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Four common retirement fears

Retirement is not only a time to relax - it can also be a journey of self-discovery.

 

By facing your fears now and overcoming them, you can pave the way for a more rewarding future. Here are four of the most common retirement fears and some tips for dealing with them.

 

1.Boredom

We may not always find work fulfilling, but it does provide us with a sense of purpose and a reason to get up in the morning. Many people worry about becoming bored once that's taken away.

 

The solution is to think of retirement as your new job, but one designed by you. Start by brainstorming a list of things you've always wanted to achieve, from learning to paint and volunteering for a cause you believe in, to traveling Australia and growing your own veggies. Then write a step-by-step plan of how you can reach those goals. You'll never be bored - and soon you'll be able to look back with satisfaction on all you've achieved.

 

2. Poor health

Australians are living longer than ever before, putting us in the top 10 OECD countries for life expectancy. But the older we become, the more likely we are to experience health issues, with more than one in five older Australians suffering from heart disease, stroke or vascular diseases1.

Fortunately, there are some simple steps many of us can take to stay healthier for longer. Prevention is always better than cure, so make sure you eat well, get daily exercise and have regular check-ups.

Think carefully before dropping your private health insurance, since the government's Lifetime Health Cover system is likely to mean that opting out now will cost you dearly if you re-join in the future2. Remember, too, that over 65s and over 70s, get higher rebates on private health insurance premiums, making them more affordable3.

3. Memory issues

Along with declining eyesight, memory problems are the bane of getting older but there's plenty you can do to keep your mind nimble and promote brain health.

The Alzheimer's Association has a simple five-step plan for keeping your brain in shape, from challenging yourself mentally to eating 'good fats' like olive and fish oils - seewww.yourbrainmatters.org.au for details.

 

4. Running out of money

The longer we live, the more money we'll need in retirement - and the greater the risk of running short.

 

The good news is that a little planning can make an enormous difference. Even if retirement is only a few years away, there's a lot you may still be able to do to maximise your savings before you finish work. And the right strategies in retirement can help you build a healthier and more sustainable income, without putting your financial security at risk.

 

A financial adviser can help you navigate the complexities of Australia's super and pension system and create a practical plan for a more secure and rewarding retirement. Because the sooner you start planning, them more time you'll have to create the future you want.

 

1 Australian Institute of Health and Welfare, Australia's Health 2014.
2 
www.privatehealth.gov.au
3 
www.privatehealth.gov.au

DISCLAIMERS
You may choose to cut and paste all or part of this publication into your own business branded template.
This document has been prepared by Colonial First State Investments Limited ABN 98 002 348 352, AFS Licence 232468 (Colonial First State) based on its understanding of current regulatory requirements and laws as at
16 February 2015. While all care has been taken in the preparation of this document (using sources believed to be reliable and accurate), to the maximum extent permitted by law, no person including Colonial First State or any member of the Commonwealth Bank group of companies, accepts responsibility for any loss suffered by any person arising from reliance on this information. 

Where there’s a Will, there’s a way

Where there's a Will, there's a way

If you think estate planning is complex, think again. It revolves around two simple questions.

Who do you want to inherit your assets?   

Who would you like to handle your financial affairs after you die?

These are important questions because the answers directly impact you, your loved ones and any business associates you may have.

Who would you like to inherit your assets?

Currently around half of all Australians die without a Will[i] – termed dying 'intestate'. It's a problem that can leave families struggling with complicated legal processes at a time of grief. The affairs of a person who dies intestate can be properly managed by someone who is granted 'letters of administration' over the estate by the probate court. However, it should be noted that intestacy can sometimes see a valuable legacy significantly eroded through court challenges and poor management by an executor.

At worst, the way your assets are distributed could be determined by a formula set out by legislation.

The perils of leaving your legacy to fate and the state

If you die intestate, your assets will be divided in accordance with the law of the state or territory you live in. While this varies slightly across the country there is a good chance the distribution formula won't reflect your preferences.  If you have separated, divorced, re-partnered or are part of a blended family, it's almost certain that dying intestate will see your assets distributed in a way you had never intended.

This explains why a Will forms the core of your estate plan. It gives you control over the legacy you leave behind by clearly spelling out who you would like to bequeath your estate to. This doesn't mean a Will can't be contested, and this can certainly happen if someone feels they should have been provided for and weren't. However using a solicitor to draft your Will can go a long way to ensuring it will stand up to any legal challenges.

Choosing your beneficiaries and possible tax implications

To begin preparing your Will you need to think about your assets and who you would like to inherit them. Superannuation, including an allocated pension, is treated separately from your will so it's likely you will need to make a death benefit nomination to indicate who you wish to receive your pension or superannuation funds when you die.

Deciding on your executor
Once you have decided how your assets are to be distributed, the next step is choosing an executor. This is the person responsible for putting your wishes into action by collecting and managing all your estate assets, paying taxes, debts and other expenses and distributing your estate in line with your Will.

