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31-05-2014, 09:30 PM
An honorable member of the Coffee Shop Has Just Posted the Following:
http://www.afr.com/p/personal_financ...y9mpa5prbeVXtN (http://www.afr.com/p/personal_finance/smart_money/how_to_restart_your_finances_at_yHANL3GPy9mpa5prbe VXtN)
SAMANTHA HUTCHINSON
Gwyn Thornton never expected to go back to work in her late 60s. But sometime after her 68th birthday in 2008, she and her husband found themselves taking jobs at their local Bunnings store.
They had no choice. Listed stockbroker Opes Prime had collapsed earlier that year, taking with it the bulk of an investment which was to see them through their retirement and into later life.
“It was like a tsunami had hit us,” Thornton says. “Overnight, we had this huge problem on our hands.”
Thornton and her husband had worked for more than 40 years to set themselves up for a comfortable retirement.
Before emigrating from Britain a few years previously, they had invested in an annuity to give them a certain level of income into later life, they owned their own home and thought they had a diversified share portfolio.
But a bolt from the blue was enough to drag them to the brink of financial disaster. Even worse, they found themselves staring down the barrel of an $86,000 tax bill they had no means of paying, at a time in life when they least expected it. The unexpected tax was incurred from a successful stint trading options the previous year, but all profits had been reinvested.
Financial planners say the Thornton’s case is not isolated.
“I’d love to say situations like this are uncommon, but they do happen,” adds BFG Financial Services managing director Suzanne Haddan. “And there’s not always a magic prescription on how to fix it.”
“Because once you get into a situation like this later on in life, you only have a limited number of opportunities to get things back on track. You have to decide on a course of action and stick to it – it’s not like there are second chances.”
Divorce, the collapse of a business or a *catastrophic slide in the value of a property or share portfolio are some events that can topple the best-laid retirement finance plans. But planners and accountants insist there are ways to get out of the mire.
MAKING A GAME PLAN
Sentinel Wealth principal Justin Hooper tells his clients to create a set of long-term financial goals, and to be methodical about coming up with a plan on how to get there.
“It’s straightforward really. It’s a matter of figuring out how much you need to survive, and then looking at your opportunities to achieve that income stream,” he adds.
“Everyone has something to offer. It’s just a matter of realising what you have or what you can do that someone else needs.”
Hooper’s no-nonsense approach may rankle job seekers in their 60s who have battled long periods of unemployment. That’s because the job hunt can be lengthy. The average length of unemployment for workers over 55 is 73 weeks, compared to about 24 weeks for workers under 30.
But a growing number of services dedicated to help older workers find jobs, such as adage.com.au, do provide opportunities for those re-entering the work force later on in life. Likewise, retailers including Bunnings, Freedom furniture and homewares stores, garden centres and nurseries have forged reputations as being active employers of older workers.
Hooper’s point is that the task is never going to be easy, and job seekers need a level of creativity in their search. “It’s about talking and telling your friends and seeing where opportunities open up. It’s an active process,” he says.
He is quick to admit his perspective has been influenced by his mother, who started a business printing flyers and promotional materials well into her 60s. Now in her 80s, she is only just taking her first steps back from the business, and her mental capacity is still razor sharp. For this reason, he is also quick to dismiss the idea that anyone having to work into their late 60s and 70s is necessarily in dire financial straits.
“It’s not unreasonable to be working during those years of your life,” he says. Life expectancy is stretching out, he reasons, and there are benefits that come with the challenge of work and keeping mentally active.
An individual who owns their own home can survive day-to-day on about $20,000 a year, Hooper says. That’s an income of about $384 per week, or just over 21 hours of work a week on the minimum retail award wage, including super contributions of 9.25 per cent.
From there, it’s up to the individual to assess what skills they have, and how they can bring in an income, and then what *proportion of earnings above $20,000 they can put into savings and investments to tide them over in later life.
THE BENEFITS OF PART-TIME WORK
All subjects interviewed for this article have attested to the mental and physical *benefits of having to stick to full-time work, even at an age when they thought they would be long-retired.
Thornton also professes the health of both her and her husband has increased markedly since they started working the floors at Bunnings. Likewise, they’ve derived a great deal of satisfaction from leasing out rooms in their home to international *students. “You develop rapport with some of these kids that you lose when your own children move out,” she says.
