financial control, retirement income, managing money

We’re very appreciative of your ongoing support of the Retirement Pulse surveys. Your answers continue to inform the way we respond to your needs and to the information we offer in our weekly enewsletters. In the April Retirement Pulse we asked questions about financial control and your need for support to manage retirement finances.

We were pleased to see a high percentage of members do feel in control of their finances, with:

  • 64.5% either strongly agreeing or agreeing with this proposition
  • 23% neither agreeing nor disagreeing, and
  • Just 13.5% saying they did not feel in control.

That said, however, most members felt they still needed some help or support (44.5%), with 35% neutral on this matter and just 22% who felt they had no need of help or support.

These responses led us to question what feeling in financial control really looks like. And, for the majority who do feel in control, why seeking help or support is still a major factor. Here’s our summary of the various aspects of control and how and when extra money advice might be required.

The seven parts of financial control

1. Knowing your situation

Yes, we mention this a lot, but unless you know, top of head, your assets, liabilities, income, household expenditure, investments, and household equity, then you can’t have a clear idea of your own financial situation. If you are in doubt about any of these aspects, then that can diminish your sense of control.

2. Knowing what’s available

This refers to both entitlements and strategies. Knowing your entitlements, whether an Age Pension, concession card, Commonwealth Seniors Health Card, energy supplement, Work Bonus, or tax exemption is essential to ensuring you have a close tab on your income, and that you maximise all possibilities.

3. Knowing the details and the rules

Again, it’s tricky to know everything you will ever need to about retirement income – you’d have to be an accountant, Centrelink expert, financial advisor and lawyer, rolled into one. But it is possible to keep an eye on the rules that most affect your household. The team at Retirement Essentials works hard to ensure your weekly emails contain all changes that are relevant to retirement income. But knowing the rules is still a big ask, so knowing what you don’t know, is another important aspect of financial control. Which leads us to …

4. Knowing when to seek support

Whilst many retirement income rules can seem straightforward, our experience is that some aspects of entitlements and superannuation are not as simple as they could or should be. When in doubt, the Golden Rule is to ask. If there is something you don’t fully understand, remember Golden Rule #Two – there are no dumb questions! In particular, if you have any doubts or uncertainty as to how Centrelink will assess you, seek help first. Regardless of whether this involves contacting Centrelink, your super fund, a licensed professional or the Retirement Essentials team, make sure your questions have been fully answered, to your complete satisfaction, before acting. As Head of the Customer Services Team, Steven Sadler, notes, ‘Australians in general have a ‘she’ll be right – what could possibly go wrong?’ kind of attitude and, with Centrelink, getting things wrong could mean months of stress just to end up declined because you weren’t even eligible to start with.’

5. Living within your means

If you spend more than you earn you cannot, by definition, be in control. Knowing you are doing this is the first step to correcting the problem. Putting measures in place to turn this situation around often requires external help (for instance the Australian Debt Helpline has counsellors to talk you through appropriate actions), but it’s worth it. The critical point is that retirement tends to be a time of fixed or reduced income. There are no magical wage rises around the corner to lift your finances, just the same Age Pension entitlement or super income streams which don’t magically increase of their own accord. If you feel you are going through your savings at an alarming rate, there are ways of projecting the results of this spending and creating strategies to ensure your savings will last the distance. The most useful tool is the Retirement Essentials Retirement Forecaster which allows you to see your current situation and all future options. 

6. Managing debt

This is not necessarily as negative a process as the name suggests. The number of retirees who still have a mortgage has ballooned in recent years. Some may also have credit card debt or personal loans. Managing debt starts with an understanding of your net debt level as a percentage of your assets. It can be helpful to discuss the sustainability of this ratio with a financial professional. But managing debt also involves ensuring that you are getting the best interest rate possible, and that you can comfortably cover repayments, in spite of ongoing increases interest rates.

7. Managing your finances in a timely fashion

This is a huge topic and one which we will cover more thoroughly in coming weeks. Managing money well means not missing paying bills, not paying fines over missed payments, and ensuring payments are made as easily and inexpensively as possible. Often this means automating your household accounts. As we said, a big subject, but a great way to manage money well. 

Last, but certainly not least:

Avoiding financial stress is the aim!

If you do sleep soundly, comfortable that you can pay your way now and in the future, then this is a clear indicator that you are most likely in control of your money. There’s no stress every time the Reserve Bank meets, nor guilt over out-of-control credit card statements. Ideally you and your partner or family if are totally on the same page about money, have regular discussions about how you handle it, and feel very confident that your ducks are all in a row.

Is this you? What do you think? Are these the key aspects of financial control? Or have we missed some?

Retirement Essentials’ tailored financial advice consultations are designed to help you take back control of your finances in many different ways: