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Financial Planning

Work through costings and implications to help you make the best financial decision for your circumstances.
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Superannuation and planning your future

Superannuation is one way of saving for retirement. It is money that is set aside by you or your employer during your working life that becomes available when you're older and is designed to help you fund your retirement lifestyle. Currently the Australian Super Guarantee which you receive is 10 percent of your regular income, and the amount paid into super is set to rise to 12 percent by 2025.

You can also choose to add more money into your super fund on top of the required amount if you want to, by having an agreement with your employer that they will pay some of your wages as super contributions instead of directly to you. This is called salary sacrificing and can reduce the tax rates paid for your income.

During your working life, the super fund looking after your money will invest your Super Guarantee and salary sacrificed funds and the return of those investments will grow your super over time.

There is no fixed retirement age in Australia, however, you can only access your superannuation from 55 years old, depending on your date of birth. This is also referred to as the preservation age. If you were born before 1 July 1960, 55 is the preservation age to start accessing your super. If you were born after 1 July 1960, the preservation slowly increased depending on the year you were born and can be up to 60 years old if you were born after 1 July 1964.

When planning how much income you will need from super and other sources after you retire, it is important to think about the kind of lifestyle you want to live.

For a comfortable lifestyle where you have a decent amount of money to spend in the week on non-essential items, the general guide is 80 percent of the income you had before you left the workforce. For example, if you earned $100,000 in your last year of working full time, you can expect to need about $80,000 a year to live with the same expenses and spending in retirement.

A more specific guide for a comfortable lifestyle is:

  • A single person will require $835 per week or $43,601 per year
  • A couple will need $1,179 per week or $61,522 per year.
  • This amounts to $1,230,440 for 20 years worth of savings for a couple or $872,020 for a single person.

For a more modest lifestyle:

  • A single person will require $533 per week or $27,814 per year
  • A couple will need $797 per week or $40,054 per year
  • This amounts to $801,080 for 20 years worth of savings for a couple or $556,280 for a single person.

However, these rates don’t take into account any effect that the COVID-19 pandemic may have had on your financial situation or lifestyle.

You should be realistic about when you are going to retire. Consider future medical conditions you may develop or if you should plan to work for longer or transition to retirement to better boost your savings and superannuation.

Many people look at superannuation as 'guaranteed', however, that isn't always the case, as superannuation is subject to market fluctuation through the year, just like any other investment. It shouldn't be a 'set and forget' approach either, but it's wise to review all your finances and how you're tracking against your goals regularly.

There are some factors to take into account to get the most out of your super:

  • Watch your super - keep track of how spread out your super is across different accounts as this can add unnecessary fees onto your super. Consider consolidating your super into one account
  • Performance - look at the current and past performance of your super fund over the last five years to see how your superannuation should grow and whether the returns will be what you are looking for
  • Insurance coverage - Most super funds provide insurance for their members, like life insurance, income protection - which protects your earnings while you are working, or total and permanent disability (TPD) insurance. Having insurance through your super can result in cheaper premiums, but it does impact your balance as you will be paying for this coverage through your super account.
  • Fees and charges - Super fund fees can include investment fees, buy and sell fees, membership fee (yearly), administration fees, and advice fees. Some funds may seem attractive because they have low fees - however, this could mean the returns won't be as high.
  • Extras and benefits - Each super fund has its own benefits and extras in place as an incentive to join. For instance, a lot of providers offer financial advice (free or for a fee), gym membership discounts, shopping discounts, and more
  • How a fund invests - When you're looking into a potential new super fund, make sure you understand how they invest your super because this can tell you a lot about how they manage risk. Ethical super funds are becoming more popular with people preferring to invest in renewable energies or anti-oil options. But if a super fund is investing mostly in non-renewable resources or doesn't have a diverse portfolio, it can mean they are investing in a sector which has limited longevity
  • Risk profiles - If you are changing your super to a new provider and you are over 60, you need to carefully consider what investment option you choose. Everyone has a different risk profile and it can depend on your current financial situation and how far off you are from retiring. Many retirees tend to have a balanced or conservative super account

You can choose whether to have a managed fund, through an industry or retail group which will invest your money on your behalf, or a private self managed super fund (SMSF) where you choose how your money is invested.

There are a number of reasons why people decide to run or join an SMSF. These are just a few pros and cons of self-managed superfunds as there are a lot of restrictions and legalities around running an SMSF.

Some benefits of SMSF include:

  • More freedom to invest in what you want
  • A larger pool of investments to choose from, for example, collectables or physical gold
  • Expanded investment portfolio
  • Better tax benefits and strategies

Some downfalls of SMSF include:

  • High insurance premiums
  • Big legal risks
  • All the responsibility is on you
  • Managing a super fund can take up a lot of time
  • Fees can be higher depending on your assets (in certain circumstances)
  • You'll be paying for audits and levies, and financial advice
  • Maintaining documents and records for up to 10 years
  • Restrictions on certain investments

Regardless of your superannuation situation, just having retirement savings and super as your only form of funding in retirement is like having all your 'eggs in one basket'. Other investment options which could diversify your savings include stocks and investment properties.