Jeannie Hawkins*, a divorcee who found herself bankrupt after a messy split at 63, agrees. “It’s scary and stressful not knowing how long I’m going to have to work for, but I still enjoy it. Having something to focus on has also been good [during] a tough time.”
Hawkins was blindsided when her *husband announced he was leaving her at the end of two years in which Hawkins had supported the family while her husband went back to university to study law.
Working for the family company for much of her *marriage, there was little Hawkins could have done to change the way her finances unfolded. But for many, divorce is an economic events they can control.
John Adamson* had forged a long and successful career working in risk management for a financial services consultancy, before deciding in his late 50s that his *marriage had become unviable.
He had planned well for retirement with his wife, and had a total portfolio value that – excluding the family home – was valued at just under $1 million. “Between two people, it would have been a very comfortable retirement,” Haddan says. “But during the conversation we had, he quickly realised that retirement wasn’t going to be what he envisaged once the divorce had been factored in.”
Divorce for Adamson meant selling the family home which both he and his wife loved, but neither could afford to own on their own. Likewise, purchasing a smaller home or apartment in the same Sydney suburb was a costly exercise to do by himself.
Adamson bought an apartment in an affordable suburb some way from the family home.
He will enjoy a comfortable retirement in which he isn’t likely to see a wolf at the door. But as Haddan says: “It’s a lower standard of living compared to what he thought he would be enjoying at this time of his life.”
CONSIDER THE COSTS OF DIVORCE
Haddan takes pains to bring up cases like Adamson’s with all of her clients who start to contemplate what their life would look like post-split. “I explain to all my clients that divorce is costly and could lead to a lower standard of living than what they’re used to,” she says. “But I’ve never come across anyone who’s changed their mind.”
Haddan advises couples or individual members of a couple contemplating divorce to seek out financial advice well ahead of time. It can be daunting, particularly for woman who have been the family’s *primary homemaker rather than the breadwinner. But a tax-return statement is all a financial planner needs to get a good start on understanding the size and scope of a shared portfolio spread across different tax structures.
“Women often find themselves signing different documents put forward by their partner, which is a good indicator they’re a trustee of an account or a trust or another tax structure holding assets,” Haddan says.
And if they’re a trustee, they have a legal entitlement to find out the specifics of the asset and how much it is worth. Another *factor many women forget is they are entitled to half of their spouse’s superannuation.
Some of Haddan’s clients make the mistake of assuming that their living expenses, living on their own, will be exactly half what they were when they were living as a couple. But they never are, she says.
“Someone living by themselves will likely spend about two-thirds of what they would living in a couple. You don’t get the same economy of scale.”
ASKING THE HARD QUESTIONS
Some divorcees might find entering into a de facto relationship with a new partner will offer savings on the cost of living – not to mention health and lifestyle benefits.
But they need to be doubly certain before making the decision, Haddan says, lest they break up and suffer another messy division of assets. “It’s the not the most romantic advice, but I’m adamant with my clients that they need to enter into some sort of financial agreement before moving in together,” she says. “Because if you’ve started over again once, not many people can afford to go through the process all over again.”
Haddan suggests sitting down with your new partner and outlining your financial situation in the plainest of terms. This means asking tough questions such as what is your financial position, how is that likely to change, what sort of lifestyle can you afford, how will we negotiate the bills together?
The most important step in the process is a written agreement to outline who keeps what if the relationship falls apart.
It’s a difficult conversation to have, but Haddan insists there’s no other way if you want financial security.
“Some of my clients say their partners respond by saying ‘You wouldn’t be asking me to do this if you really loved me,’ and I tell them ‘It’s because your partner really loves you that they’ll be willing to have this conversation’.”
For many individuals, the last step in starting over involves devising a new plan of saving, and a sustainable, secure investment strategy. It’s possible they may be wary of equities or certain financial products if they feel they’ve been burnt by them in the past.
But later-in-life investors can’t afford to adopt a set-and-forget approach, Hooper says. They need to be more vigilant about adopting a diversified portfolio than ever.
“Its not about dumping cash in a term-deposit account or a 10-year government bond and just waiting for it [to mature] . . . it’s even more important for people starting over to be prepared to actively manage their investment,” he says.
Of course there’s the age pension, but it’s $766 a fortnight for singles (maximum basic rate for those who earn less than $156 a fortnight) and $577.40 for couples (maximum basic rate earning less than $276 a fortnight combined).
