Retirement Update September 2015

ISSUE 7

SEPTEMBER 2015

Retirement Update

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Spring into an active retirement Retirement income Government Technology Pension living costs budget spending RETIREMENT RIGHTS Health RELATIONSHIPS Super Legal COOKING PROPERTY LESSONS LEARNED AND MORE...

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18 Day Tulip Time

Fully Escorted European River Cruise

April 2016

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Contents From the Editor 4 It’s your retirement Rate your retirement 4 Will you have a good retirement?

Take our quiz to find out Money explained Noel Whittaker suggests what money advice you should give your children

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Top technology tips 9 These gadgets will make your retirement smarter and simpler No-nonsense finance 10 Maurice Patane answers some of your pertinent financial questions Retirement rights 12 Susan Ryan shows how to fight age discrimination in five steps

Published by: Indigo Arch Pty Ltd Publisher: Kaye Fallick Editor: Debbie McTaggart Assistant Editor: Lesh Karan Designer: Word-of-Mouth Creative Phone: 61 3 9885 4935 Email: admin@yourlifechoices.com.au Web: www.yourlifechoices.com.au All rights reserved, no parts of this book may be printed, reproduced, stored in a retrieval system or transmitted, in any form or by any means, electronic, mechanical, recording or otherwise, without the permission in writing from the publisher, with the exception of short extractions for review purposes.

IMPORTANT DISCLAIMER No person should rely on the contents of this publication without first obtaining advice from a qualified professional person. This publication is distributed on the terms and understanding that (1) the publisher, authors, consultants and editors are not responsible for the results of any actions taken on the basis of information in this publication, nor for any omission from this publication; and (2) the publisher is not engaged in rendering legal, accounting, financial, professional or other advice or services. The publisher and the authors, consultants and editors expressly disclaim all and any liability and responsibility to any person, whether a subscriber or reader of this publication or not, in respect of anything, and of the consequences of anything done or omitted to be done by any such person in reliance, whether wholly or partially, upon the whole or any part of the contents of this publication. Without limiting the generality of the above, no publisher, author, consultant or editor shall have any responsibility for any act of omission of any author, consultant or editor.

Copyright Indigo Arch Pty Ltd 2015

4 10

Your health – who’s in charge?

13 Discover how to take a ‘no excuses’ approach to your health Retirement planning 14 Retirement mumbo-jumbo explained in our A–Z guide Superannuation 16 Amelia Theodorakis explores why many women retire in poverty Lessons Learned Prof Kerryn Phelps’ holistic world view has helped shape her remarkable life

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Your retirement living costs 20 Have they gone up or down?

Your retirement budget 21 How does your spending compare?

Government Find out about the indexation of Age Pension rates and threshold changes

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Relationships 23 How do you maintain a social network without your work mates?

Eat well Our healthy yet delicious take on Caesar salad – with a twist!

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YourLifeChoices Retirement Update September 2015

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Retirement insights

It’s your retirement Long gone are the days when you simply reached 65, left work and claimed your Age Pension. Australians are now expected to work longer, fund more of their own retirement and make decisions for which they may not be ready or prepared.

More than ever before, Australians are being forced to take control of their own retirement and as daunting as this may be, being more proactive can only reap benefits. It gives you the chance to take a more holistic view of how you want to live your retirement years and make changes sooner rather than later.

Of course, the most important issue when planning your retirement is how it will be funded, but you also have to consider how you can enjoy this next and exciting stage of your life. This is where good health, strong relationships and achievable goals are paramount to a successful retirement.

(How to) rate your retirement What makes a good retirement? Money? Friends?

Travel? Golf? Grandkids?

T

here’s no right answer, but there is a body of research that reveals the ingredients most likely to tip the scales in your favour as you transition from work to play.

Interestingly, while much of our media focus is on the state of our savings and superannuation, financial wherewithal is really the least important of the four indicators that matter most. In descending order of importance, these indicators are: • health • connection • sense of purpose • wealth.

This is not to say that wealth is unimportant – far from it – as financial security offers us choice, independence and the ability to purchase important insurances.

It also affords us discretion in health services and the rich rewards of travel.

But it just pales into insignificance beside the critical need to be healthy in body and

So, don’t be afraid to grab the bull by the horns and take action. It’s your retirement and it’s up to you to make the most of it.

Debbie McTaggart Editor

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YourLifeChoices Retirement Update September 2015

mind, and have satisfying familial and social relationships, as well as a high self-esteem based on a strong sense of purpose.

On the next page, in our ‘Rate your retirement’ quiz, we offer five measures of strength in each of these aspects of retirement. There are no absolute right or wrong answers, and the questions are by no means comprehensive, but when weighted according to their relative importance, they will give you a quick picture of your likelihood of enjoying a happy and healthy later life.

Hopefully it will also prompt you to think about the diverse prerequisites needed to enjoy life after work and the many ways of making life richer.

So, without further ado, why not tackle our quick quiz?

Retirement insights

Yes

No

Yes

Health

Wealth

1. Is your BMI within the correct range for your age?

2. Would you describe your mental health as stable?

1. Do you have sufficient income to cover your essentials, with some extra money for discretionary expenditure?

3. Are you exercising at least four times a week, for a minimum of 30 minutes?

2. Is your income above $42,861 per annum (single household) or $58,784 (couple household)?

4. Do you have a full health check at least once a year?

3. Do you have enough put away should adversity suddenly hit? (e.g. $5000 you can access in an emergency?)

5. Is your diet nutritionally balanced?

Connection 1. Do you live with someone else?

2. Do you see people every day?

3. Are you a member of a club, association or working group?

4. Do you work more than five hours per week?

No

4. Are you living in your own home?

5. Are your debts less than 10 per cent of your total assets?

Scoring Each question answered ‘Yes’ gives you a score of 1; a ‘No’ answer is a zero score.

