It’s our birthday Did you know QInvest is turning 20? Since we were established in 1994, we’ve expanded to nine offices throughout Queensland, and have helped over 100,000 people like you reach your financial goals. At QInvest, we believe it’s important to review your financial position regularly. We’re delighted that each year our Advisers are seeing more and more Review Service clients, almost 3,000 of you. It’s a great way to make sure you’re on track for a comfortable financial future. Part of helping our members achieve a comfortable financial future is to explore topics that are relevant to you. In this edition we’ve focused on popular topics and questions that have been discussed with our Advisers. Our first article gives you some tips for dealing with Centrelink, both in the lead up to retirement and when you retire. We also take a look at being mentally prepared for retirement and important considerations of what it will be like when it comes time to retire. Finally we finish with an article that looks at how life expectancy is increasing for both men and women and making the years count. We hope you’ll enjoy this edition of the Review Service Newsletter! If you’re interested in hearing about specific topics, or if you’d like to share your QInvest story with us, we’d love to hear from you. Email us at email@example.com
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Review Service newsletter
In the final quarter of 2013 the economy grew by 0.8% and for the entire year it grew by 2.8%. Although this is below trend, this was Australia’s 23rd year running of economic expansion. Growth sources focused on exports, consumption spending and public capital spending, all partly offset by declining private capital spending. Retail sales also rose for an eighth consecutive month in December, up by 0.5% to be 5.7% higher over the year. This was the strongest outcome for retail in four years, however experts predict that if the economy is to grow close to trend in 2014 then increases in both residential and infrastructure spending will also be needed. This year to date Australia’s property and share prices remain high. Recently share prices moved up when key company earnings, in particular BHP Billiton’s higher than expected interim profit, were unveiled. At the same time Qantas has announced job losses of 5,000 and the job losses in the auto industry involve thousands of both white collar and blue collar workers. The Reserve Bank has held the cash rate at 2.5% again for a seventh consecutive month. This should remain steady for some time, however a rate rise does look possible before the end of the year. The Reserve Bank has also forecasted Australia’s economy to grow by 2.75% in 2013/2014 and by more than 3% in the following 2-3 years. The Australian Bureau of Statistics data showed the unemployment rate held steady in February, but full-time employment rose strongly and the total number of jobs lifted three times faster than forecast. In overseas news the latest International Monetary Fund (IMF) estimates show this years global growth (issued in January) as forecast to reach 3.75%, up from 3% in 2013.
Centrelink In retirement, you may be entitled to receive some financial support from the Australian Government through the Age Pension. You may also be entitled to supplementary payments and concession cards to assist with the costs of rent, healthcare, pharmaceuticals, telephone and other expenses.
tested include cash, savings, property (excluding your principal home), motor vehicles, boats, caravans and so on. Your Adviser can help you determine the value of your assets, and identify potential strategies to minimise your assessable assets, in order to maximise potential benefit.
If you meet age and residency requirements, Centrelink will conduct a means test to calculate which entitlements you may be eligible for. Your income and assets will affect your potential entitlements.
The income test uses your income to assess your eligibility to receive the Age Pension. Like the assets test, you’re allowed to receive a certain amount of income before your pension entitlement is affected. Most forms of income are considered, including rent, super and employment earnings.
Your Adviser can help you structure your financial situation so you can make the most of Australian Government benefits and potentially boost your Age Pension entitlement.
Many retired Queenslanders live on a mix of their own savings and the Age Pension. How does Centrelink work out my entitlement? There are two components of means testing you’ll be assessed under, an asset test and an income test. Centrelink will then calculate the amount of pension you’re entitled to.
Your QInvest Adviser can help you decide on the right strategy for your individual circumstances. Assets test The assets test may influence the amount of Age Pension you’re eligible to receive based on the value of your assets. While the value of your assets can have an effect on your entitlement, you can have a certain level of assets before your pension starts to reduce. Assets
99 Consider giving gifts to family now instead of leaving them as part
of your estate. Be aware there are thresholds that could affect your pension or allowance if exceeded. You can give up to $10,000 in any financial year with a maximum of $30,000 over any five year period.
99 Know the market value of your assets, not the original costs or
the replacement cost. This is the figure you need to provide to Centrelink. How you determine the market value will depend on the asset. Your QInvest Adviser can provide assistance with this.
