When Andrew Dunkerley first met Jim and Alice* he was concerned that there might be little he could do to help them achieve a reasonable retirement income. That was because they had more than $100,000 in credit card debt and were paying an interest rate of 26% which made it impossible for them to balance their budget. But his strong belief is that most people are better off than they think they are, so he took on the challenge of talking them through their options.
Few people understand retirement income as well as Noel Whitaker. Today we are examining the pros and cons of Lifetime Income Streams (LIS) and Noel has helped us out with some Q&A on these relatively new products.
But first, some background.
There has been a rapid increase in the number of super funds and financial institutions who offer Lifetime Income Streams. Unsurprisingly, there is also an increase in the uptake of this form of retirement income. Treasury estimates suggest that just 3.5% of super is held in this form of investment. This may not sound high, but individual companies are reporting much higher interest than a few years ago. One of the reasons is that there are more people retiring and converting their super savings into different income streams, so there are a higher number of potential customers. But there has also been a lot of refinement in these offerings – they are much more flexible than those previously offered, so they have gained in appeal as part of a retirement income mix.
A couple of weeks ago we reported on the September 20 Age Pension increases. This is one of two increases that occur each year with the next one scheduled for March 20 2025.
We always receive tons of comments on the amount of the increase with the majority claiming it doesn’t meet the increased cost of living. It doesn’t keep up with rent increases, or insurance costs, or interest rates for those with a mortgage etc are among the comments we typically hear. So this week we decided to write an overview of how the increase is actually calculated.