5. Do you volunteer or give time, money or assistance on a regular basis?

Each section is weighted, so place your totals in the table below, multiply by the category weighting and then add these amounts to achieve an allover retirement satisfaction rating.

Sense of purpose

So how did you go?

1. Do you have structured activities you must attend on a weekly basis?

Any score over 40 is great. From 25 to 30 means you have some work to do! If it’s less than 25, you may find life challenging – but maybe it’s mind over matter, with a sunny attitude carrying you through.

2. Do you have a hobby which you enjoy regularly?

3. Do you have a project with an external deadline?

4. Do you have grandchildren or other younger people you see frequently?

5. Do you have a clear idea what your legacy will be?

Your total

Rating

Potential top score

Health

x4

20

Connection Sense of Purpose Wealth

x3

15

x2

10

x1

5

Final Score

Your final total

50

YourLifeChoices Retirement Update September 2015

5

Money explained

What money advice would you give your children?

J

While you may have learned a few things about managing your finances in retirement, we’re delighted to welcome Noel Whittaker to share an important message.

ohn is one of the first baby boomers. Born in January 1946, he has just turned 69 and is living a full life in retirement. His career started in banking then moved to financial services, so he is well experienced in the way the various asset classes work.

Recently, I joined him on the stage where he shared his experiences with an audience of retirees.

One message he gave really hit the mark, because I’ve never heard any financial person mention it before. The topic was life insurance. The natural reaction is to ask why would this topic be relevant to retirees, because they would be unlikely to need it or to be able to afford it.

The natural reaction is to ask why would this topic be relevant to retirees ...

“No,” he said, “it’s not for you, it’s for your children.” In his experience as a financial adviser, John has seen all the problems that can happen when a family has insufficient insurance, and has long insisted that all his children be insured to the hilt. This includes life insurance, Total and Permanent Disability (TPD) insurance, trauma insurance and income replacement insurance.

As an example, John then told us about his daughter, who has twin babies, and who three years ago was diagnosed with breast cancer. She has a high-paying job, and the combination of her income replacement insurance and her trauma insurance meant the family had enough funds to handle their mortgage payments and all the treatment that her condition required. She lived in a large provincial town and extensive oncology treatment was only available 1000km away, in the nearest capital city.

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YourLifeChoices Retirement Update September 2015

Money explained

The good news is that the treatment appears to have worked, and she is now in remission.

Then John delivered the clincher: “Imagine you’re in a comfortable retirement with a substantial nest egg and enjoying the fruits of all your hard work – how are you going to react when one of your children rings to tell you they’ve been diagnosed with a serious illness? Are you going to tell them it’s up to them, or are you going to dig into your own savings to rescue them?”

Never have truer words been spoken. Illness is something we all think is going to happen to somebody else, and insurance, as with making a will, is something that’s easy to put off. It’s only when the problems start that we realise it’s too late to do anything about it.

John concluded, “A serious illness is bad enough, but if one partner dies, or is permanently incapacitated, the surviving partner may be unable to continue to work and care for the children at the same time. If that happened, it may be the grandparents who end up taking care of the children.”

Getting your children to take out sufficient insurance is an important and emotive matter, and one that is never over in a single conversation, which

is why it’s important to involve your financial adviser. Often, premium affordability is a stumbling block, but life and TPD premiums can be covered in their super. Income protection premiums are tax deductible – only trauma cover premiums have to come from post-tax dollars.

MORE About Noel Whitaker Noel has written 20 bestselling books that have sold over two million copies around the world. His book Making Money Made Simple was recently named in the top 100 of the most influential books of the last century.

In 2011, he was made a Member of the Order of Australia for his services to the Australian financial planning industry.

He is a Certified Financial Planner, a Chartered Tax Adviser, a member of the Australian Securities and Investment Commission Liaison Committee, and is currently an Executive in Residence and Adjunct Professor with the Faculty of Business at the Queensland University of Technology.

YourLifeChoices Retirement Update September 2015

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Sponsored message from Seniors Holiday Travel

Why you should book with an expert travel agency The ease of booking your travel online may be tempting but if you’re looking for a more personalised trip, you really can’t go past an independent, expert travel agent.

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o you ever think, while you are researching your next overseas holiday with our very good friend Google, that you have found some really great places to visit but worry that once you’ve booked, a friend will ‘helpfully’ tell you about other places to go to whilst there?

You are not alone. No one can know everything about travel, so what a lot of would-be travellers are doing these days is conducting their own research online, then talking to one of the travel experts at the Seniors Holiday Travel Club. By taking the time to chat to a travel expert about what you would like to include in your next holiday and what your personal interests are – whether it’s art, music, architecture, fine wine, cooking classes or gardening – you’re more likely to get the personalised dream holiday you hope to achieve.

Expert travel tips may include suggestions, such as using trains between cities in Europe, which can be faster than flights for train travel under four hours, (as well as far more spacious and comfortable), the best locations for hotels in different cities (depending on what your interests are), organising stopovers between Australia and Europe (in either or both directions), currency tips, dining suggestions, festivals and more. The value of the insider travel knowledge that agents often have cannot be underestimated.

different wholesalers, detailing their strengths and weaknesses, to help you create and craft your own personal holiday, armed with the best information to do so.

And, of course, by organising your travel through an expert travel agency, such as the Seniors Holiday Travel Club, rather than booking online through some random website, you avoid all the internet scams that are unfortunately becoming more and more prevalent.

