It’s always fun catching up with Retirement Essentials’ adviser, Nicole Bell. She’s a great example of someone who loves what they do, probably because most days she helps people to achieve their retirement wish lists. Nicole is an avid swimmer, the mother of a 15 and 17-year-old, and has a husband who wants to live on the mid-north coast of New South Wales. Meanwhile she spends her working hours helping people like Carol to get the financial monkey off their backs. When asked why she enjoys her role so much, after 22 years in financial services, she replies:
‘The favourite part of my job is the end of an appointment when the client is so relieved, smiling and telling me that no one has ever explained it that way before. They walk away confident with their own decisions and with a clear path forward. And I get to reassure them and say, at least you now know what to do.
‘Every day I get to meet really lovely people – and so many of these people come back for further meetings; they trust us. We’re not trying to sell them anything or get them to change their super fund. We’re here to explain, guide and support them in their quest for information, strategy options and reassurance. That’s why I felt so happy about being able to help Carol who is a single woman who’s suffered from a few financial setbacks in recent years.’
Who is Carol?* (not real name, but real retirement case study)
Carol is a 67-year-old who lives in southern Queensland and is currently working full-time in a bank, earning $70,000 per annum.
And what happened to her?
When she was 58 she discovered that her husband had taken out mortgages against their home to fund some business ventures that did not work out. In the space of a year she had lost her husband, her home, and all the wealth she had built over their lifetime together.
She had to start from scratch again at age 60, as a single renter with only $70,000 in super to her name and a 20-year old car.
Why is she suffering from financial anxiety?
Carol has been working full-time ever since, spending frugally and squirrelling away every last cent she earns to try and build some financial security for herself.
She’s just turned 67 with $150,000 in super and a new car that she owns outright. And although she feels she has done well to get where she is, she also has great anxiety around heading into retirement as a renter as the Age Pension alone, plus maybe a little bit of rent assistance, will never be able to cover her needs.
What was a good starting point in your discussion with her?
We started by talking about what Carol thinks she will need to cover her outgoings.
She believes that she needs at least $52,000 per year as a minimum to survive at the moment, including her rent payments.
What does she want to do?
Carol said that she has always assumed she will have to work full-time until at least 80, if not forever, to keep paying her rent and bills. When we caught up in a video consultation, we ran a couple of scenarios, using the Retirement Forecasting calculator.
Continuing to work full-time until age 72 then fully retiring
If Carol does this, and spends $52,000 per annum, there is a 74% probability she will still have super remaining in 20 years’ time.
OR
Continuing to work until age 75 but reducing to three days a week.
This creates better work-life balance over the age of 67, where she is working fewer hours so work becomes more manageable. In this scenario, Carol is able to access a part-Age Pension as her income is low enough for her to qualify. Spending $52,000 per annum there is a 55% probability she will have super remaining in 20 years.
Is relief in sight?
Both these scenarios gave Carol a much better chance than she thought that she may actually be able to relax one day.
Her dad is a fit and healthy 88-year-old who has no money, but a very modest little unit that he owns in a regional town. Carol will ultimately inherit this unit and at this time it will relieve the pressure of continuing to meet her rental expenses. This means that she was more than comfortable with the projections that we looked at, knowing her cost of living will likely go down later in retirement. Her grandmother lived to over 105 and she hopes her dad is the same, so she didn’t want to factor this money in any earlier.
Nicole summarised their appointment in Carol’s own words:
‘You had the patience to show me not what I should do, but what I can do. The rest is up to me and I’m so excited to know that I will finally be able to cover my bills – and more importantly I can go part-time much sooner than I expected. I literally don’t have to work forever!’
Carol booked a Retirement Strategy video consultation with Nicole. They spent 55 minutes to assess Carol’s current situation and model the two scenarios shared above. You can book your own similar consultation here.
Do you believe many people are unaware they will qualify for an Age Pension sooner than they had expected?
If you agree this is a common oversight, why do you think this happens?
