,000,000 in the lottery and have placed that money in a basic interest-bearing savings account with our bank." "We intend to use that money to buy a new house and sell our existing one but may just renovate. The windfall has stopped our pension completely until we spend the money, which is all good and well. But could we have prevented the pension loss in any way?" Whittaker responded that the couple should consider themselves extremely fortunate and enjoy the money, saying they "could have a far better lifestyle living off capital instead of relying on welfare". He also urged the couple not "spend to get a pension". The boomers' questions quickly drew attention online, with many flocking to Facebook comments to slam the couple for their "greed". One person wrote, "If you won the lotto, why would you want the pension?", while another added, "Ah yes, the call of the boomers everywhere, 'I have millions but where's my pension money?'" Others said the Lotto winners should consider themselves lucky they are now able to provide for themselves, with one person writing, "Pension is a support system to allow you to survive without/reduced work in retirement. If you are a multimillionaire then you don't need it." Another person echoed the sentiment, saying, "Wow, what entitlement. The pension is a safety net, if you don’t qualify for it think yourself lucky." Other social media users simply shared their outrage towards the boomer generation, as one frustrated person wrote, "Won a million and whinging they can't scam the taxpayers, what self-centered arrogance", while another added, "Tax the boomers! No more handouts." Image credits: Shutterstock <div class="x6s0dn4 x3nfvp2" style="font-family: inherit; align-items: center; display: inline-flex; min-width: 604px;"> <ul class="html-ul xe8uvvx xdj266r x4uap5 x18d9i69 xkhd6sd x1n0m28w x78zum5 x1wfe3co xat24cr xsgj6o6 x1o1nzlu xyqdw3p" style="list-style: none; margin: 0px -8px 0px 4px; padding: 3px 0px 0px; display: flex; min-height: 15px; line-height: 12px; caret-color: #1c1e21; color: #1c1e21; font-family: system-ui, -apple-system, BlinkMacSystemFont, '.SFNSText-Regular', sans-serif; font-size: 12.000001px;" aria-hidden="false"> <li class="html-li xe8uvvx xdj266r xat24cr xexx8yu x4uap5 x18d9i69 xkhd6sd x1rg5ohu x1emribx x1i64zmx" style="list-style: none; display: inline-block; padding: 0px; margin: 0px 8px;"> </li> </ul> </div>

Retirement Income

How do I plan for my retirement? Step one – start right away

<div class="theconversation-article-body"><a href="https://theconversation.com/profiles/bomikazi-zeka-680577">Bomikazi Zeka</a>, <a href="https://theconversation.com/institutions/university-of-canberra-865">University of Canberra</a> Planning for retirement is important because it will help you build the nest egg you’ll need to financially sustain your retirement years. Past <a href="https://www.tandfonline.com/doi/epdf/10.1080/03601277.2012.660859?needAccess=true">studies</a> have shown that those who plan for their retirement are more likely to be better off at retirement compared to those don’t. The sooner the planning process gets underway, the better. This gives your money more time to grow by generating investment returns. And the income from your first job is your first opportunity to save for retirement. As the saying goes: “The best time to plant a tree was 20 years ago. The second best time is now.” As people <a href="https://www.statssa.gov.za/?p=15601">can expect to live longer</a>, they must save more for retirement so that they don’t outlive their savings. This is particularly true given that the pensions landscape worldwide has undergone some major changes. In the past, governments and employers provided retirement income for individuals through government social security benefits and employment-based retirement funds. Because of increasing life expectancies, pension plans that guaranteed a retirement benefit to employees are now rare. Employees are now responsible for making contributions towards their own pensions as well as choosing the investments offered by the pension fund. Since employers are no longer responsible for funding their employees’ retirement and governments lack resources to provide a universal state pension, each person is ultimately responsible for ensuring they have enough retirement savings. So it’s very important to know the basics of the retirement planning process. As a researcher, I’m interested in how people use financial products to overcome economic challenges and build wealth. One of the things I investigate is whether planning for retirement leads to better retirement outcomes. For instance, my <a href="https://www.researchgate.net/profile/Bomikazi-Zeka-2/publication/340130176_Retirement_funding_adequacy_in_black_South_African_townships/links/5e8bf3924585150839c6408b/Retirement-funding-adequacy-in-black-South-African-townships.pdf?_sg%5B0%5D=started_experiment_milestone&origin=journalDetail&_rtd=e30%3D">research</a> has found that individuals whose financial affairs are in order are more likely to maintain their standard of living at retirement. Given that everyone’s financial situation is unique, it’s always a good idea to speak to a financial planner for tailored financial advice. If you haven’t given retirement planning much thought or don’t know where to start, here are four points to help get the ball rolling. <h2>What are my retirement goals?</h2> Retirement goals make you think about what you want to achieve by the time you retire and what you need to do to achieve it. Some people may have a goal in mind about when they want to retire, or how much wealth they’d like to have by the time they retire. And since wealth has different meanings for different people, others may think about maintaining or improving their standard of living at retirement. Once you’ve thought about your retirement goals, the <a href="https://corporatefinanceinstitute.com/resources/management/smart-goal/">“smart” goals</a> framework is a useful guide. It outlines that goals should be: specific, measurable, attainable, relevant and time-bound. When goals are clear, within reach, achievable, realistic and time-sensitive, they become a blueprint to help you turn them into a reality. <h2>How do I start saving for retirement?</h2> For those who have a job that comes with retirement fund membership, a workplace pension is used to provide for retirement. But there are also other options available to help you save. For instance, retirement annuity funds are voluntary retirement savings. Personal assets such as <a href="https://www.allangray.co.za/what-we-offer/unit-trust-investment/#fund-3">unit trusts</a> or <a href="https://www.gov.za/faq/money-matters/how-can-i-make-tax-free-investment">tax-free investments</a> can also be used as a savings tool. Unit trusts are generally better suited for people willing to take on risk because their value is tied to the movements of financial markets. In other words, they can generate positive returns but they can also lose value. The drawback of tax-free investments in South Africa is that they have a lifetime contribution limit. You can’t use them to save more than R500,000 (US$27,400). Each of these options has its advantages and disadvantages and what works best for one person may not be best for another. But there are several ways to save for retirement depending on your financial situation and retirement goals. Getting professional advice will help you determine what’s best for you. <h2>Will my retirement savings be enough?</h2> Once you’ve set your retirement goals and have a retirement savings plan in place, you can calculate whether you are saving enough to achieve your retirement goals. For example, if your retirement goal is: “I want to retire at the age of 65 years with an income equivalent to R35,000 (US$1,900) per month” then you can use a <a href="https://www.sanlam.co.za/tools/Pages/retirement.aspx">retirement calculator</a> to track your progress and determine whether you need to make adjustments to meet your goals. You might have to increase the monthly amount you’re putting away for retirement or reconsider your retirement age. The retirement calculators are also a useful tool for regular check-ins on your progress should your financial situation change – for example, if you change employers and earn a different salary. <h2>What other issues should I consider?</h2> It’s also important to think about your lifestyle and priorities. For instance: <ul> <li> do you aim to retire with your mortgage settled? </li> <li> are there debts you plan to clear before you retire or children who need financial support at retirement? </li> <li> would you like to renovate your home? </li> <li> would you like to buy a new car when you reach retirement age? </li> </ul> Another important consideration is healthcare costs. Many people assume that they will be able to work indefinitely and overlook the fact that healthcare costs may increase with age. <h2>Starting early matters</h2> Many people plan to work after retirement age, while others don’t plan to retire at all. It may be that they can’t afford to. They may have accessed their retirement benefits too soon, made inconsistent retirement fund contributions, or had to pay high administrative costs that eroded the final value of a retirement payout. So best be prepared. Retirement may seem like a distant event to plan and save for, especially when there are more pressing financial needs. It’s important to think about the financial decisions you make now that may cost you in the future. If you start to plan for your retirement now, your future self will thank you for it.<img style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important;" src="https://counter.theconversation.com/content/230553/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" /> <a href="https://theconversation.com/profiles/bomikazi-zeka-680577">Bomikazi Zeka</a>, Assistant Professor in Finance and Financial Planning, <a href="https://theconversation.com/institutions/university-of-canberra-865">University of Canberra</a> Image credits: Shutterstock This article is republished from <a href="https://theconversation.com">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/how-do-i-plan-for-my-retirement-step-one-start-right-away-230553">original article</a>. </div>