The founder of the Seniors Holiday Travel Club, Perry Morcombe, recently told YourLifeChoices that the key word that sums up his staff is ‘passion’ – passion for ensuring that all its travel club members enjoy just the very best holiday or cruise that they can. This is perfectly reflected in its business motto – SERVICE with EXPERTISE. Many travel websites are organised by travel wholesalers or cruise companies and will, of course, only offer you information about their own products.

What you really need is advice and support from an independent expert travel agent who will offer you suggestions from a wide range of travel wholesalers or cruise companies. Your independent expert travel agent will be able to compare and contrast the 8

YourLifeChoices Retirement Update September 2015

MORE To discuss your travel needs, call Seniors Holiday Travel on 1800 300 999 or visit Seniorsholidaytravel.com.au for more information.

Technology

Top technology tips for retirement

Whether you have a love – or hate – relationship with technology, you may find that these particular gadgets make retirement living both smarter and simpler.

Staying healthy With advances in smart technology, especially the wearable type, keeping track of your health and fitness has never been easier. Smartphones from Apple or Samsung come loaded with useful software to help you stay in shape and keep track of your fitness. However, if you’re after a more comprehensive tool, it might be worth considering a fitness band or a smart watch.

Such tools will enable you to keep track of your daily steps or analyse your fitness and heart rate while you exercise. But as you may already know, regular exercise is only half the battle: having a good diet is vital too. To make sure you keep yourself motivated to eat healthily, why not try some recipes from blogs dedicated to healthy eating?

Tech-assisted travelling Many people use their retirement to travel the world, and with the resources available on the internet, you can ensure that you get the most out of your travel budget – regardless of its size.

TripAdvisor is a great website for planning trips, where you can read millions of reviews on everything tourism related to make sure you don’t waste any time at dull attractions. And using websites such as Couchsurfing will allow you to stay nearly anywhere in the world for free, provided that you’re ready to return the favour. But if you’re looking for armchair travel, these top five picks will have you exploring the world in minutes.

We have some easy-to-follow guides on setting up Facebook and Twitter, and if you’ve got family whom you can’t visit as often as you would like, then why not try using video calls to stay in touch?

Forums are also a great place to stay socially active, so if you have (or you’re looking for) some hobbies, why not join an online community dedicated to them? Try googling a hobby followed by the word ‘forum’ and you should be able to find an online community dedicated to your chosen subject.

The smarter home Smart home technology is still in its early stages, but with the increased popularity of smartphones and tablets, it’s becoming more and more viable. Being able to control multiple aspects of your house – such as the heating, lighting and TV – with one device isn’t all that difficult to achieve with today’s technology.

This article from Gizmodo has some great tips if you’re interested in building a smart home or retrofitting your current home with some 21st-century functionality.

Staying social It’s a sad reality, but many people struggle with loneliness after retirement.

Luckily it’s never too late to get started on social media.

YourLifeChoices Retirement Update September 2015

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NO–NONSENSE FINANCE

Your money questions answered

Our no-nonsense planner Maurice Patane answers some of your pertinent financial questions, including the pros and cons of SMSFs and selling your property.

Q

Q1 I’m 60 years old, still working full time and have around $250k in super. Is it too late to consider an SMSF?

inheritance or downsizing a home, then an SMSF may be worthwhile.

So it’s wise to review your reasons with your financial planner who can assist you in making a decision.

There is no real age or threshold for when you should consider setting up a self-managed super fund (SMSF), as it depends on the purpose and stage of life.

Many people get caught up in the hype of an SMSF without realising they can achieve the same outcomes with less cost and less effort using a retail or industry super fund. One of the most significant benefits of an SMSF is that it enables you to tailor the options specific to your needs.

Here is a quick summary of some differences between an SMSF and retail/industry super funds:

Q

• investment choice – most super funds allow you to invest in assets, such as listed shares and managed funds, while with an SMSF you can also invest in property and you are allowed to borrow

• tax benefits – all super funds provide the same tax benefits, although you can be a little more creative with an SMSF • estate planning benefits – most super funds provide tax-effective estate planning, although an SMSF can be more flexible.

A limiting factor can be the amount available to invest.

For example, if you have a low balance, say less than $200,000, and you are drawing a pension, then it may be more economically viable to consider a retail or industry super fund.

On the other hand, if you are continuing to contribute and will receive new money, such as an 10

Many people get caught up in the hype of an SMSF …

YourLifeChoices Retirement Update September 2015

Q2 My wife and I are divorcing after 25 years of marriage. At 50 years of age, can I access my super to pay her out?

Your superannuation benefits are not accessible unless you have unrestricted benefits – including whether you have satisfied a condition of release or due to severe financial hardship.

However, what happens to your super benefits when a couple divorce or separate is a more involved discussion, and you generally have three options.

The most common approach is to agree to an ‘interest split’, which means you and your ex-wife receive a superannuation interest. This amount can remain in the same fund or be transferred to another super fund.

Another option is to ‘flag the benefit’ and defer the decision until another time, such as impending retirement.

A third option is to take the super into account, but leave it untouched. In the past, superannuation was treated as a financial resource rather than an asset of the marriage. You can divide the other assets and take the value of the super into consideration rather than splitting the superannuation benefit.

NO–NONSENSE FINANCE

The rules relating to dividing superannuation assets in the event of a relationship breakdown or divorce are complex and chatting to a family lawyer about the rules and your entitlements is a must.

prices combined with record-low interest rates are a good indicator that it may be a time to consider selling your investment property to secure a profit you may not see again for a very long time.

Q3 I’m planning to retire in four years’ time, when I will be 67. Should I sell my investment property now or wait until after I’ve retired? I would probably have about $100,000 profit to declare if I sold now.

Of course, you will need to consider the costs of selling, which includes agent’s commission, legal fees, possible break costs on a fixed loan and capital gains tax (CGT). The advantage of deferring the sale is to possibly reduce the CGT payable when you are paying less or no tax.

