Drowning in debt

When advice helps turn things around

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.

Andrew has recently joined Retirement Essentials to assist members with their financial advice needs. He has strong qualifications and nearly 30 years’ experience across mortgage broking, credit management, financial planning, superannuation and mentoring younger advisers. He says that he is having great fun working with our team and meeting lots of members with diverse needs.

He’s based in Sydney, but that is no barrier to dealing with clients from all states in Australia. His favourite activity is going off grid in a caravan, travelling with his wife to remote parts of the country. He’s also an avid ocean swimmer and fulfills regular charity commitments.

But first and foremost, he enjoys using his extensive experience to help others solve their money problems.

‘In short, what I enjoy the most is helping the average ‘mum and dad’ pre-retiree or retiree, not the wealthy. That’s because you can do so much more for those who have less and they invariably need more help. My greatest joy in retirement is helping people realise their retirement dreams. This may sound corny, but some people think they won’t be able to achieve all of their goals, such as travelling extensively. In many cases I’ve shown people that this is possible. 

‘For example, some clients have come to me nervous about the future to the point you can see them fretting. At the end of our meeting, I have usually addressed their fears by providing them with solutions and showing them that ‘everything’ will be okay. One of my favourite memories is when I told a couple they could retire comfortably now, the wife started crying with joy in front of me because she was so exhausted from work. 

‘Many people believe that they don’t have enough money so, alternatively, I’ve been able to work with them on how much they can spend in retirement. By and large, they only need to drop their income by a small amount because retirement generally lasts for decades. In many cases, reducing their current household expenditure by, say, $5000 – $10,000 per annum means they won’t spend their money too quickly and then be completely reliant on the Age Pension. Slowing spending down, even by a small amount, leads to a better result given that many people can struggle to live on the Age Pension without any top-up income.’ 

‘In contrast, many people believe their situation is worse than it is. Just last week, I spoke with a woman who lived a very frugal lifestyle. After realising she had saved more than she needed, she discussed her desire to travel. On the basis of an alternative forecast, she now plans to spend $10,000 more per year on holidays for the first 10 years of her retirement.’

So how was Andrew able to help Jim and Alice?

First some details about their situation.

At the time Andrew met them, Alice was 67 and Jim 70. She was working in child care and he was working at a local nursery. They described themselves as exhausted and ‘going backwards fast’. This was because they were living on credit card debt. They had accumulated $100,000 in debt and as noted above, were paying a whopping 26% which cleaned them out every month. Whilst they owned their own home, they were concerned they would soon have to sell it and the idea of renting after years of home ownership was less than appealing.

Andrew advised them to transfer money from their super fund to cancel the credit card debt. They also closed their credit card account and decided to use EFT or debit cards instead. This meant they would still have $280,000 combined in super. 

They were both quite desperate to retire, feeling as though they had been living life on a treadmill for years because their debt had destroyed their cash flow and created a huge amount of personal stress. As part of Andrew’s advice, he projected whether they would be able to retire, in line with their intentions. They had to reduce their expenditure by about $5,000 per annum but they were extremely happy because they went from a situation that could have resulted in a forced sale of their home, to a situation where they were on target to live a relatively comfortable retirement. Their retirement income was made up of a combined full Age Pension (and supplements and Pension Concession Card) of $44,855 plus a top-up from their super (of around $6000 per year) to ensure they could continue to receive this income through to their mid-90s.

Says Andrew,
‘The biggest lesson I have learned is there is no silver bullet with saving and investing. The safety net of the Age Pension combined with compulsory superannuation means many do live a comfortable retirement. I love using the Retirement Forecasting tool because, as you guide clients through their own projections, if someone thinks they are in trouble, you can usually show them things will actually be okay.’

If you, too would like to work with Andrew to see if things will be okay in your household, you can do so with an initial 10-minute ‘try before you buy’ chat. Or you may be ready for a full 55-minute strategy consultation priced at $375.

Andrew’s fuller CV can be read here.

*not real names

It’s not unusual…

… to feel that you are trapped at work, unable to retire as you simply can’t afford it.
But often solutions can be found to help pre-retirees turn things around.
Has this been your experience too?