Retirement Income

Don’t give mum chocolates for Mother’s Day. Take on more housework, share the mental load and advocate for equality instead

<div class="theconversation-article-body"><a href="https://theconversation.com/profiles/leah-ruppanner-106371">Leah Ruppanner</a>, <a href="https://theconversation.com/institutions/the-university-of-melbourne-722">The University of Melbourne</a> With Mother’s Day right around the corner, many grateful and loving families are thinking about what to give mum to show their appreciation. Should you give her chocolate? Nope. Fancy soaps? Nope. Fuzzy slippers, pyjamas, scented candles? No, no and no. On this Mother’s Day, keep your cash and give your wonderful mother gifts that will actually have a long-term impact on her health and well-being. <h2>1. Do a chore that mum hates and hold onto it … forever</h2> Research <a href="https://www.tandfonline.com/doi/full/10.1080/13545701.2020.1831039">shows</a> men have increased the amount of time spent on housework and childcare and that mothers, over time, are doing less (hooray!). But, women <a href="https://onlinelibrary.wiley.com/doi/abs/10.1111/j.1741-3737.2008.00479.x">still do more housework</a> than men, especially when <a href="https://onlinelibrary.wiley.com/doi/full/10.1111/gwao.12497?fbclid=IwAR2dp04p2sFqbDqdehXmXgDSfTYwX3GRzP7ScMJhSOrMePTGQVErR2TTX88">kids are in the home</a>. Further, <a href="https://journals.sagepub.com/doi/abs/10.1177/0891243205285212">men tend to pick up the more desirable tasks</a>, like <a href="https://www.jstor.org/stable/3598304">cooking and playing with the kids</a>, leaving mothers to do the less pleasurable chores (think cleaning toilets and clearing out fridges). The chore divide in same-sex relationships is generally found to be more equal, but some critique suggests equality may suffer <a href="https://www.nytimes.com/2018/05/16/upshot/same-sex-couples-divide-chores-much-more-evenly-until-they-become-parents.html">once kids are involved</a>. This year give your mum (or mums) the gift of equal housework and childcare sharing – start by taking the most-hated tasks and then hold onto them… forever. <a href="https://onlinelibrary.wiley.com/doi/full/10.1111/gwao.12727">Research</a> shows housework inequality is bad for women’s mental health. Undervaluing women’s housework and unequal sharing of the chores deteriorates <a href="https://link.springer.com/article/10.1007/s11199-022-01282-5">relationship quality</a>, and <a href="https://journals.sagepub.com/doi/full/10.1177/0038038516674664">leads to divorce</a>. Housework and childcare take up valuable time to keep the family happy, harmonious and thriving, often at the expense of mum’s health and well-being. So, skip the chocolates and show mum love by doing the worst, most drudgerous and constant household chores (hello, cleaning mouldy showers!) and keep doing these… forever. <h2>2. Initiate a mental unload</h2> The <a href="https://www.abc.net.au/news/health/2017-09-14/the-mental-load-and-what-to-do-about-it/8942032">mental load</a> is all of the planning, organising and management work necessary to keep the family running. The mental load is often perceived as list making or allocating tasks to family members. But, it’s so much more – it is the <a href="https://theconversation.com/planning-stress-and-worry-put-the-mental-load-on-mothers-will-2022-be-the-year-they-share-the-burden-172599">emotional work</a> that goes with this thinking work. The mental load is the worry work that never ends and can be done <a href="https://www.tandfonline.com/doi/abs/10.1080/13668803.2021.2002813">anywhere, anytime and with anyone</a> (in, for example, said mouldy shower). Because the mental load is performed inside our heads, it is invisible. That means we don’t know when we or others are performing this labour unless we really tune in. In fact, it is often when we tune in through quiet time, relaxation or meditation that the mental load rears its ugly head. Suddenly you remind yourself to buy oranges for the weekend soccer game, organise a family movie night and don’t forget to check in on nanna. Women in heterosexual relationships are <a href="https://journals.sagepub.com/doi/abs/10.1177/0003122419859007">shown to do more</a> of the mental load with serious consequences for their mental health. But we don’t have a comprehensive measurement of how much women do it nor how it is allocated in same-sex couples. So, on this mothers’ day spend some time talking about, cataloguing, and equalising the family’s mental load. This isn’t just making a list about what has to be done but also understanding <a href="https://www.abc.net.au/news/health/2017-09-14/the-mental-load-and-what-to-do-about-it/8942032">how the mental load</a> connects to the emotional health of the family, and the person carrying this <a href="https://www.newamerica.org/better-life-lab/blog/making-the-mental-load-visible/">invisible labour, worry and stress</a>. <h2>3. Speak up for your mum and all caregivers</h2> Families alone cannot bear the brunt of the caregiving necessary to keep us thriving. Governments, workplaces and local communities also play a critical role. For this mothers’ day, pick an issue impacting mothers (for example, equal pay, affordable childcare or paid family leave) and do one thing to help move the needle. Write a letter to your boss, your local MP, or donate money to an advocacy organisation advancing gender equality. Or, role model these behaviours yourself – normalise caregiving as a critical piece of being an effective worker, create policies and practices that support junior staff to care for themselves, their families and their communities and use these policies. <a href="https://journals.sagepub.com/doi/abs/10.1177/0891243216649946">Research</a> shows men want to be equal carers and sharers but often fear what taking time off for caregiving will signal to their employer despite evidence that fathers who request flexible work are perceived more <a href="https://academic.oup.com/sf/article-abstract/94/4/1567/2461609?login=false">favourably</a>. Appearing to be singularly devoted to work was shown to be impossible during the pandemic with kids, spouses, partners, and pets home all day long. Learning to create more care-inclusive workplaces and communities is critical. Paid parental leave, affordable and accessible high-quality childcare, flexibility in how, when and where we work and greater investments in paid sick leave, long-term disability support and aged care are just a few policies that would strengthen the care safety net. We will all be called upon to care at some point in our lives – let’s create the environments that support caregiving for all, not just mum.<img style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important;" src="https://counter.theconversation.com/content/182330/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" /> <a href="https://theconversation.com/profiles/leah-ruppanner-106371">Leah Ruppanner</a>, Professor of Sociology and Founding Director of The Future of Work Lab, <a href="https://theconversation.com/institutions/the-university-of-melbourne-722">The University of Melbourne</a> Image credits: Getty Images This article is republished from <a href="https://theconversation.com">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/dont-give-mum-chocolates-for-mothers-day-take-on-more-housework-share-the-mental-load-and-advocate-for-equality-instead-182330">original article</a>. </div>