Q

If your reason for selling is solely for retirement, then you should analyse whether it is viable to retain the property to provide you with an income stream. On the other hand, this may not be appropriate if the property has a debt, if it requires additional funds for improvements or if you require access to the capital amount to supplement your lifestyle needs.

One of the main reasons for selling can be to obtain a better outcome from an alternative investment or strategy. This may include a tax-free superannuation income stream or having access to capital to minimise your ongoing tax liabilities or to maximise your Centrelink pension.

The difficulty is determining the future capital growth and the optimum timeframe.

This is a great opportunity to discuss your options and the potential tax implications with your financial planner and accountant.

MORE Do you have a question for Maurice?

Then email it to finance@yourlifechoices.com.au Maurice Patane Access Financial Management AFSL 229760 Ph (03) 9500 9988

One of the advantages of selling now is greater certainty of the proceeds. The current high house YourLifeChoices Retirement Update September 2015

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Retirement Rights

Actively fighting discrimination Experiencing any form of discrimination is demoralising. So Susan Ryan shows you how to actively fight age discrimination – and claim your rights.

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n Australia, we are protected by the Age Discrimination Act, which aims to ensure that people of all ages are treated equally. Despite this law, discrimination on the basis of age is all too common in our society.

Research commissioned by the Australian Human Rights Commission (AHRC) shows that many people hold negative perceptions of older people, perceiving them as isolated, lonely, forgetful and resistant to change.

In my role as Age and Disability Discrimination Commissioner, I work to overcome these damaging stereotypes and encourage all Australians to recognise the ‘Power of Oldness’, which is to recognise and acknowledge the many strengths of experience. It is also important for people to be aware of their rights. So here are some things you can do to fight discrimination, should you experience it.

1. Know your rights The Age Discrimination Act 2004 protects you from age discrimination in many areas of life, including: • employment • education • accommodation • getting or using services.

This means it is unlawful to treat a person less favourably in these protected areas because of their age.

2. Recognise discrimination It is important to be able to recognise discrimination when it happens to you. Sometimes it will be obvious – in the form of derogatory comments or jokes. At other times it will be harder to spot, such as being refused a chance to get more training on the basis that you are expected to leave the job in a few years.

A recent survey undertaken by the AHRC showed that one in five people who had experienced age discrimination at work were unaware that the behaviour was unlawful.

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YourLifeChoices Retirement Update September 2015

3. Talk to someone Discrimination of any kind is upsetting and can have an impact on your mental health. It is important to seek the help you need if this happens to you. You could talk to a manager, colleague, family member or friend.

You could also seek help from a counselling service such as Lifeline (Ph131114).

4. Make a complaint If you do not feel comfortable raising the issue with your manager, or this does not resolve the issue, you can make a complaint to the AHRC.

5. Understand the Power of Oldness Older people have a huge amount to contribute to society, and they make this contribution in many ways. Negative stereotypes often lie at the heart of age discrimination, which is why the AHRC is committed to replacing this negativity with positive and realistic attitudes towards both young and older Australians. This ARHC video helps to convey the message.

MORE Contact the AHRC for advice or to make a complaint if you feel you have experienced age discrimination at work.

Ph 1300 656 419 or 02 9284 98888 Email: infoservice@humanrights.gov.au

HEALTH

Your health – who’s in charge?

Do you find it challenging to be healthy when the people around you aren’t? Our health expert Lesh Karan offers you a ‘no excuses’ approach to own your wellbeing.

O

ne of the excuses people have for not looking after their wellbeing is that they find it too difficult to change, especially if their loved ones aren’t supportive or healthy themselves. You might also fear that making a healthy lifestyle shift will cause a rift in your relationships, especially if jealousy or a difference in values or personality arises – i.e. we no longer have fun together! So here are some practical ideas to help you take charge of your health.

Own your health Of course, it’s trying when your partner, family or friends don’t support your lifestyle improvements, or consciously (or unconsciously) sabotage your efforts to be healthy. However, the point to keep in mind is that no one can force you to do anything you don’t want to do. The ultimate decision maker is always you.

Speak up Some loved ones not only don’t want you to change (because it makes you different from them), but they might also go out of their way to subvert your efforts.

Tell them nicely that they’re not being helpful or supportive. They might even think they’re just being playful, so it’s up to you to speak up for yourself.

Ask for support You can’t change your partner, so don’t even try to do so – this will only create resentment. Instead, why not ask them to support and respect your

efforts to change yourself? Tell them that while you aren’t expecting them to change, you’d appreciate their encouragement, especially if you feel you’re about to fall off the bandwagon.

Do it anyway If you want to adopt healthy activities – such as walking, yoga, or going to a health seminar or retreat – but don’t have anyone to go with, go anyway. This way you are more inclined to meet like-minded people, and over the long term, create a support network and new friends who’ll make it much easier to be healthy.

Become the cook If you’re not in charge of the food in your house, you may need to make cooking and grocery shopping your new hobby. Find recipes that are not only healthy but also delicious substitutes for your favourites, and allocate some shelves in the pantry and fridge for your food. This will help you to own your lifestyle and separate the opposite lifestyles that are being lived in the house.

The crucial fact is, if you want to prioritise your health, you will have to take the courageous leap to make long-term changes despite your fears of the consequences. If some relationships fall by the wayside, perhaps consider that having someone in your life who doesn’t have your best interest at heart isn’t worth it. Soon, you will find your tribe.

YourLifeChoices Retirement Update September 2015

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Retirement Planning

The A–Z of retirement

It’s often said that a little knowledge is a dangerous thing, and when it comes to retirement, you can never know too much.