Get expert advice from a financial adviser about how superannuation fits in your retirement plan and how you can ensure you won't run out of money when you retire.

Search for accredited financial advisors near you or call 1300 863 216 to speak to someone independent about your financial future today.

Disclaimer: The information on this site is general in nature and does not constitute legal or financial advice. Readers should seek their own personal legal and financial advice from a suitably qualified practitioner.

Superannuation and planning your future

Investment and wealth creation options

Investing your money is one option to grow your retirement savings but you need to make sure your approach is right to help you build your nest egg.

With hundreds of investment options available to you, it can be difficult to provide a list of the best options. The most beneficial options will also depend on your personal circumstance, from the income you earn to the debts you have or even your medical costs if they are significant.

You may have specific ideas about where you would like to invest your money, such as shares or property, but it's a good idea to engage a financial planner to help you understand the risks involved as well as making sure it's an option that suits your financial goals.

Wealth creation, or investing, may be able to help you to reach these goals by growing the income you earn while working so that you have more than just your income savings when you retire. Continuing wealth creation after you retire, by staying on top of the returns your investments are bringing, can add to the money you have available and stretch it out over more years.

There are generally four classes of investments:

  • Stocks
  • Bonds
  • Funds
  • Cash equivalents

Each has a number of types of investments in the class.

You invest in stocks by buying part of a company, also called purchasing shares, and as the company grows using your investment, the value of your stocks increase. To make money off of your original investment you sell the shares when they are worth more than you paid for them.

The risk with stocks is that there is no guarantee that they will go up in value and they could actually be worth less than you paid when you need to sell them, or the company could fold, meaning you could lose money. However, there is the chance that you could sell stocks for a lot more than what you paid if you sell at the right time. This requires monitoring on your part to know when is a good time to sell.

The two different types of stocks are common stock, which provides you with a vote per stock on who the board members of the company are, and preferred stock, which doesn’t give you a vote but does entitle you to priority dividend payments.

Dividends are paid out to investors quarterly by the company, to both common shareholders and preferred shareholders, however preferred shareholders will usually receive a standard amount from dividends, whereas common shareholders may have varied payouts.

Bonds are similar to a loan in which you invest in an organisation, which could be a business or government entity, and they promise to pay you back by a specific date. Your investment is used by the organisation to finance projects which require more money than a bank would loan. The entity which you enter into a bond with will pay you an agreed variable or fixed interest rate until they pay back your investment.

Bonds have a lower risk than stocks, but also have a lower return. They are usually long term investments, but can be shorter depending on the bond agreement you have.

The main risk of a bond is that a company with a lower credit rating, which is less trusted, is more likely to go under and not be able to pay back your bond, so these investments look more attractive because they will provide you with higher interest payments. You also can’t choose to get your bond back whenever you want and have to wait until the organisation returns your investment.

In Australia the types of bonds are corporate bonds, with companies, Treasury Bonds, which are fixed rate Government bonds, and Treasury Indexed Bonds, which are Government bonds linked to the Consumer Price Index (CPI).

Funds are arrangements where you pool your money with other people’s investments to buy assets including stocks and bonds. The fund is managed by a finance professional who is in control of distributing your and other investors’ money.

One benefit is that your investment is professionally managed, and that it can be invested in a wide range of ways, however because you are part of a group everyone shares in the losses and gains.

Cash equivalents are assets offered for purchase by companies, which are easily convertible to cash, such as commercial papers, marketable securities and short-term government bonds.

This type of investment can be shorter term, providing return within three months, and does not fluctuate in the same way as stocks and bonds, making it low-risk. It is usually a sign that a company is strong if it can offer cash equivalents.

However, cash equivalents are unlikely to give you a high return.

Other types of investments include commodities - goods which people buy and sell such as wheat, coal and gold - term deposits where you put money into a bank account to earn interest for a certain amount of time, and real estate or property investment.

Commodities tend to be riskier investments as prices fluctuate wildly, although gold and silver tend to be stable. However, you can choose for these to be short term or long term investments.

Term deposits in bank accounts may not produce high returns, as this depends on interest rates, and you can't access your money until the term is up. So if you have a five year term deposit and you need more money, you won't be able to withdraw your deposit. But this is a stable way to collect interest and you will never end up with less money than you put in as a deposit, making it low risk.

Properties can only be long term investments, but also come with tax benefits and a good record of long term growth.

Diversifying your investment portfolio across asset classes can give you more security if one of your investments doesn’t have returns which are as strong as you were expecting.

Goal setting is an important step before you jump into investing or look into wealth creation, as you want the options which you use to give you the returns which will achieve your goals. Goals which you set can be formed into a good financial retirement plan, which is vital when investing.