Click here to view the whole thread at www.sammyboy.com (http://www.sammyboy.com/showthread.php?182966-How-to-restart-your-finances-at-60&goto=newpost).
http://www.afr.com/p/personal_financ...y9mpa5prbeVXtN (http://www.afr.com/p/personal_finance/smart_money/how_to_restart_your_finances_at_yHANL3GPy9mpa5prbe VXtN)
SAMANTHA HUTCHINSON
Gwyn Thornton never expected to go back to work in her late 60s. But sometime after her 68th birthday in 2008, she and her husband found themselves taking jobs at their local Bunnings store.
They had no choice. Listed stockbroker Opes Prime had collapsed earlier that year, taking with it the bulk of an investment which was to see them through their retirement and into later life.
“It was like a tsunami had hit us,” Thornton says. “Overnight, we had this huge problem on our hands.”
Thornton and her husband had worked for more than 40 years to set themselves up for a comfortable retirement.
Before emigrating from Britain a few years previously, they had invested in an annuity to give them a certain level of income into later life, they owned their own home and thought they had a diversified share portfolio.
But a bolt from the blue was enough to drag them to the brink of financial disaster. Even worse, they found themselves staring down the barrel of an $86,000 tax bill they had no means of paying, at a time in life when they least expected it. The unexpected tax was incurred from a successful stint trading options the previous year, but all profits had been reinvested.
Financial planners say the Thornton’s case is not isolated.
“I’d love to say situations like this are uncommon, but they do happen,” adds BFG Financial Services managing director Suzanne Haddan. “And there’s not always a magic prescription on how to fix it.”
“Because once you get into a situation like this later on in life, you only have a limited number of opportunities to get things back on track. You have to decide on a course of action and stick to it – it’s not like there are second chances.”
Divorce, the collapse of a business or a *catastrophic slide in the value of a property or share portfolio are some events that can topple the best-laid retirement finance plans. But planners and accountants insist there are ways to get out of the mire.
MAKING A GAME PLAN
Sentinel Wealth principal Justin Hooper tells his clients to create a set of long-term financial goals, and to be methodical about coming up with a plan on how to get there.
“It’s straightforward really. It’s a matter of figuring out how much you need to survive, and then looking at your opportunities to achieve that income stream,” he adds.
“Everyone has something to offer. It’s just a matter of realising what you have or what you can do that someone else needs.”
Hooper’s no-nonsense approach may rankle job seekers in their 60s who have battled long periods of unemployment. That’s because the job hunt can be lengthy. The average length of unemployment for workers over 55 is 73 weeks, compared to about 24 weeks for workers under 30.
But a growing number of services dedicated to help older workers find jobs, such as adage.com.au, do provide opportunities for those re-entering the work force later on in life. Likewise, retailers including Bunnings, Freedom furniture and homewares stores, garden centres and nurseries have forged reputations as being active employers of older workers.
Hooper’s point is that the task is never going to be easy, and job seekers need a level of creativity in their search. “It’s about talking and telling your friends and seeing where opportunities open up. It’s an active process,” he says.
He is quick to admit his perspective has been influenced by his mother, who started a business printing flyers and promotional materials well into her 60s. Now in her 80s, she is only just taking her first steps back from the business, and her mental capacity is still razor sharp. For this reason, he is also quick to dismiss the idea that anyone having to work into their late 60s and 70s is necessarily in dire financial straits.
“It’s not unreasonable to be working during those years of your life,” he says. Life expectancy is stretching out, he reasons, and there are benefits that come with the challenge of work and keeping mentally active.
An individual who owns their own home can survive day-to-day on about $20,000 a year, Hooper says. That’s an income of about $384 per week, or just over 21 hours of work a week on the minimum retail award wage, including super contributions of 9.25 per cent.
From there, it’s up to the individual to assess what skills they have, and how they can bring in an income, and then what *proportion of earnings above $20,000 they can put into savings and investments to tide them over in later life.
THE BENEFITS OF PART-TIME WORK
All subjects interviewed for this article have attested to the mental and physical *benefits of having to stick to full-time work, even at an age when they thought they would be long-retired.
Thornton also professes the health of both her and her husband has increased markedly since they started working the floors at Bunnings. Likewise, they’ve derived a great deal of satisfaction from leasing out rooms in their home to international *students. “You develop rapport with some of these kids that you lose when your own children move out,” she says.
Jeannie Hawkins*, a divorcee who found herself bankrupt after a messy split at 63, agrees. “It’s scary and stressful not knowing how long I’m going to have to work for, but I still enjoy it. Having something to focus on has also been good [during] a tough time.”