R

etirement is difficult enough to navigate without the added complication of terms, phrases and acronyms that you’ve never heard before, or simply don’t understand. To encourage you to take a more active approach in planning your retirement, our A–Z of Retirement will help you decipher the code.

Accumulation fund – a superannuation fund which accepts both employer and personal contributions.

Adjusted taxable income – income test measure used by the ATO to determine your tax liability.

Age Pension – a social security benefit paid by the Australian Government via Centrelink.

Allocated pension – also known as an accountbased pension. A retirement income product that allows you to make a lump sum investment, usually from superannuation, to provide a drawndown annual pension of between four and 14 per cent, depending on your age.

Annuity – a periodic payment made to a person in return for a lump sum investment.

APRA – Australian Prudential Regulation Authority.

ASFA – Association of Superannuation Funds of Australia.

AFSL –Australian Financial Services Licence.

ASIC – Australian Securities and Investment Commission.

ASX – Australian Stock Exchange.

Assessable income – income earned before allowable deductions.

Assets – possessions or property.

Asset test – applied to Age Pension claims as a method of testing your eligibility.

ATO – Australian Tax Office.

Binding death benefit nomination – a legally binding nomination made by a trustee or member of a superannuation fund as to who receives their super upon their death.

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YourLifeChoices Retirement Update September 2015

Centrelink – the agency of the Australian Government that manages social security payments and allowances.

Commutation – process of converting a pension into a lump sum.

Complying funds – superannuation funds that comply with operating standards and are therefore eligible to receive concessional taxation treatment.

Compound interest – interest that is accrued on an investment that, in turn, is reinvested to earn more interest.

Concessional contribution – superannuation contributions you make to which the concessional tax rate (15 per cent) is applied.

Concessional contribution cap – the limit to the amount of concessional contributions you can make.

Contribution tax – tax levied on contributions to superannuation funds.

Defined Benefit Fund – in contrast to an accumulation fund, a formula is used to calculate the retirement benefit based on average salary and years of membership in the fund, so your income is defined and not dependent upon market fluctuations.

Retirement Planning Industry super fund – originally a fund open only to members who are employed in a specific industry. However, many of the larger funds now allow anyone to join. These funds are ‘not for profit’, so all profits are put back into the fund to benefit all members.

Non-concessional contribution – contributions to a super fund made by an individual where no concessional tax rate has been applied.

Offset – a tax deduction that reduces the amount of tax paid.

Preservation age – the age, determined by your year of birth, at which you can access funds from your superannuation.

Revisionary pension – a pension that is paid regularly, rather than as a lump sum, to an eligible dependant after the death of a fund member.

Salary sacrifice – pre-tax salary that is paid into a superannuation fund as additional contributions.

Self Managed Super Fund (SMSF) – a fund that is managed by its members (trustees).

Equity – value of an asset after any debt owed on it is deducted.

Equity release – accessing capital that has accrued on an asset, such as property, whereby you receive a lump sum or regular payment. You remain the legal owner and the debt is paid when the property is sold.

Financial advisor – a person authorised (by operating under an ASIC licence) to give financial advice.

Financial plan – a plan created, usually with the help of a financial advisor, to help you achieve your financial goals.

Superannuation Guarantee Contribution (SGC) – compulsory amount paid into a nominated or default super fund by an employer on behalf of employees.

Spouse contribution – superannuation contributions made on behalf of a spouse who earns below a certain amount.

Transition to Retirement (TTR) pension – a means to access superannuation benefits once preservation age has been reached, while still working and being able to salary sacrifice employment income as concessional contributions.

Work test – to be able to make superannuation contributions between the ages of 65 and 74, you must meet the requirements of a work test defined by the ATO.

Franking credit – a tax credit that shareholders receive on share dividends on which an Australian company has already paid tax.

Gearing – an investment made with borrowed money.

Income stream – an investment that provides a regular payment.

Income test – the test that is applied to Age Pension claims as a method of assessing your eligibility.

YourLifeChoices Retirement Update September 2015

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Superannuation

Why do women retire in poverty?

In Australia, women retire with half as much superannuation as men.

Understanding why this imbalance occurs is the first step to changing this significant gap, says Amelia Theodorakis.

I

n Australia, women retire with half as much superannuation as men, and considering that retirement income is one of the most important influences on quality of life, this disparity places women on the back foot, financially and socially.

In a 2014 Association of Superannuation Funds of Australia (ASFA) report, it was revealed that in 2011/2012 the average super balance for men at the time of retirement was $197,000. This figure was almost halved for women, at $105,000.

While on average over the last 10 years super balances have increased, women still hold only 37 per cent of Australia’s total superannuation savings,

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YourLifeChoices Retirement Update September 2015

compared to 63 per cent for men. However, a large majority (60 per cent) of women aged 65–69 have no superannuation at all.

A number of underlying factors contribute to the existence of this superannuation disparity.

In Australia the gender pay gap is a significant factor. According to the Government’s Workplace Gender Equality Agency Report in May 2015, women earn on average $298.10 less per week than men, equalling a 17.9 per cent pay gap. Year on year, this pay gap amounts to a difference of a $15,000.

Additionally, as a result of pervading stereotypes about the type of work women and men ‘should’ do, women remain the primary caregivers for family members. Women are therefore more likely than men to experience prolonged periods away from the workforce, as well as undertaking, part-time, casual and unpaid work. In the case of acquiring more than one part-time job, women may pay a higher tax rate on second and subsequent incomes. As a result of these factors, the earning capacity and super contributions of women are severely reduced.

While these statistics reveal the economic nature of the super imbalance, the human consequences of the issue expose it as a social crisis. Despite the fact that women typically live longer than men, they often end up struggling financially throughout retirement. A report released by Westpac in May 2015 found that a woman earning $53,700 per year would need to work until the age of 74 to retire with as much super as the average Australian man. Startling data reveal that, even if a woman works full time for 40 years at average

Superannuation

female earnings and contributes 15 per cent to superannuation, she is highly likely to outlive her super.

The Australian Council of Social Service (ACOSS) released a report called Poverty in Australia 2014 that found that women are at a greater risk of experiencing poverty than men. Of Australians living below the poverty line (calculated at $400 per week for single adults), 53.7 per cent are women, while 46.3 per cent are men. Single mothers, single people over 65 years of age and those living in households mainly reliant on social security are particularly at risk.

So, what can be done?

Thanks to increased focus on the gender pay gap in both the political and social spheres, the superannuation disparity is now receiving more attention.

…a large majority (60 per cent) of women aged 65–69 have no superannuation at all.

In July, the ANZ bank publically highlighted the super issue when it announced a new policy that offered free financial advice to women who have less than $50,000 in super. The bank is also doing its part to bridge the superannuation divide by offering its female staff an additional $500 per year as a contribution to their super fund. While this may seem like a small offering, it represents an enormous step in the right direction.

Politicians are also recognising the problem.

In December last year, Greens MP Adam Bandt backed a bill proposed by ASFA that would allow employers to boost superannuation payments to female employees. He acknowledged that women have lower employment outcomes and wages, a higher likelihood of being in unpaid caring roles and reduced retirement income. Despite the Government’s refusal to support the bill, it represents a greater political emphasis on the issue.

Until further policies are put in place, the current ‘official’ advice given to women is to secure their super by taking it upon themselves to invest.

In addition to the phased increase in the rate of the Superannuation Guarantee Contribution to 12 per cent (by 2025) and the Low Income Superannuation Contribution (LISC), the Government’s co-contribution scheme is the main way for women to boost their super. In this scheme, the Government makes a bonus contribution for every voluntary contribution made by an individual. However, eligibility for the scheme is capped at being less than 71 years old and earning less than $50,000 per year. While this scheme can benefit women on low-incomes, it doesn’t address the superannuation crisis experienced by so many others. Additionally, the LISC payment may be phased out.

The continuing superannuation gap between women and men exemplifies the gender inequality still experienced by Australian women. While we have seen significant social and cultural shifts that have allowed women to receive many of the same benefits as men, there remains a stark contrast in the financial welfare of women in comparison to men. In order for this to be resolved, we need representative bodies to continue pushing forward official policies that ensure equal pay and higher super incomes for women. By protecting the interests of women and men alike, we will have the best possible chance to ensure each individual can experience a dignified retirement.

MORE Workplace Gender Equality Agency, Gender Pay Gap Statistics, May 2015.

Association of Superannuation Funds of Australia, Research and Papers database.

YourLifeChoices Retirement Update September 2015

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Lessons Learned

Professor Kerryn Phelps Professor Kerryn Phelps shares how a strong sense of community and holistic view of the world have helped shape her remarkable life.

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was born in the northern beaches of Sydney, and my upbringing was very much involved in sports and academics. My mother was particularly involved in our education. Her circumstances meant she had limited education, so it was important to her that my education was completed and that I had a profession.

My father was, well my parents both were, very interested in sport. And they felt that it was very important for children to have a rounded upbringing.

We were involved in a lot of sport. Pretty much any sport that was going we tried, and spent a lot of time in the outdoors.

I believe we can never truly count the number of life lessons we learn from our parents. But I certainly had a lot of early strong life lessons about appreciation of the environment, physical activity as a part of overall health, and the importance of education. And I think those elements really set the tone for the rest of my life.

I don’t think you can distil your achievements down into a single one.

You get to your fifties and think it is important to have a holistic view of your life. I like to think that I started the conversation in Australia on health and holistic wellness. And I became involved in health promotion and reporting before it became a speciality. And that was very important to me personally.

As well as inspiring others to be as well as they can, I think that raising three children in different circumstances has been challenging yet rewarding, and I’m proud of the people they are.

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YourLifeChoices Retirement Update September 2015

Lessons Learned

I’ve always constructed my career in a way that could make my children as well as my work a priority. There’s no simple formula for being able to find that balance. It’s also the fact that my wife Jackie and I work very much as a team.

One of my more obvious achievements that people look at is being the first female president of the AMA (Australian Medical Association), as well as what I achieved with my colleagues during that period.

I’ve always had an outward look and strong awareness of the world. It’s not enough for me to say, “Well, I’m doing okay.” And that’s probably been an early life lesson too because my parents have been very much involved in community projects and they still are.

You have to live life to learn what you have to learn.

Nothing significant is achieved without effort. And effort implies challenge. I don’t shy away from challenge or from the difficulty of a task if I think the outcome is worthwhile.

On a social justice level, I’ve also worked on a whole range of areas in Australia, including the LGBT (Lesbian Gay Bisexual Trans sexual) community with Jackie, as well as on indigenous health and child protection systems.

Social justice issues have been enormously challenging because you’re working to change very entrenched beliefs and patterns in the community and the political system. When we look at challenges, I think we need to look at personal ones as well as broader ones that involve changing the system.

One of the things about life is that you have to accept that you will make some mistakes. You have to live life to learn what you have to learn. You can’t learn from other people.

five years, we’re looking at how our lives will look in the next five years. I think more people should run their lives and health more like a business, in that they have goals and objectives looking forward into the future, otherwise there’s no point to health promotion.

If people didn’t think about the consequences of their actions now, they wouldn’t do things like exercise regularly. They need a little bit of thought for the future, not just about today. Being mindful of today is important, but having a mind for the future is equally as important.

What I’ve learnt about people as a practitioner who has written books on health, with my latest being The Cancer Recovery Guide, is that life is precious and people don’t realise how precious their life is until it is challenged or threatened, and by something like a diagnosis such as cancer. After the diagnosis of cancer some people get a second chance. They go through the treatment and they come out the other side and now they have to get on with their lives and they’re very rarely unchanged by the experience.

Mindfulness is probably the most important change I wish people could make to take control of their health and life. By that I mean thinking about what you do, and the impact it could have on your future health. And by ‘what you do’ I mean it’s the work that you’re doing, the relationships around you, it’s what you eat, drink and smoke. It’s everything.

It’s every little decision you make during the day.

MORE Professor Kerryn Phelps’ book The Cancer Recovery Guide is published by Pan Macmillan Australia, and is available from all good bookstores.

Jackie and I always have a personal five-year plan, and so with our youngest finishing school in the next YourLifeChoices Retirement Update September 2015

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Your retirement living costs

June quarter costs In September, the Association of Super Funds of Australia (ASFA) released the ASFA Retirement Standard.

ASFA has kindly allowed YourLifeChoices to share this information.

Weekly expenditure for retirees aged 65–85

No change

Increased

Decreased

Comfortable couple

Modest couple

Comfortable single female

Modest single female

Building and contents insurance Rates Home improvements Repairs and maintenance Total housing

30.91 36.60 10.30 18.03 95.53

24.47 30.91 0.00 12.88 68.25

25.76 30.91 10.30 15.45 82.41

24.56 31.03 0.00 15.51 71.10

Electricity and gas Total energy

57.29 57.29

55.29 55.29

42.25 42.25

41.63 41.63

Food – groceries and other fresh food Total food

198.32 198.32

159.76 159.76

110.18 110.18

77.13 77.13

Bundle of home phone, broadband, mobile Total communications

31.96 31.96

15.99 15.99

25.11 25.11

9.13 9.13

Household cleaning and other supplies Cosmetic and personal care items Barber or hairdresser Music and CDs Newspapers and magazines Computer, printer, software Household appliances Pest control, alarm service Total household goods and services

25.72 3.07 20.58 2.15 8.24 4.22 11.81 12.64 88.43

15.43 2.95 8.87 0.00 1.91 4.22 2.99 0.00 36.38

18.52 6.89 14.79 0.32 8.05 4.22 10.06 12.64 75.48

10.29 1.98 4.95 0.00 2.41 4.22 2.99 0.00 26.83

Clothing Total clothing and footwear

57.43 57.43

28.71 28.71

38.28 38.28

17.69 17.69

Car transport and running costs Public transport Total transport

137.16 5.32 142.48

91.17 5.32 96.48

137.16 2.66 139.82

91.17 2.66 93.83

Health insurance Chemist Co-payment and out of pocket Total health services

82.11 24.14 42.36 148.61

65.85 3.29 12.77 81.91

41.78 13.32 29.11 84.20

32.92 1.85 7.66 42.44

Membership clubs TV, DVD, digital camera Alcohol consumed in home (or equivalent spent) Lunches and dinners out Cinema, plays, sport and day trips Domestic vacations Overseas vacations Sundry items Total leisure

9.67 1.79 40.36 80.71 13.53 77.32 54.11 29.84 307.31

1.94 0.90 15.13 25.12 18.85 36.72 0.00 11.59 110.25

4.85 1.79 25.22 60.30 6.76 65.72 36.72 22.89 224.25

0.97 0.90 10.09 30.16 5.80 18.36 0.00 7.73 74.00

Gifts and/or alcohol or tobacco

0.00

0.00

0.00

0.00

Total weekly expenditure Total annual expenditure

$1,127.36 $58,784

$653.04 $34,051

$821.99 $42,861

$453.78 $23,662

Expenditure items

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YourLifeChoices Retirement Update September 2015

YOUR RETIREMENT BUDGET

How does your spending compare?

Expenditure items

Weekly

Monthly

Annual

Building and contents insurance Rates Home improvements Repairs and maintenance Total housing Electricity and gas Total energy Food – groceries and other fresh food Total food Bundle of home phone, broadband, mobile Total communications Household cleaning and other supplies Cosmetic and personal care items Barber or hairdresser Music and CDs Newspapers and magazines Computer, printer, software Household appliances Pest control, alarm service Total household goods and services Clothing Total clothing and footwear Car transport and running costs Public transport Total transport Health insurance Chemist Co-payment and out of pocket Total health services Membership clubs TV, DVD, digital camera Alcohol consumed in home (or equivalent spent) Lunches and dinners out Cinema, plays, sport and day trips Domestic vacations Overseas vacations Sundry items Total leisure Gifts and/or alcohol or tobacco Total expenditure YourLifeChoices Retirement Update September 2015

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Government

September 2015 update Indexation of the Age Pension rates may see some people with a few more dollars, while others may benefit from the rise in thresholds.

New pension rates The biannual indexation of pension payment rates occurred on 20 September 2015 and has resulted in an increase of $6.80 per fortnight for a full, single Age Pension and $5.10 for each member of a couple.

For full details of the new payment rates, visit YourLifeChoices.com.au

Income and asset indexation Indexation of disqualifying asset and income limits for part Age Pensions took effect from 20 September 2015 and may mean that those who have narrowly missed out on a part Age Pension will now qualify. For a single part Age Pension, the disqualifying income limit is now $1896 (fortnightly) and the disqualifying asset limit is $783,500 for homeowners.

For full details of indexed limits, visit YourLifeChoices.com.au

Indexation of income limits for Commonwealth Seniors Health Card For those over Age Pension eligibility age who do not qualify for an Age Pension, a Commonwealth Seniors Health Card (CSHC) can provide muchneeded financial assistance with reduced-cost medicines on the PBS and other concessions provided by state governments. If you have previously missed out on receiving a CSHC due to the income threshold, increased limits due to indexation may help.

