We’re not trained for retirement

With the footy season underway, I thought I’d share a favorite story:  I was lucky to spend a few moments alone with Geelong Captain Joel Selwood, at a 2013 Grand Final Day event. He was pretty subdued as Geelong had missed the big game due to a memorable 5 point Preliminary Final loss to the Hawks.  The Cats had been ahead 20 points at three quarter time but faced a resurgent Hawks to lag by six points with seconds to go. Geelong’s Travis Varcoe had the opportunity to tie the score when he kicked from 30 metres in front.  The kick sailed right to record a minor score..and the game was lost.

I said, “great year, Joel.  Hope the team isn’t going to give Travis Varcoe too hard a time.”  Joel simply said: “Well, we’re trained to get those.”

That short reply said a lot.  Still hurting.  High expectations.  Incredible intensity and competitiveness. And even though we’re trained over and over, we professionals still miss.  We make mistakes.

Imagine then that you were playing a really important game, but one you’ve never played before. Maybe watched a match once or twice from the grandstands.  You don’t know the rules —and they’re really complex.  And have never been trained.

That’s what going into retirement is like for most Australians. 

It’s not a game they’ve played before; it’s got complex rules; and they haven’t been trained.  And with the small number of financial planners, and the very high costs of traditional financial planning (typically $3500-$5,000), there’s very little affordable coaching staff available —except to the wealthy.  

Unlike football, it’s not a competition against another side and it’s not about scoring more.  Retirement’s more like a marathon, running on your own, or as a team of two, over maybe 25 years or longer.  With your own personal objectives…and life and investment markets creating mountains or potholes along the way.  Like a marathon, the challenge is to last the distance.  The biggest concern of most people is “will they have enough money?”

Working with older Australians at Retirement Essentials, we see plenty of “misses,” where our clients clearly weren’t trained to get those.  Here are a few examples:  

• The most important component of retirement income for more than 50% of older Australians is the Age Pension. Yet recent AMP research revealed that 40% of people over 50 don’t know whether they’ll be eligible for the Age Pension.
• Our research showed that more than 50% are applying late for the Age Pension.  Only 44% of people said they applied on time.  32% applied at least a year late (16% over 3 years late). There’s probably not a more expensive mistake for older Australians, as there’s no “backpay” for missed Age Pension.  One fellow we were working with reported applying three years late and we calculated a loss of $75,000 in foregone Pension.
• Over 30% of people over 65 are still in accumulation (taxed earnings) super as opposed to an Account-based pension (untaxed earnings).  One of our understanding super consults can help you understand the benefits of an account based pension
• Many people underspend in retirement, living below their means and ultimately leave larger than intended bequests.  Many people just don’t understand how much they can afford to spend.  How could they if they’re not getting forecasts of how much they can spend.  A retirement forecasting appointment is a great place to start.  

At Retirement Essentials, we’re trying to coach you through this “new game” of retirement. Our Age Pension Concierge team can help you through applications for the Age Pension or Commonwealth Seniors Health Card.  Your entitlements may be the most important part of your retirement income so it’s worth getting the help you need. Our financial advisers can take you through what you need to know to get by on field. They’ll coach you through your questions or help you work out what questions you need to answer.  They can explain the rules and help you make the moves that win the game.  All at remarkably low cost — less than a tenth of what it typically costs to get a financial plan.  You can get a free 10 minute consultation to see if it’s right for you.