Jeremy Duffield

Jeremy Duffield is a senior player in the Australian and international financial services sectors, having served as a senior executive with leading global funds manager The Vanguard Group USA from 1980 to 2010. He founded Vanguard’s operations in Australia and Asia, and led them from 1996 to 2010. Jeremy is Chairman of the Australian Centre for Financial Studies and is a non-executive director of MLC, National Wealth Management and Plum Financial Services. He is a member of the Federal Government’s Australian Centre Financial Task Force and was previously a member of the Financial Sector Advisory Council and the Financial Literacy Foundation. He was also Deputy Chair of the Financial Services Council.
Your retirement horizon and your spending level

Your retirement horizon and your spending level

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In Australia, we’re responsible for our retirement. The government helps with the Age Pension and Aged Care. But the rest we supply ourselves through our super and other savings and perhaps some work income.  

The big questions are how much can I afford to spend? And how long will my super and savings last? And what do I have to do to make the most out of my retirement resources?  

They’re tough questions to work out because there are two big unknowns: 

How long will I, or we, live?  and 

How much will I/we earn on our super and our investments?

In our first article, we identified the resources you have to fund retirement. You need to spend down some of those resources to pay your expenses. So, when working out how much we can spend, a second key principle to understand is: The longer we need to plan for, the less we can spend each year.  

This chart illustrates the principle. It shows that the longer your retirement period, the less you can spend each year without running your savings down to the point where you rely on the Age Pension only. This example is showing what a 67 year old couple with $500,000 in super and savings could afford to spend based on their selected retirement age horizon.  If they

Resourcing your retirement

Resourcing your retirement

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A good retirement is about so much more than money – whole books are written about getting the most out of your life after ending full time work.  But when the payslips end, you become responsible for funding your retirement necessities and your pursuits out of your “retirement resources.”  

Through super and savings you’ve been getting ready, building a nest egg.  It’s time to call on the nest egg and start drawing it down.  It’s a big change in the way you need to think about your finances…and requires a bit of planning and forecasting to work out how much you can afford to spend and how to make the most out of your retirement.  

Retirement Principle #1 The first rule of retirement finances might be:  The greater your retirement resources, the more you can afford to spend in retirement.  

No duh, eh?  It sounds obvious that the bigger your nest egg, the more you can afford to spend. And that the opposite would be true too; the lower your retirement resources, the less you can spend.  

But what are your retirement resources?  How much do you really have?  And if you’re not yet retired, but getting ready, what can you do to increase them?

We’re not trained for retirement

We’re not trained for retirement

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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.