The Government Work Bonus is a scheme established for those people who decide to continue to work after they are eligible to receive the Age Pension. As part of this scheme, the first $250 of any fortnightly income earned will not be assessed under the income test which means you may be able to receive a part or full pension.
Maximising your income Your Adviser can work with you to identify potential strategies for your personal situation to limit the effects of the income and assets test and maximise your potential Government entitlements. For example, setting up an Account-Based Pension with your super potentially receives a more favorable assessment under Centrelink’s income test. This allows for a regular, tax-effective income that is not fully assessable under the income test, to help you meet your retirement income needs. If however you leave your money in your super, it will be considered by Centrelink and earnings on this money will be assessed as part of the income test. It’s also important to note that any earnings in your super fund will be taxed up to 15%.
Of course what’s right for you depends on your personal situation. Talk to your QInvest Adviser at your next appointment if you have any questions relating to Centrelink or call us on 1800 762 033.
99 Make sure you get all the discounts to which you’re entitled. Even
if you’re only eligible for $1 of Age Pension, you still qualify for a range of pensioner discounts and access to discount cards such as the Pensioner Concession Card (PCC), Health Care Card (HCC), Commonwealth Seniors Health Card (CSHC) and the Queensland/ New South Wales Seniors Card.
99 Consider pre-paying funeral expenses (this can help reduce your assessable assets).
Are you really ready to ? As you know from speaking to your QInvest Adviser, the earlier you start planning for your retirement the better. Too many Australians retire without enough savings, with average superannuation payouts in 2009/2010 approximately $198,000 for men and $112,600 for women.1 Recent figures released by the Association of Superannuation Funds of Australia (ASFA) show the average couple needs an annual income of $57,6652, to fund a comfortable lifestyle in retirement, and a single person needs $42,1582. The average superannuation balances are not nearly enough to support a comfortable retirement. Paul3, a QInvest client since 2001 who is recently retired, says ‘you talk to people all the time about how they’d love to retire. I often say to them don’t do it too soon because you need to plan it very carefully.’ However as important as it is to be financially prepared, it is equally important to think about your emotional and psychological readiness. On the surface it may seem like a strange thing to worry about – who wouldn’t look forward to swapping the daily grind for a life of leisure? The reality can be very different. Dean Taylor, Advice Manager at QInvest, has seen many clients who struggle to adjust to the realities of retirement and feels passionately about making sure clients aren’t only financially prepared, but they’ve thought through the broader day to day impacts of what retirement really means. ‘Preparation isn’t just financial - I think it’s a mental state as well. People need to think about what they’re actually going to do on a day-to-day basis when they fully retire, and set out their goals and aspirations. Have they really thought about how they’re going to fill their time?’
Who are you now? Some people have defined themselves by their careers, so when they are no longer working they feel they have little to define their lives. This can be especially true for people who have held high-powered positions and filled their life with their work. However anyone who is unprepared for retirement can fall victim to boredom and a lack of purpose that can lead to health problems and even depression.
Take up a new hobby, join a group or club, or engage in volunteer work. You could also look at studying a course. The University of the Third Age (U3A) offers adult learning courses specifically for older people and is a great way to meet new people with similar interests.
Staying active Generally, people who cope best with retirement are those who stay active and involved, keeping themselves busy and making sure they reach out to family and friends. Robyn3, a retired QInvest client, says she thought her and her husband would be more relaxed, but they’re still very busy. ‘We enjoy our family, so having the children around is very important, as well as the grandchildren’. Tip
Make an effort to stay in touch with your family and friends. If you live nearby be sure to visit often. If you don’t, pick up the phone or Skype to keep in touch and avoid feeling isolated.
Not quite ready for full time retirement? You may want to think about easing into retirement gradually by cutting back from full-time to part-time work before ’clocking off’ for the last time. Mental health counsellor Lynn Berger says working less, but still working, keeps you physically, mentally and socially active and many people experience a rapid decline in physical and mental health soon after retirement, due to lack of activity and purpose. You can find out more about transition to retirement on the QSuper website or speak to your Adviser at your next appointment.
The next step Making the decision to leave the workforce permanently isn’t always an easy one, but your QInvest Adviser can help to ensure your finances are in order and you feel prepared for the change, and ready to start enjoying the next stage of your life.