Family & Pets

Why millions of Aussies are falling behind on superannuation savings

Millions of Aussies are falling behind on their superannuation savings, with nearly one in two Australians on track for a grim retirement. According to research from superannuation and investments company Vanguard, this huge number of Australians have no idea how much they are playing in fees to their super funds, which can greatly impact how much you have in savings when your retirement day comes. “We are coming up against a stubborn statistic in our retirement research again this year — almost one in two Australians still don’t know what they pay in super fees,” Vanguard Investments Australia managing director Daniel Shrimski said. Also adding to the confusion of how much is needed for comfortable gold year is different companies sharing conflicting numbers on what figures to strive for in your superannuation. Superannuation consultancy company Australian Retirement Trust’s latest research shows the average superannuation balance for someone age 35 to 44 is $92,700, however this should be closer to $156,000 to be on track for a “comfortable retirement”. The average worker aged 55 to 64 has $285,900 in super but a 60-year-old needs close to $453,000 in retirement savings, ART said. “In the past 12 months, only one in five of us has checked our super balance,” Australian Retirement Trust executive general manager Anne Fuchs said, adding 70 per cent of Australians feel they don’t have enough money to retire on. “We talk to members all the time who have reached the end of their working life full of regret, wishing they had done something earlier. Australia has a monster problem whereby not enough of us are engaging with our super." “The earlier you start paying attention and understanding how your money is invested ... then you’ll really be able to finish work and put your feet up.” Financial consultancy Link Wealth director and financial adviser Joshua Lee told <a href="https://7news.com.au/news/new-research-shows-aussie-superannuation-savings-falling-short-of-retirement-needs--c-14507773" target="_blank" rel="noopener">7News</a> that one of the most important tips for Australians is to take notice and understand their superannuation payments and what they pay in fees. “Take notice of what your account is doing,” he said. “Look at your statement when it comes in every year so you can understand what fees are being deducted from your account because that will have an impact on how much money you have come retirement.” Image credits: Shutterstock

Retirement Life

Stay or go? Most older Australians want to retire where they are, but renters don’t always get a choice

