David Koch's guide to getting the most of your superannuation.
Looking ahead ... money concerns are high in the minds of Australian retirees.
FINANCIAL fears are stacking up quickly as the biggest worry for retirees this year.
A horror start on the sharemarket, shrinking interest rates paid on savings accounts, looming pension and superannuation changes, and health and housing costs are causing concerns, but experts say that now is still a great time to be retired.
Goldsborough Financial Services director and adviser John Oliver said retirees were worried about investment returns this year after a flat 2015 and poor opening to 2016 in which Australian shares have already plunged 7.5 per cent.
“The big issue is trying to have their investments keep up with the cost of living, and that’s difficult,” he said.
Social researcher Mark McCrindle said financial instability was an enemy of retirees. After the GFC a lot of people had to change their retirement plans and expectations because so much was wiped off,” he said.
Falling house prices in several states were adding uncertainty to retirees looking to downsize, Mr McCrindle said, while there were social impacts caused by children failing to leave the nest.
“Retirees can’t quite make their own independent decisions because they still have adult children living at home.”
MORE: Turnbull government eyes changes to superannuation
Be alert ... Mark McCrindle says financial instability was an enemy of retirees.Source:Supplied
Mr McCrindle said Australia added one million people aged over 70 in the past two decades, from 1.4 million in 1995 to 2.4 million today, giving them more numbers and more power and making now “an amazing time to be a retiree”.
“They have more health opportunities, are well connected with their families, have got technology and the ability to use that with smart devices, and the cost of travel is quite low,” he said. However, some travel plans are taking a hit, with the Aussie dollar dropping below US70c to its lowest level in seven years.
Seniors body COTA Australia has found that finding a financial adviser they can trust is a big issue for retirees.
COTA chief executive Ian Yates said many were burnt by financial losses during the Global Financial Crisis in 2008, pulled their money out of the sharemarket and put it into term deposits, only to watch deposit rates slump by two-thirds in the past five years.
“The other area that worries people is what’s going to happen with the cost of health services. Can I afford a hip replacement and keep up the health insurance? Am I in the right health insurance? Is it worthwhile?”
Growing concern ... retirees are worried about the cost of health services. Picture: Thinkstock.Source:Supplied
Mr Yates said recent aged care system changes had made financial decisions more complex, while younger retirees needed to understand the financial arrangements of retirement villages. “They think they are buying a home, but they are buying a licence to occupy,” he said.
Mr McCrindle said popular retirement locations were evolving from traditional coastal areas. “It’s increasingly the city — not quite the CBD but perhaps a more urbanised area.”
Mr Oliver said retirees were concerned about the increasing likelihood of superannuation tax changes this year. “However, the rule changes would probably not affect 95 per cent of people — just the wealthy.”
A tightening of the Centrelink assets test in January 2017 would affect some, he said, but there were strategies available other than simply spending money on travel to lower your assets.
“Don’t take on more risk than you need to.”
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