To find out the current income thresholds, visit YourLifeChoices.com.au

Changes to Centrepay Centrepay, the service provided by Centrelink to help customers pay their bills directly from their social security payments, is changing. From 1 July 2015, Centrelink has restricted the type of consumer leases it will manage via Centrepay. It has also been expanded to include payments for low interest loans, savings plans and layby.

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YourLifeChoices Retirement Update September 2015

These moves are to increase protection for vulnerable Centrelink customers. A transitional period will operate until 1 July 2016, during which time affected Centrepay customers will be contacted directly by Centrelink to arrange alternative means of payment.

For more information on the changes, visit HumanServices.gov.au/centrepay

When will you qualify for a pension?

The Age Pension eligibility age is currently 65 for both men and women, but this will gradually increase depending on the year you were born. If you’re unsure when you will be eligible, check the table below.

Date of birth

Qualifying age at

1 July 1952 to 31 December 1953

65 years and 6 months

1 January 1954 to 30 June 1955

66 years

1 July 1955 to 31 December 1956

66 years and 6 months

From 1 January 1957

67 years

Relationships

No need to be lonely Our relationship expert Jo Lamble answers a question we often ask when retiring: How do I maintain a social network without my work mates?

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ne of the many benefits of working is the social aspect, which is why many people fear becoming isolated once they retire.

But retirement doesn’t have to spell the end to the friendships you made at work. However, it does mean that you may have to be the initiator – the one who suggests meeting up for coffee or lunch on a regular basis.

wider group is always a good way to get to know someone better.

Retirement is also the time to explore ways of meeting new people. What have you always wanted to do, but have never had the time? Maybe you want to take up golf or tennis. Perhaps you’d like to join a bridge club or a craft group. You might be someone who is more interested in community groups, such as Probus or Rotary, or the Lions Club.

You could consider becoming a volunteer with the SES, Meals on Wheels or at your local hospital.

Post-retirement doesn’t just mean maintaining the relationships you made during your work life and forming new friendships. It’s also a time to reconnect with people with whom you’ve lost contact. If you haven’t already, try joining Facebook; it’ll help you to look up old acquaintances, people about whom you’ve often thought and find out what your best friend from high school is up to these days. You’ll be surprised how delighted most people are to be found after so many years. It can be as if life has stood still and you are just picking up right from where you left off.

Also, there are many social groups, such as ‘meetup’, that regularly organise different outings – e.g. bushwalking, movie nights and wine tasting.

Google is your friend on this one – just type in social groups in your local area and see what comes up. You’ll see that our communities are brimming with people who want to stay connected and be involved. Your job is to find them.

Many of the activities I have just mentioned have regular meetings or events so you don’t need to put in much effort – just turn up and participate.

Creating friendships, however, takes a bit more work. Once you have met a few people with whom you click, suggesting a catch-up outside the

Developing friendships is the same at any age. We need to go a little outside our comfort zone and open up about ourselves. Slowly divulging more and more about yourself allows others to get to know you and deepens the relationship.

MORE Websites to help you make new friends: Probus.org Rotary.org.au Lionsclub.org.au Govolunteer.com.au Meetup.com Facebook.com

YourLifeChoices Retirement Update September 2015

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EAT WELL

Spring Caesar Salad It’s spring, and that means asparagus is in season. Take advantage of this delectable green veg with our unconventional but tasty Spring Caesar Salad.

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good Caesar salad usually has bacon, croutons and anchovies in the mix, but since it’s spring, we’re going a little lighter without compromising taste. Think avocado, cherry tomatoes and asparagus, with chicken instead of bacon. And in lieu of croutons, enjoy this salad with a side of crusty sourdough.

Spring Caesar Salad Serves: 2–4 Time: 30 minutes

Ingredients Salad: • 2 tablespoons extra virgin olive oil • 2 skinless, boneless chicken breasts • 2 eggs • 1 baby cos or romaine lettuce, leaves separated, washed and dried • 1 firm, ripe avocado • 1 bunch asparagus (or green beans), lightly blanched • 1/2 punnet cherry tomatoes • 1/2 cup shaved Parmesan cheese Dressing: • 1 garlic clove, minced • 1/2 cup mayonnaise (see suggested videos in the MORE box to make your own) • 1 tablespoon white wine vinegar • 1 lemon, juiced • 1/4 cup finely grated Parmesan cheese

Method Rub the chicken breasts with the oil and season with salt and pepper. Place a pan over a medium heat, and once hot but not smoking, cook the chicken for about four minutes each side, or until cooked through. You can check if cooked by cutting through the thickest part; the meat shouldn’t be pink and the juices should run clear.

Slice and set aside.

In the meantime, boil the eggs for seven minutes, then drain and run under cold water until cool enough to handle. Peel and cut into quarters.

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YourLifeChoices Retirement Update September 2015

Now, prepare the rest of the salad: roughly chop lettuce leaves, peel and slice the avocado, halve the cherry tomatoes and chop the asparagus into short stems. In a small bowl, whisk together the dressing ingredients.

To serve, toss together the shaved Parmesan, lettuce, asparagus, avocado and tomatoes, and divide between plates. Top with the chicken and egg, and drizzle with as much or as little dressing as you wish. Serve with toasted sourdough on the side, and a cheeky glass of riesling. Delicious!

MORE If you’d like to make your own mayonnaise for the dressing, this video of Jamie Oliver shows you how to do it the traditional way. While this BBC video shows you the cheat’s method using a handheld blender. Either way, making your own homemade mayonnaise is very easy and much healthier (and tastier) than those you buy.