<a href="https://theconversation.com/profiles/christopher-phelps-378137">Christopher Phelps</a>, <a href="https://theconversation.com/institutions/curtin-university-873">Curtin University</a>; <a href="https://theconversation.com/profiles/rachel-ong-viforj-113482">Rachel Ong ViforJ</a>, <a href="https://theconversation.com/institutions/curtin-university-873">Curtin University</a>, and <a href="https://theconversation.com/profiles/william-clark-1488932">William Clark</a>, <a href="https://theconversation.com/institutions/university-of-california-los-angeles-1301">University of California, Los Angeles</a> As Australia’s population gets older, more people are confronted with a choice: retire where they are or seek new horizons elsewhere. Choosing to grow old in your existing home or neighbourhood is known as “ageing in place”. It enables older people to stay connected to their community and maintain familiarity with their surroundings. For many, the decision to “age in place” will be tied to their connection to the family home. But for many, secure and affordable housing is increasingly <a href="https://theconversation.com/ageing-in-a-housing-crisis-growing-numbers-of-older-australians-are-facing-a-bleak-future-209237">beyond reach</a>. This choice may then be impeded by a lack of suitable accommodation in their current or desired neighbourhoods. Our recently published <a href="https://doi.org/10.1177/01640275231209683">study</a> asks what motivates older homeowners and renters to age in place or relocate, and what factors disrupt these preferences. It suggests older renters are often not given a fair choice. <h2>Most older Australians want to age in place</h2> Having the option to age in place enables older people to retain autonomy over their lifestyles and identity, promoting emotional wellbeing. Using 20 years of data from the government-funded Household, Income and Labour Dynamics in Australia (HILDA) survey, we tracked the preferences of Australians aged 55 and over. Encouragingly, most older Australians are already where they want to be. Two-thirds (67%) of respondents strongly preferred to stay in their current neighbourhood, and an additional one-fifth (19%) had a moderate preference to stay. Only 6% showed a moderate or strong desire to leave. Ageing in place is then the natural choice for a vast majority of older Australians. <iframe id="s3LTM" class="tc-infographic-datawrapper" style="border: none;" src="https://datawrapper.dwcdn.net/s3LTM/1/" width="100%" height="400px" frameborder="0"></iframe> Our study highlights several motivations for people to stay put as they retire. For homeowners, family ties matter. Owners with children residing nearby were around one and a half times more likely to have a higher preference to stay. Older owners might then have a reason to call on their substantial <a href="https://theconversation.com/the-housing-wealth-gap-between-older-and-younger-australians-has-widened-alarmingly-in-the-past-30-years-heres-why-197027">housing wealth</a> and keep their children nearby via the <a href="https://360info.org/how-to-help-the-young-buy-a-home/">“bank of mum and dad”</a>. For renters, how long they stay is important. Those renting their home for 10 years or more were 1.7 times more likely to have a higher preference to stay than short-term renters. <h2>Renters face the most disruption</h2> The survey enabled us to follow where older people lived a year after they provided their preferences. This helped us gauge how often they turned their desires into reality. The chart below indicates that private renters face greater obstacles to ageing in place. Around one in 10 private renters that desired to age in place were disrupted – they wanted to stay in their neighbourhood but didn’t. This suggests they moved out of their neighbourhood involuntarily. Only 2% of homeowners and social renters experienced the same disruption. However, for those in these tenures that did not desire to age in place, involuntary immobility was a greater concern. Only 15% of those that wanted to leave succeeded, leaving the vast majority “stuck in place”. <iframe id="IlliV" class="tc-infographic-datawrapper" style="border: none;" src="https://datawrapper.dwcdn.net/IlliV/1/" width="100%" height="400px" frameborder="0"></iframe> The private rental market is the least secure of tenures, and so private tenants are often exposed to involuntary moves. Australia’s private rental system is lightly regulated compared to many other countries, creating tenure insecurity concerns. On the other hand, social renters were particularly susceptible to involuntary immobility. Social housing is scarce in Australia and subject to <a href="https://theconversation.com/its-soul-destroying-how-people-on-a-housing-wait-list-of-175-000-describe-their-years-of-waiting-210705">lengthy waiting lists</a>. A neighbourhood move often requires transferring to the less affordable and less secure private rental housing. Even after considering financial status, social renters were four times as likely to be stuck as compared to private renters. Social tenants are strongly deterred from moving in the current system. <h2>How can we support older Australians’ preferences?</h2> Our study exposes some barriers in the housing system that hinder people from being able to age in place, or move when they want to. Clearly, older renters enjoy fewer protections against disruptions to their preferences to age in place than older owners. For private renters, tenure insecurity in the <a href="https://theconversation.com/insecure-renting-ages-you-faster-than-owning-a-home-unemployment-or-obesity-better-housing-policy-can-change-this-216364">private rental sector</a> is a key reform priority. This can be achieved through stronger regulation that improves tenants’ rights. For example, more states could adopt <a href="https://theconversation.com/how-5-key-tenancy-reforms-are-affecting-renters-and-landlords-around-australia-187779?utm_source=twitter&utm_medium=bylinetwitterbutton">recent regulatory rental reforms</a> that support the rights of pet owners and protect against no-grounds evictions. Large numbers of older private renters also face severe <a href="https://www.oldertenants.org.au/publications/ageing-in-a-housing-crisis-older-peoples-housing-insecurity-homelessness-in-australia">rental stress</a>, which may force them to move from their preferred neighbourhood. <a href="https://theconversation.com/1-billion-per-year-or-less-could-halve-rental-housing-stress-146397">Commonwealth rent assistance reform</a> would alleviate some of this stress through an increase in rates and better targeting. An increase in the supply of social housing would play an important role in improving both tenure security and housing affordability. Older social renters enjoy fewer obstacles to ageing in place than older private renters. However, if social renters want to move into the private rental market to relocate, they face difficulty securing accommodation. This will likely discourage moves as it would require sacrificing the tenure security offered by social housing. However, policy initiatives that improve the <a href="https://www.ahuri.edu.au/sites/default/files/migration/documents/PES-358-Lessons-from-public-housing-urban-renewal-evaluation.pdf">quality of the public housing stock</a> can reduce feelings of being stuck. As <a href="https://www.aihw.gov.au/reports/australias-welfare/home-ownership-and-housing-tenure">homeownership rates decline</a> both among young people and those nearing retirement, we can expect the population of older renters to grow. Overall, our findings support a strong case for policy reform in the rental sectors to address the needs and preferences of older renters.<img style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important;" src="https://counter.theconversation.com/content/218024/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" /> <a href="https://theconversation.com/profiles/christopher-phelps-378137">Christopher Phelps</a>, Research Fellow, School of Accounting, Economics and Finance, <a href="https://theconversation.com/institutions/curtin-university-873">Curtin University</a>; <a href="https://theconversation.com/profiles/rachel-ong-viforj-113482">Rachel Ong ViforJ</a>, ARC Future Fellow & Professor of Economics, <a href="https://theconversation.com/institutions/curtin-university-873">Curtin University</a>, and <a href="https://theconversation.com/profiles/william-clark-1488932">William Clark</a>, Research Professor of Geography, <a href="https://theconversation.com/institutions/university-of-california-los-angeles-1301">University of California, Los Angeles</a> Image credits: Shutterstock This article is republished from <a href="https://theconversation.com">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/stay-or-go-most-older-australians-want-to-retire-where-they-are-but-renters-dont-always-get-a-choice-218024">original article</a>.

Retirement Income

Monty Python star's candid financial admission

Monty Python star Eric Idle has made a candid admission about the state of his finances, revealing why he still has to work at the age of 80. The comic legend admitted he receives only a fraction of the millions the Python team have made in the past because the finances are a “disaster”. In messages on X, formerly Twitter, Idle wrote: “I don’t know why people always assume we’re loaded”. “I have to work for my living. I never dreamed that at this age the income streams would tail off so disastrously." “I have been working and earning for Pythons since 1995. And now no more.” Idle also took aim at TV lawyer Holly Gilliam, the daughter of fellow Python member Terry Gilliam, who took over the Python brand in 2013 as part of HDG Projects Ltd. He said, “I guess if you put a Gilliam child in as your manager you should not be so surprised”. “One Gilliam is bad enough. Two can take out any company.” Daughter Lily Idle backed him, writing online, “I’m so proud of my dad for finally finally finally starting to share the truth.” The Pythons, who also included John Cleese, 84, Michael Palin, 80, and the late Terry Jones — made a fortune thanks to their iconic cult films, including Life of Brian, hit stage show Spamalot, which Idle co-wrote, and the original Flying Circus BBC TV series. They were back in the limelight in 2014 with Monty Python Live (Mostly) — One Down, Five to Go: a reference to former member Graham Chapman who died in 1989 aged just 48. It featured interpretations of some of their famous sketches, and reportedly earned the surviving members at least £2 million ($3.87m AUD) each. Image credits: Getty Images