1 Association of Superannuation Funds of Australia (ASFA) media release, ‘Average super balances boosted despite volatile economy’, 19 September 2011. 2 ASFA Retirement Standard, December Quarter 2013. 3 Real clients who have provided consent to use their statements for illustrative purposes only. 4 Lynn Berger, licesned mental health counsellor, New York Times. 4 July 2009, www.nytimes.com/2009/07/05/jobs/05career.html
If you’re planning your retirement or have recently retired we’d love to hear your story and feature you in an upcoming edition. Email us at firstname.lastname@example.org
Making the years count Recently released data from the Australian Bureau of Statistics (ABS) tell us that Australians are living longer than ever. Our life expectancy increased by two and a half years in the last decade and remains among the highest in the world. The combined male and female figure of 82 years, while a little lower than Japan and Hong Kong, is higher than Canada, New Zealand, the United Kingdom and the United States, according to the ABS1. A boy born today could expect to live 79.9 years, while a girl could expect to live 84.3 years. Dr Steve Hambleton, president of the Australian Medical Association predicts that we will soon see the average life expectancy hit 100, possibly higher. However, longevity is not the gift it seems unless we are getting the most out of life - happy, healthy and financially secure now and into our later years.
Make life work for you! Work/life balance is about the effect your job has on your family, your relationships and your own stress levels. If you are in a role that is all-consuming, you might consider another job for the sake of your health as well as your family’s – we all know that stress has been linked to suppression of the immune system and consequent illnesses. And if you work for yourself, you should take extra care to keep your work and your life in balance. You only have 24 hours – 1,440 minutes – each day. Spend those minutes as carefully as you spend your cash.
expectancy is increased, partial and total disability is delayed, and there are major gains in quality-adjusted life expectancy. Just like the rest of our body, your ‘grey matter’ also responds well to a regular work out. Neuroscientists suggest that the key to maintaining your mental faculties as you age is to keep learning. Activities need to be sufficiently challenging, get progressively harder, engage several brain systems (motor skills, listening, the visual system) and reward you (mastering a new skill can do that!). Think about taking those dance classes, improving your Spanish, take up juggling or just try saying ‘yes’ to things you have never tried before.
Ensure your financial security While the thought of living longer, healthier, happier lives is appealing, the idea of outliving our savings is rather frightening. Google the phrase ‘retirement readiness’ and receive a deluge of surveys and calculators that reveal sobering statistics on the lack of preparedness of the general populace. The strong message is that it is never too soon to start preparing for retirement and it is also never too late. Even if you are close to retiring, every dollar saved can go a long way to covering your expenses, and different financial strategies can make a big difference to your financial position at, and into retirement.
Your Adviser can help you calculate how much you’ll need, devise a This information may not be suitable to you because it contains gen plan, set goals and keep you that on track you’re ontothe way to ensuring has notso been tailored your personal circumstances. You shou appropriateness of the information having regard to your own obje your lifelong financial security. situation and needs prior to acting on this information. This newslet
Use it or lose it We have all heard that physical activity is an anti-ageing prescription in itself. Exercise can protect us against a number of chronic diseases. More importantly, exercise maximises residual function. In some instances, biological age is reduced by as much as 20 years1. Life
on behalf of QInvest Limited (QInvest) (ABN 35 063 511 580, AFSL an Licence number 238274). QInvest is ultimately owned by the QSupe 059 006) as trustee for the QSuper Fund (ABN 60 905 115 063), and i which is responsible for the financial services and credit services it p
With people living longer than ever – make sure you live it to the fullest!
1 Advant Pty Ltd 2014. This information may not be suitable to you because it contains general information that has not been tailored to your personal circumstances. You should consider the appropriateness of the information having regard to your own objectives, financial situation and needs prior to acting on this information. Information, rates and calculations are based on laws and regulations current at the time of printing. This newsletter has been prepared on behalf of QInvest Limited (QInvest) (ABN 35 063 511 580, AFSL and Australian Credit Licence number 238274). QInvest is ultimately owned by the QSuper Board (ABN 32 125 059 006) as trustee for the QSuper Fund (ABN 60 905 115 063), and is a separate legal entity which is responsible for the financial services and credit services it provides.
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