To have $50,000 per annum in retirement, you require on a lump sum of approximately $850,000 (depending on investment returns).
This is after paying off debts, purchasing a home, holidays, cars, paying off mortgages, marriage, starting a family, school fees, children’s weddings.
Even at age 30, a person on the average wage for an Australian will find they are significantly short of the above lump sum by age 65, if they are just relying on employer superannuation contributions for retirement. A small adjustment now can have a large compounding effect over the long term.
A financial plan is a bit like building a house; you need to establish a strong foundation. If you haven’t consolidated or reviewed your current superannuation fund, are you aware of the entry fees or potentially high ongoing costs.
I remember I was horrified to realise when I first started financial planning a client had previously been hit with a 4% entry fee on a $300,000 rollover ($12,000).
Upon review of a new client of mine I discovered they had two income protection policies due to multiple superannuation funds and could only ever claim on one.
Fortunately, the two funds were with the same company and I managed to negotiate a refund for three years of premiums.
With the increasing influence of marketing, Australian’s seem to really struggle with saving. I don’t ask people how much they spend. I ask them how much they save. If they have no savings and a $5,000 credit card bill, then they are spending more than they earn.
Despite this heavy reliance on income, people seem to be reluctant to protect their income. They are happy to risk a multi-million dollar investment (their income) but have no hesitation insuring a lower cost item such as a mobile phone.
68% of males and 43% of females in Australia between 30-65 will incur a Critical Illness (cancer, heart attack, bypass surgery, stroke) during their working life. For those younger readers who feel they are a lower risk, have you considered that the insurance company may also consider you are a lower risk and you maybe able to take advantage of lower premiums for life.
Perhaps, one of the most valuable services I offer is I stop people from making silly decisions. Too often clients approach me after failed investments, trying to time the market and/or investing in inefficient structures.
I recently saved a client $3,000 a year for a 20 year strategy ($60,000) by ensuring they were invested in the most efficient structure.
Contact Steven on 0407 062 344 or email steven@shawfs.com.au. Or visit www.shawfs.com.au