Retirement Income

After a lifetime studying superannuation, here are 5 things I wish I knew earlier

<a href="https://theconversation.com/profiles/susan-thorp-214">Susan Thorp</a>, <a href="https://theconversation.com/institutions/university-of-sydney-841">University of Sydney</a> Amassing the wealth needed to support retirement by regular saving is a monumental test of personal planning and discipline. Fortunately for most Australian workers, the superannuation system can help. Superannuation uses the carrot of tax incentives, and the sticks of compulsion and limited access, to make us save for retirement. There are benefits to paying timely attention to your super early in your working life to get the most from this publicly mandated form of financial self-discipline. I’ve been researching and thinking about superannuation for most of my career. Here’s what I wish I knew at the beginning of my working life. <h2>1. Check you’re actually getting paid super</h2> First, make sure you are getting your dues. If you are working, your employer must contribute <a href="https://www.ato.gov.au/businesses-and-organisations/super-for-employers/paying-super-contributions/how-much-super-to-pay">11% of your earnings</a> into your superannuation account. By July 2025 the rate will increase to 12%. This mandatory payment (the “<a href="https://www.ato.gov.au/tax-rates-and-codes/key-superannuation-rates-and-thresholds/super-guarantee">superannuation guarantee</a>”) may look like yet another tax but it is an important part of your earnings (would you take an 11% pay cut?). It is worth checking on, and worth <a href="https://www.ato.gov.au/calculators-and-tools/super-report-unpaid-super-contributions-from-my-employer">reporting</a> if it is not being paid. The Australian Tax Office <a href="https://oia.pmc.gov.au/sites/default/files/posts/2023/05/Impact%20Analysis%20-%20Unpaid%20Superannuation%20Guarantee%20package.pdf">estimates</a> there is a gap between the superannuation employers should pay and what they do pay of around 5% (or $A3.3 billion) every year. Failing to pay is <a href="https://oia.pmc.gov.au/sites/default/files/posts/2023/05/Impact%20Analysis%20-%20Unpaid%20Superannuation%20Guarantee%20package.pdf">more common</a> among the accommodation, food service and construction industries, as well as small businesses. Don’t take your payslip at face value; cross-check your super account balance and the annual statement from your fund. <h2>2. Have just one super account</h2> Don’t make personal donations to the finance sector by having more than one superannuation account. Two super accounts mean you are donating unnecessary administration fees, possibly redundant insurance premiums and suffering two times the confusion to manage your accounts. The superannuation sector does not need your charity. If you have more than one super account, please consolidate them into just one today. You can do that <a href="https://moneysmart.gov.au/how-super-works/consolidating-super-funds">relatively easily</a>. <h2>3. Be patient, and appreciate the power of compound interest</h2> If you’re young now, retirement may feel a very distant problem not worth worrying about until later. But in a few decades you’re probably going to appreciate the way superannuation works. As a person closing in on retirement, I admit I had no idea in my 20s how much my future, and the futures of those close to me, would depend on my superannuation savings. Now I get it! <a href="https://www.nber.org/papers/w27459">Research</a> <a href="https://economics.mit.edu/sites/default/files/publications/pandp.20221022.pdf">shows</a> the strict rules preventing us from withdrawing superannuation earlier are definitely costly to some people in preventing them from spending on things they really need. For many, however, it stops them spending on things that, in retrospect, they would rate as less important. But each dollar we contribute in our 30s is worth around three times the dollars we contribute in our 50s. This is because of the advantages of time and <a href="https://moneysmart.gov.au/saving/compound-interest">compound interest</a> (which is where you earn interest not just on the money initially invested, but on the interest as well; it’s where you earn “interest on your interest”). For some, adding extra “voluntary” savings can build up retirement savings as a buffer against the periods of unemployment, disability or carer’s leave that most of us experience at some stage. <h2>4. Count your blessings</h2> If you are building superannuation savings, try to remember you’re among the lucky ones. The benefits of super aren’t available to those who can’t work much (or at all). They face a more precarious reliance on public safety nets, like the Age Pension. So aim to maintain your earning capacity, and pay particular attention to staying employable if you take breaks from work. What’s more, superannuation savings are invested by (usually) skilled professionals at rates of return hard for individual investors to achieve outside the system. Many larger superannuation funds offer members types of investments – such as infrastructure projects and commodities – that retail investors can’t access. The Australian Prudential Regulation Authority (APRA) also <a href="https://www.apra.gov.au/industries/superannuation">checks</a> on large funds’ investment strategies and performance. <h2>5. Tough decisions lie ahead</h2> The really hard work is ahead of you. The saving or “accumulation” phase of superannuation is mainly automatic for most workers. Even a series of non-decisions (defaults) will usually achieve a satisfactory outcome. A little intelligent activity will do even better. However, at retirement we face the challenge of making that accumulated wealth cover our needs and wants over an uncertain number of remaining years. We also face variable returns on investments, a likely need for aged care and, in many cases, declining cognitive capacity. It’s helpful to frame your early thinking about superannuation as a means to support these critical decades of consumption in later life. At any age, when we review our financial management and think about what we wish we had known in the past, we should be realistic. Careful and conscientious people still make mistakes, procrastinate and suffer from bad luck. So if your super isn’t where you had hoped it would be by now, don’t beat yourself up about it. <img style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important;" src="https://counter.theconversation.com/content/217922/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" /> <a href="https://theconversation.com/profiles/susan-thorp-214">Susan Thorp</a>, Professor of Finance, <a href="https://theconversation.com/institutions/university-of-sydney-841">University of Sydney</a> Image credits: Getty Images This article is republished from <a href="https://theconversation.com">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/after-a-lifetime-studying-superannuation-here-are-5-things-i-wish-i-knew-earlier-217922">original article</a>.