A testamentary trust can be useful

A testamentary trust allows you to specify the control of assets for a beneficiary(s). Its terms are set out in your Will and it is activated on your death. Instead of ownership of assets passing directly from one person to another, the assets are passed to the testamentary trust and then administered by a designated trustee - usually a family member, a trustee company, accountant or a solicitor.

Keeping your Will up to date

Having drafted a Will, be sure to keep it up to date. A Will should be altered each time a major life event occurs such as marriage or divorce, the arrival of children or grandchildren or if you acquire or dispose of substantial assets especially those noted in your Will.

Minor changes can be made using a codicil (an attachment to your existing Will). For major changes, drawing up a new Will can make things clearer.

TIP – Smooth the path for loved ones

There isn't much point having a Will if no one knows of its existence or where it can be found.

Let your family and other beneficiaries plus business partners know where your Will is, and keep an up to date record of your financial assets. This means securely storing details of your bank accounts, your pension account and other investments. This prevents your beneficiaries from having to become forensic accountants.

Who would you like to handle your financial affairs?

As part of your estate plan you may wish to nominate an enduring power of attorney. This is when you appoint someone who can manage your financial affairs on your behalf even if you are incapacitated.

None of us like to think about becoming mentally incapacitated or being unable to make our own decisions. And hopefully, you may never need to rely on your attorney. The important thing is to be prepared. Making these decisions today will give you peace of mind for tomorrow. Here too you should appoint someone you trust, and it's worth discussing your choice of attorney with your loved ones.

Another step worth considering is whether you wish to appoint an enduring guardian. Your guardian's role is to make medical and lifestyle decisions on your behalf.

Don't leave the planning for later
It's easy to put estate planning on the backburner. After all, life is about enjoying the here and now. The problem is that none of us know what lies around the corner. That makes estate planning something to address today through open and frank discussions with those who matter in your life.

 At JSA Accounting, we are able to assist you with your Estate Planning needs.  Contact our office on 08 8322 5088 for an appointment.



DISCLAIMERS
This document has been prepared by Colonial First State Investments Limited ABN 98 002 348 352, AFS Licence 232468 (Colonial First State) based on its understanding of current regulatory requirements and laws as at 20 September 2013. While all care has been taken in the preparation of this document (using sources believed to be reliable and accurate), to the maximum extent permitted by law, no person including Colonial First State or any member of the Commonwealth Bank group of companies, accepts responsibility for any loss suffered by any person arising from reliance on this information. 

 

What is the point of personal insurance?

What is the point of personal insurance? Put simply, it can help to smooth out some of the unexpected turbulence that life sometimes encounters, just as motor vehicle insurance can help take the financial shock out of events that can occur on the road.

If you have a financial plan, whether it's a short or long term one, then your financial journey along life's road is already mapped out. Serious threats still exist though, particularly in the form of death, illness or injury.

Helping to guard against such threats are three main types of personal insurance – life insurance, total and permanent disability and income protection.

Life Insurance: Putting aside the obvious emotional consequences for your family, if you died tomorrow then who would be affected financially, and how? Could the mortgage be paid? How might future school fees be financed? What would happen to the lifestyle of those closest to you?

In the event of the death (and sometimes the diagnosis of a terminal illness) of the insured, a life insurance policy pays a lump sum. This money can be used to pay debts, pay funeral costs, cover living expenses for family.

Total & Permanent Disability (TPD): An injury or illness that results in your being permanently disabled is also very likely to damage your income earning capabilities. But debts and medical bills must still be paid and the future financial health of your loved ones must be managed.

TPD pays a lump sum if you are 'totally and permanently disabled' and unable to work. Various TPD products carry differing definitions of 'totally and permanently disabled', so ensure this is clarified by your financial planner.

As with life insurance, the TPD payout amount is agreed before the policy is put in place, to ensure it will do the job of helping to pay medical bills and protect your loved ones financially.

Income Protection: If illness or injury leaves you unable to work for a short or long period, the result on current finances and future plans can be serious. An income protection policy can be put in place to help soften the blow, usually offering up to 75% of your current income to be paid to you in place of your regular income.

The replacement income is usually paid monthly, taking away some of the typical financial stresses during recovery and helping to protect future financial plans.

Income protection policies can be highly personalised, including lower premiums for longer waiting periods (replacement income does not kick in until six weeks after disablement, for instance), longer or shorter benefit periods, and either a pre-agreed payout value or a value that is assessed at the time of the illness/injury. Premiums for income protection may also be tax deductible.

CLICK HERE to view the 'What's your most important asset' flyer

DISCLAIMER:-  This document has been prepared by Colonial First State Investments Limited ABN 98 002 348 352, AFS Licence 232468 (Colonial First State) based on its understanding of current regulatory requirements and laws as at 16 February 2015. While all care has been taken in the preparation of this document (using sources believed to be reliable and accurate), to the maximum extent permitted by law, no person including Colonial First State or any member of the Commonwealth Bank group of companies, accepts responsibility for any loss suffered by any person arising from reliance on this information.  

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