Hawkins was blindsided when her *husband announced he was leaving her at the end of two years in which Hawkins had supported the family while her husband went back to university to study law.
Working for the family company for much of her *marriage, there was little Hawkins could have done to change the way her finances unfolded. But for many, divorce is an economic events they can control.
John Adamson* had forged a long and successful career working in risk management for a financial services consultancy, before deciding in his late 50s that his *marriage had become unviable.
He had planned well for retirement with his wife, and had a total portfolio value that – excluding the family home – was valued at just under $1 million. “Between two people, it would have been a very comfortable retirement,” Haddan says. “But during the conversation we had, he quickly realised that retirement wasn’t going to be what he envisaged once the divorce had been factored in.”
Divorce for Adamson meant selling the family home which both he and his wife loved, but neither could afford to own on their own. Likewise, purchasing a smaller home or apartment in the same Sydney suburb was a costly exercise to do by himself.
Adamson bought an apartment in an affordable suburb some way from the family home.
He will enjoy a comfortable retirement in which he isn’t likely to see a wolf at the door. But as Haddan says: “It’s a lower standard of living compared to what he thought he would be enjoying at this time of his life.”
CONSIDER THE COSTS OF DIVORCE
Haddan takes pains to bring up cases like Adamson’s with all of her clients who start to contemplate what their life would look like post-split. “I explain to all my clients that divorce is costly and could lead to a lower standard of living than what they’re used to,” she says. “But I’ve never come across anyone who’s changed their mind.”
Haddan advises couples or individual members of a couple contemplating divorce to seek out financial advice well ahead of time. It can be daunting, particularly for woman who have been the family’s *primary homemaker rather than the breadwinner. But a tax-return statement is all a financial planner needs to get a good start on understanding the size and scope of a shared portfolio spread across different tax structures.
“Women often find themselves signing different documents put forward by their partner, which is a good indicator they’re a trustee of an account or a trust or another tax structure holding assets,” Haddan says.
And if they’re a trustee, they have a legal entitlement to find out the specifics of the asset and how much it is worth. Another *factor many women forget is they are entitled to half of their spouse’s superannuation.
Some of Haddan’s clients make the mistake of assuming that their living expenses, living on their own, will be exactly half what they were when they were living as a couple. But they never are, she says.
“Someone living by themselves will likely spend about two-thirds of what they would living in a couple. You don’t get the same economy of scale.”
ASKING THE HARD QUESTIONS
Some divorcees might find entering into a de facto relationship with a new partner will offer savings on the cost of living – not to mention health and lifestyle benefits.
But they need to be doubly certain before making the decision, Haddan says, lest they break up and suffer another messy division of assets. “It’s the not the most romantic advice, but I’m adamant with my clients that they need to enter into some sort of financial agreement before moving in together,” she says. “Because if you’ve started over again once, not many people can afford to go through the process all over again.”
Haddan suggests sitting down with your new partner and outlining your financial situation in the plainest of terms. This means asking tough questions such as what is your financial position, how is that likely to change, what sort of lifestyle can you afford, how will we negotiate the bills together?
The most important step in the process is a written agreement to outline who keeps what if the relationship falls apart.
It’s a difficult conversation to have, but Haddan insists there’s no other way if you want financial security.
“Some of my clients say their partners respond by saying ‘You wouldn’t be asking me to do this if you really loved me,’ and I tell them ‘It’s because your partner really loves you that they’ll be willing to have this conversation’.”
For many individuals, the last step in starting over involves devising a new plan of saving, and a sustainable, secure investment strategy. It’s possible they may be wary of equities or certain financial products if they feel they’ve been burnt by them in the past.
But later-in-life investors can’t afford to adopt a set-and-forget approach, Hooper says. They need to be more vigilant about adopting a diversified portfolio than ever.
“Its not about dumping cash in a term-deposit account or a 10-year government bond and just waiting for it [to mature] . . . it’s even more important for people starting over to be prepared to actively manage their investment,” he says.
Of course there’s the age pension, but it’s $766 a fortnight for singles (maximum basic rate for those who earn less than $156 a fortnight) and $577.40 for couples (maximum basic rate earning less than $276 a fortnight combined).
Click here to view the whole thread at www.sammyboy.com (http://www.sammyboy.com/showthread.php?182966-How-to-restart-your-finances-at-60&goto=newpost).