Retirement Income

It’s not just about accumulating super. Australians need to learn how to spend their retirement savings

<a href="https://theconversation.com/profiles/marc-olynyk-1493791">Marc Olynyk</a>, <a href="https://theconversation.com/institutions/deakin-university-757">Deakin University</a> Australia’s superannuation and retirement income system is complex and difficult to navigate. Retirees need to make decisions on numerous issues where they have less than full information and understanding, both financial and non-financial. They also require access to retirement products to help them manage and balance income needs against longevity risk. Recognising these issues, the government released a <a href="https://treasury.gov.au/consultation/c2023-441613">discussion paper</a> this month seeking views on three key issues: <ol> <li> helping super fund members navigate the retirement income system </li> <li> supporting superannuation funds to deliver better services </li> <li> making retirement income products more accessible. </li> </ol> Australia has one of the largest and most sophisticated pension systems in the world. Valued at more than <a href="https://www.apra.gov.au/quarterly-superannuation-statistics">A$3.5 trillion</a> as at September 2023, and is the <a href="https://www.thinkingaheadinstitute.org/research-papers/global-pension-assets-study-2023/">5th largest pension scheme</a> in terms of asset size. It is also the <a href="https://www.mercer.com/insights/investments/market-outlook-and-trends/mercer-cfa-global-pension-index/">5th most highly rated retirement income system</a> internationally behind the Netherlands, Iceland, Denmark and Israel. <h2>What is wrong with the super system?</h2> But while the super system ranks highly in terms of integrity and sustainability, the numbers are not as flattering when it comes to “adequacy”. Adequacy is the level of income available to retirees depending on their different circumstances. According to a recent <a href="https://www.mercer.com/insights/investments/market-outlook-and-trends/mercer-cfa-global-pension-index/">study</a>, Australia is ranked 20th out of 47 worldwide on the adequacy index. <a href="https://www.investmentmagazine.com.au/2023/02/purpose-of-super-law-to-herald-tax-reform/">Reform</a> in the pre-retirement phase of Australia’s retirement income scheme is ongoing and designed to support accumulating wealth for retirement. These ongoing reforms have been designed to make superannuation easier to understand and to reduce much of the decision making required. They’ve been needed because of an apparent lack of skills, interest and financial literacy among Australians. While the message that we need to save to be comfortable in retirement is getting through, the lack of information about how to manage these savings once we retire means many retirees are left to navigate the complex system as best they can. Given the complexity and volatility of Australia’s financial system, it’s hardly surprising many of the decisions made by retirees don’t produce the best financial results. For example, more than <a href="https://treasury.gov.au/consultation/c2023-441613">84%</a> of retirement savings are held in account-based pensions which, if not properly managed, can run out. This is despite government and community awareness that outliving your savings is a real possibility. About 50% of retirees currently withdraw at the minimum pension rate, which means many people experience a lower standard of living than what would normally be expected with the super they have accumulated. This can result in wealth not being used and instead being passed on to the next generation. <h2>Help is needed now because the retiree sector is booming</h2> Over the next decade there is going to be a big increase in the number of people retiring and transitioning from the accumulation phase of their super to the pension phase. It’s estimated <a href="https://treasury.gov.au/consultation/c2023-441613">2.5 million</a> Australians will move to the retirement phase in this period. Following the 2014 <a href="https://treasury.gov.au/publication/c2014-fsi-final-report">Financial System Inquiry</a>, the government introduced the <a href="http://www5.austlii.edu.au/au/legis/cth/consol_act/sia1993473/s52.html">Retirement Income Covenant</a> in 2022 to force super fund trustees to develop a strategy that would provide better retirement outcomes for their members. The strategy is based on retirees maximising their expected retirement income, managing expected risks to their retirement income and having flexible access to super funds during their retirement. A 2022-23 review conducted by <a href="https://asic.gov.au/regulatory-resources/find-a-document/reports/rep-766-implementation-of-the-retirement-income-covenant-findings-from-the-apra-and-asic-thematic-review/">Australian Prudential Regulation Authority and the Australian Securities and Investments Commission</a> found while trustees were providing more help to retirees, overall there was a lack of progress and urgency among trustees to improve retirement outcomes. <h2>How the system could be improved</h2> Several proposals have been put forward to improve the experiences and decision-making of retirees. These have included: <ul> <li> improved support from and education by superannuation fund trustees </li> <li> changing how people view their super savings from an accumulation of wealth to a system that enables drawdown of retirement savings over time to fund expenses. </li> <li> providing an automatic rollover of retirement savings into an income-stream instead of allowing a lump sum withdrawal on retirement </li> <li> expanding existing income products (that are starting to be offered by several financial institutions) which combine providing investment choice with a pension for life </li> <li> setting up a MyRetire product that would run parallel to <a href="https://treasury.gov.au/programs-and-initiatives-superannuation/mysuper">MySuper</a> and provide a simple and cost-effective retirement income system for less engaged members. MySuper only applies to the accumulation phase. Once a member starts an income stream in retirement, their MySuper account ceases </li> <li> improving access to financial planning advice which is shown to play a significant role in preparing Australians for retirement. </li> </ul> The government, superannuation industry and the community all have a greater role to play in improving the financial outcomes and experiences of retirees. With Australia’s ageing population, the need to better support retirees to achieve a dignified retirement is becoming more urgent. All Australians expect and deserve a financially secure retirement.<img style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important;" src="https://counter.theconversation.com/content/219217/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" /> <a href="https://theconversation.com/profiles/marc-olynyk-1493791">Marc Olynyk</a>, Director of Financial Planning, Deakin Business School, <a href="https://theconversation.com/institutions/deakin-university-757">Deakin University</a> Image credits: Getty Images This article is republished from <a href="https://theconversation.com">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/its-not-just-about-accumulating-super-australians-need-to-learn-how-to-spend-their-retirement-savings-219217">original article</a>.

