Kaye Fallick, Author at Retirement Essentials

Managing retirement risk: Finding your sweet spot

Last week we explored the topic of risk and how a better understanding of investment risk can boost your retirement income. We received a lot of follow-on questions on this topic, particularly the Retirement Essentials Market Risk Levels, so today we are sharing how we work with our members to increase their understanding of risk and assist them to explore ways that different settings can help increase income across their retirement journeys.

In a sense, the work our qualified advisers are doing is a Masterclass in understanding retirement income investment. As Alison Squire, Head of Advice at Retirement Essentials notes, our financial wellbeing can be as important as our physical and mental wellbeing. But financial wellbeing is not just dependent on how much money you have. It’s more closely aligned with a sense of security and confidence that you can cover your expenses today, tomorrow and beyond. And that you can do so in a way that ensures you are living a comfortable, rather than constrained, lifestyle.

Can understanding risk increase your income?

by Kaye Fallick | Retirement Advice

Talking about risk and retirement is a little like talking about debt and retirement. We may be aware that we need to confront this, but words like risk and debt can have negative connotations. This means many of us will avoid ever ‘going there’. But this can be a mistake. It’s usually only by managing debt and understanding risk that we can fully maximise our later life income.

In search of an easier way to tackle these thorny issues, it occurred to me how much most of us love a makeover. Whether it’s a farmer in search of a wife, a ‘grand design’ for a renovation or a bootcamp in the jungle to fast-track fitness, most of us love to see the foundational work-in-progress which is necessary to create better outcomes.

How does this foundational work translate to managing money? Not as a quick fix, that’s for sure. But creating strong foundations by understanding investment risk is a very useful strategy. It starts with self-knowledge and then applying this understanding to the way you invest and the settings you choose. Today we explore this topic and look at a ‘makeover’ that could lead to $100,000 extra in retirement savings, should Bevan and Anne make this choice.

Deeming rates frozen to 2025

by Kaye Fallick | Centrelink Age Pension

The biggest win for retirees in this year’s Federal Budget was the decision to freeze deeming rates until 30 June 2025. We reported on this in our Budget 2024-25 wrap, but wanted to take time to further explain this for those who are not quite sure how deeming rates work or those who have yet to encounter them in their retirement journey. This brief explainer has been prepared to bring you up to speed as quickly and easily as possible.

What are deeming rates?

Deeming rates are used to calculate the money that Centrelink assumes you earn on your financial assets. Remember, the means test for the Age Pension is based upon both an income and an assets test. If you have financial assets (this excludes the family home, car, caravans and boats etc) they will be deemed to earn income. In the real world (i.e. investment market returns) you may currently be earning 5% on money invested in a fixed term bank account. But Centrelink cannot input and manage every separate earning rate for every retiree. So it has a ‘deemed’ rate that is applied across the board to the financial assets of those seeking an Age Pension or perhaps a Commonwealth Seniors Health Card. The current deeming rate is applied to all financial assets and the resulting earnings are then added to any other income you may receive in order to calculate your eligibility.