Retirement Income

Downsizing cost trap awaits retirees – five reasons to be wary

<a href="https://theconversation.com/profiles/erika-altmann-361218">Erika Altmann</a>, <a href="https://theconversation.com/institutions/university-of-tasmania-888">University of Tasmania</a> It’s time to debunk the myth of zero housing costs in retirement if we want to understand why retirees resist downsizing. Retirees have at least five reasons to be wary of the costs of downsizing. Retirees living in middle-ring suburbs face frequent calls to downsize into apartments to free up larger allotments in these suburbs for redevelopment. Retirees who fail to downsize into smaller units and apartments are viewed as being a greedy, baby-boomer elite, stealing financial security from younger generations. It also makes sense to policymakers for retirees to move into less spacious accommodation and make way for high-density housing. Housing think-tank AHURI <a href="http://www.ahuri.edu.au/__data/assets/pdf_file/0021/14079/AHURI_Final_Report_No_286_Australian-demographic-trends-and-implications-for-housing-assistance-programs.pdf">fosters this view</a>. Yet seniors remain resistant to moving, in part because of the ongoing costs they would face. The concept of zero housing costs in retirement is based on a 1940s view of a well-maintained, single dwelling on a single allotment of land where the mortgage has been paid off. This concept is incompatible with medium- and high-density housing and refusing to acknowledge ongoing housing costs may cause significant poverty for retirees. <h2>Reason 1 – upfront moving costs are high</h2> When a house is sold the owner receives the sale funds minus the real estate and legal fees. When the same person then buys a different property to live in, they pay legal fees plus stamp duty. For cities such as Melbourne and Sydney, these costs are likely to exceed A$70,000. These high transfer costs may mean it is not cost-effective <a href="https://theconversation.com/why-older-australians-dont-downsize-and-the-limits-to-what-the-government-can-do-about-it-76931">for the person to move</a>. <h2>Reason 2 – levies are high</h2> Because apartment owners pay body corporate levies, people often assume this is just the same as periodic payment of rates, water, insurance and other costs. It is not. Fees remissions for low-income retirees for rates, power, insurance and water are difficult to apply within a body corporate environment. As a consequence, these are usually not applied to owners of apartments. The costs of maintaining essential services, such as mandatory fire-alarm testing, yearly engineering certification, lift and air-conditioning inspections, significantly increase ownership costs. When additional services are supplied, such as swimming pools, gyms and rooftop gardens, these also require periodic inspections. Garbage collection, cleaning, gardening, concierge and strata management services also <a href="https://eprints.utas.edu.au/cgi/users/home?screen=EPrint%3A%3AView&eprintid=23322">must be paid</a>. Owners of standard suburban homes choose whether they want these services, with those on fixed incomes going without them. Annual levies for apartment buildings vary, but expect to pay between $10,000 and $15,000. They <a href="https://www.strata.community/understandingstrata/faqs">may be more than this</a>. <h2>Reason 3 – costs of maintenance</h2> <figure class="align-right "><figcaption></figcaption></figure> Apartments are often sold as a maintenance-free solution for older people. The maintenance is not free. It needs to be paid for. Maintenance costs are higher in an apartment than a standard suburban home because there are more items and services to be maintained and fixed. Lifts and air conditioning need periodic servicing and fixing. This is in addition to the mandatory inspections listed above. <h2>Reason 4 – loss of financial security</h2> It is a mistaken belief that the maintenance costs that form part of the body corporate fee include periodic property upgrades. This relates to items that are owned collectively with other apartment owners. Major servicing at the ten-year mark and usually each five-to-seven years after that include painting, floor-covering replacement, and lift and air-conditioning repair or replacement. Major upgrades may also include garden redesign or other external building enhancement including <a href="https://eprints.utas.edu.au/cgi/users/home?screen=EPrint%3A%3AView&eprintid=23315">environmental upgrades</a>. All owners share these upgrade costs. Costs of upgrading the inside of an apartment (a bathroom disability upgrade, for example) are additional again. Once the body corporate committee members pledge funds towards an upgrade, all owners are required to raise their share of the funds, whether they can afford it or not. Communal choice outweighs an individual owner’s need to delay upgrade costs. Owners who buy apartments that are part of a body corporate effectively lose control of their future financial decisions. <h2>Reason 5 – loss of security of tenure</h2> Loss of security of tenure is usually associated with renters. However, the recent introduction of <a href="http://www.lpi.nsw.gov.au/__data/assets/pdf_file/0009/25965/Termination_of_a_strata_scheme_by_RG.pdf">termination legislation</a> in New South Wales gives other owners the right to vote to terminate a strata title scheme. When this occurs, all owners, including reluctant owners of apartments within that scheme, are compelled to sell. There are valid reasons why termination legislation is desirable, as many older apartment complexes are reaching the end of their useful life. Even so, as termination legislation is rolled out across the states, owner- occupiers effectively lose control of how long they will own a property for. They no longer have security of tenure, which means retirees may face an uncertain housing future in their old age. <h2>Downsizing raises poverty risks</h2> Because current data sets do not adequately take account of ongoing costs associated with apartment living, the effect of downsizing on individual households is masked. Downsizing retirees into the apartment sector creates ongoing financial stress for older people. Creating <a href="https://theconversation.com/it-will-take-more-than-piecemeal-reforms-to-convince-older-australians-to-downsize-51043">tax incentives to move</a> does not tackle these ongoing costs. Centrelink payments for of <a href="https://www.humanservices.gov.au/customer/services/centrelink/age-pension">$404 per week</a> are well below <a href="http://acoss.wpengine.com/poverty-2/">the poverty line</a>. Yet we expect retirees to willingly downsize and to be able to cede most of their Centrelink payments to cover high body corporate costs. Requiring retirees to downsize for the greater urban good will shift poverty onto retirees who could barely manage in their previously owned standard suburban home. Failing to understand the effect of high ongoing costs associated with apartment living and reinforcing the myth of zero housing costs in retirement will continue to lead to poor policy outcomes.<img style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important;" src="https://counter.theconversation.com/content/80895/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" /> <a href="https://theconversation.com/profiles/erika-altmann-361218">Erika Altmann</a>, Property and Housing Management Researcher, <a href="https://theconversation.com/institutions/university-of-tasmania-888">University of Tasmania</a> Image credits: Getty Images This article is republished from <a href="https://theconversation.com">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/downsizing-cost-trap-awaits-retirees-five-reasons-to-be-wary-80895">original article</a>.

Retirement Income

Women and low-income earners miss out in a superannuation system most Australians think is unfair

<a href="https://theconversation.com/profiles/antonia-settle-1019551">Antonia Settle</a>, <a href="https://theconversation.com/institutions/the-university-of-melbourne-722">The University of Melbourne</a> Most Australians think the superannuation system is unfair, with only one in three agreeing the retirement savings scheme is fair for most Australians, according to a survey conducted for the University of Melbourne. In fact, only about half of those <a href="https://melbourneinstitute.unimelb.edu.au/publications/research-insights/search/result?paper=4630688">surveyed</a> agreed superannuation works well for them. These results contradict a conventional view based on earlier studies and held by academics and many in the personal finance sector, that Australians give little thought to superannuation. A 2013 survey found Australians have <a href="https://search.informit.org/doi/abs/10.3316/INFORMIT.285049750322819">poor knowledge</a> of how the superannuation system works, while another study in 2022 highlighted <a href="https://melbourneinstitute.unimelb.edu.au/__data/assets/pdf_file/0011/4382057/HILDA_Statistical_Report_2022.pdf">low financial literacy</a> in general. Australians also showed <a href="https://behaviouraleconomics.pmc.gov.au/sites/default/files/projects/retirement-planning-saving-attitudes_0_0.pdf">little interest in superannuation</a>, according to a 2020 Department of Prime Minister and Cabinet survey, with few Australians showing interest in reading their superannuation statements, choosing their fund or making voluntary contributions. With Australian households seen as uninformed and uninterested, their opinions tend to be left out of the public debate. We hear much about the gender pension gap, for example, but little about what women actually think about superannuation. Similarly, the distribution of tax advantage in superannuation is hotly debated by economists but survey data tends to refrain from asking households what they think about equity in the superannuation system. The University of Melbourne survey of 1,003 Australians was undertaken by Roy Morgan Research in April. Its results show women and low-income households are widely seen as disadvantaged in the superannuation system. In fact, only one in five Australians see the superannuation system as well suited to the needs of women and of low-income households, while 70% believe super favours wealthy households. <iframe id="5VX3K" class="tc-infographic-datawrapper" style="border: none;" src="https://datawrapper.dwcdn.net/5VX3K/1/" width="100%" height="400px" frameborder="0"></iframe> This suggests although Australians may show little interest in the management of their super accounts and may report they find the system confusing or even <a href="https://www.professionalplanner.com.au/wp-content/uploads/2016/05/Attitudes-to-Super-Report-May-2016.pdf">boring</a>, they are surprisingly aware of how superannuation is distributed. <h2>Women, singles and low-income earners miss out</h2> The federal government’s 2020 <a href="https://treasury.gov.au/publication/p2020-100554">Retirement Income Review</a> documents these gaps. Renters, women, uncoupled households and those on low-incomes fare poorly in the retirement income system. With little super to supplement the public pension, these groups are vastly over-represented in elderly poverty statistics, which are among the <a href="https://www.oecd-ilibrary.org/sites/d76e4fad-en/index.html?itemId=/content/component/d76e4fad-en">highest in the OECD</a>. Mirroring the gaps in the superannuation system reported by the review, the University of Melbourne survey shows that it is outright homeowners and those who are married who believe the superannuation system works well. Concerns the system works poorly for women and low-income households are strongest among women and low-income households. Only one in three renters believe the superannuation system meets their needs. <iframe id="N9GO6" class="tc-infographic-datawrapper" style="border: none;" src="https://datawrapper.dwcdn.net/N9GO6/1/" width="100%" height="400px" frameborder="0"></iframe> This suggests individuals’ concerns about fairness in the superannuation system are driven by their own experiences of disadvantage, regardless of financial literacy. This is consistent with my own <a href="https://www.tandfonline.com/doi/full/10.1080/13563467.2023.2195159">research</a> into household attitudes to superannuation, which showed some resentment among women who were well aware their male partners had substantially higher superannuation balances than them. This all matters for policymakers. <h2>Why public perceptions are important</h2> In the short term, these results suggest public support for making super fairer is likely to be stronger than previously thought. Recent government changes to tax concessions on large balances, for example, could have gone much further without losing support from the 70% of households that think the system favours the wealthy. But it matters for the longer term too. Public perceptions of fairness, effectiveness and efficiency are crucial to policy sustainability. This is well established in the academic literature from <a href="https://onlinelibrary.wiley.com/doi/full/10.1111/spol.12683">B Ebbinghaus</a>, 2021 and <a href="https://onlinelibrary.wiley.com/doi/abs/10.1111/1911-3838.12171">H Chung et al.</a>, and accepted by the Retirement Income Review. The review assessed the public’s confidence in the system to both “deliver an adequate retirement income for them(selves) and (to) generate adequate outcomes across society”. As the review makes clear, the system must avoid a loss of public confidence from perceptions of unfairness. Yet perceptions of unfairness are exactly what the University of Melbourne results suggest. This would have been clearer to policymakers if they asked earlier.<img style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important;" src="https://counter.theconversation.com/content/207633/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" /> <a href="https://theconversation.com/profiles/antonia-settle-1019551">Antonia Settle</a>, Academic (McKenzie Postdoctoral Research Fellow), <a href="https://theconversation.com/institutions/the-university-of-melbourne-722">The University of Melbourne</a> Image credits: Getty Images This article is republished from <a href="https://theconversation.com">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/women-and-low-income-earners-miss-out-in-a-superannuation-system-most-australians-think-is-unfair-207633">original article</a>.

Retirement Income

Santas needed! Surprising Christmas shortage spells job openings for Aussie grandads

A nationwide Santa shortage has many shopping centres hoping for a Christmas miracle, before festive families line up in droves for a snap with Father Christmas. According to talent agency <a href="https://scenetobelieve.com.au/santa-jobs/" target="_blank" rel="noopener">Scene to Believe</a>, who are responsible for hiring Santas in over 180 around Australia, there are not have enough applicants for Santa roles this December. The agency's head Christmas recruiter, Viviana Diaz, told <a href="https://www.news.com.au/finance/work/careers/santa-jobs-go-unfilled-despite-fall-in-aussie-job-ads/news-story/de7f3c5b6d95c6f78f9718d1bb60a099" target="_blank" rel="noopener">news.com.au</a> that the seasonal shortfall was nationwide, but the situation was more pronounced in Sydney. The company said issue has been growing over the last three years, with the problem believed to have stemmed from the Covid pandemic. Ms Diaz said that contrary to popular belief, Santas can come in all shapes, sizes and ages, and that women are also eligible to apply. “Sometimes they think they have to look like Santa,” Ms Diaz said. “But we provide a full Santa suit and they don’t have to have a real beard.” Previous experience is also not required, as Scene to Believe runs a dedicated Santa School where new incoming Santas can learn tips from experienced Santas. The company states that Santas “need to be jolly, have a great HOHOHO and enjoy working with children”, while a genuine love of the festive season, patience and compassion, and good communication skills. A current Working with Children Check and Police Check, or willingness to get these, are also important. Ms Diaz added, “Being a shopping centre Santa is a perfect job for Aussies looking to help their hip pocket come Christmas time, with flexible working arrangements and casual rates.” Experienced Santa Tony Hooper said it’s “perfect for older Australians wanting to dip their toe back into the workforce”. “Being a Santa is by far the best work I’ve ever done. It’s flexible, I work when I want and I spend my days talking to young families and getting in the festive spirit.” “It’s also a great way to earn extra cash right before Christmas, which is when I need it most. And the best part is, I can still receive my pension!” Ms Diaz said failing to fill its Santa positions was not an option, and they would do everything in their power to have a flock of Santas ready to spread Christmas cheer on December 1st. “We have to find a lot of people because Santa has to be there. We will perform a Christmas miracle!” <div> </div> Image credits: Getty Images

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