There are five key areas to focus on when goal setting and planning for retirement:

  • Time until retirement - what age do you want to be when retired, as this will impact how many years you need to plan to fund yourself for
  • Required budget during retirement - include costs like everyday living expenses, medical expenses, extras for care to support you to live independently at home and any large purchases you are planning such as a new car or caravan
  • Current financial situation - risks and liabilities such as debts or loans
  • Insurance and ongoing costs - your insurance costs don’t stop when you retires, so consider how much you will need to pay for life, house, vehicle and other insurances
  • Your lifestyle requirements - the kind of lifestyle which you want to have after you retire, usually labelled as modest or comfortable unless you rely on the pension, which is labelled as surviving

Financial advisors provide options, advice, and investment strategies depending on how it will benefit you personally in the short and long term and can help you to work through retirement planning. They are required to act in your best interest as per the Financial Adviser Standards and Ethics Authority guidelines, so will provide you with the best options. Call 1300 863 216 to talk to an accredited financial advisor today or search for financial advisors near you.

Disclaimer: The information on this site is general in nature and does not constitute legal or financial advice. Readers should seek their own personal legal and financial advice from a suitably qualified practitioner.

Investment and wealth creation options

Aged care costs and fees

As you get older and the level of care you need increases, you might be wondering, ‘how much does residential aged care cost?’

The amount you’ll pay for a place in an aged care home depends on a number of things, including the type of accommodation you need or have chosen. Aged care services costs can be broken down into a number of different areas, including fees for your daily care, an accommodation payment, means tested fees and any additional fees if you're wanting extra services during your stay.

Your aged care fees could be paid with the money you earn from assets and investments, or the Age Pension. If you are unable to afford nursing home care but need it, the Government can provide financial hardship assistance.

Fees for aged care are also worked out based on your financial situation - income you earn and assets you own. If you don’t have a lot of funds at your disposal you may need to specifically look for a Government subsidised nursing home or care which can involve a Government subsidy, rather than a private facility.

For more information about the costs of private facilities click here.

Everyone that lives in a nursing home pays a basic daily fee. This fee covers the cost of meals, cleaning, heating and cooling, your clothes being washed, personal care, assistance with daily living and medical care.

There is a maximum amount you can be charged for a basic daily fee, which is updated by the Australian Government in March and September each year. The maximum is always 85 percent of the annual basic Age Pension for a single person, so that aged care costs for pensioners are still affordable.

An accommodation payment is added onto the basic daily fee, but the amount depends on your assets and income. If you have less than $51,500 in assets and income you won’t have to pay an accommodation fee (rate as per 30 September 2021). For those who own more than $51,500 an accommodation payment can be made as a single, mostly refundable deposit when you move in, as a rental type payment based on a cost per day, which is not refundable, or as a combination of a deposit and regular fees.

The means tested fee is a contribution to the cost of your care, paid in addition to the fees above.

How much you pay towards your care is dependent on your assets and income, so it can change if your financial situation changes, but it is capped at a certain amount per year ($28,472.60 as at 20 September 2021).

Your assets include any houses you own, including the family home. You don’t have to sell your home to move into an aged care facility but what portion of the home you own and who will be living there when you move out does affect how much you pay in nursing home costs.

For example, if you and your partner own your home, but only you move into the nursing home and your partner continues to live at home with home care services, the home can’t be counted in your assets. However, if you own your home and live alone, an amount of the value of your house will count in your assets assessment.

Our aged care costs calculator can give you an idea of how all of these fees and assessments might apply to you.

Extra services fees can cost anywhere between $10 and $100 a day on top of your regular aged care fees, depending on what you are using.

Only some aged care providers are approved by the Government to provide extra services, but these could include “hotel-like” services such as massage therapy, an additional television provider with more channels, more meal options, a wine, beer and spirits selection, daily newspaper delivery and weekly hairdressing appointments.

Your care is not impacted by extra services as the fee only relates to luxury comforts provided on top of the services covered by regular aged care home costs and fees.

Every nursing home provider, regardless of the fees you pay, is expected to:

  • Provide staff who are always on call for emergency assistance
  • Provide assistance with personal care like going to the toilet, eating, dressing and showering
  • Provide support with mobility and communication
  • Provide help to access therapy or health practitioner services
  • Support people with cognitive impairment, such as dementia

Some aged care facility costs may change after moving into a home so it's worth understanding what to expect over time and reviewing financials regularly.

Call to speak to a placement consultant today about your particular circumstances and the cost of aged care homes on 1300 903 627.

Disclaimer: The information on this site is general in nature and does not constitute legal or financial advice. Readers should seek their own personal legal and financial advice from a suitably qualified practitioner.

Aged care costs and fees

Life in an aged care home

Moving into an aged care home will mean you'll have access to 24/7 support with access to all the care and services you need. Staff are generally friendly and outgoing and can be called on if you need any help.

Daily life in a nursing home may be different from how you lived before moving in, but many residents feel positive about these changes as they often involve more social opportunities and activities. You and your family can also take comfort in the fact that any care needs you have - from medication management to support for dementia - will be looked after every day.

Some of the biggest benefits of aged care over care at home are the peace of mind, security, medical assistance and constant support which a facility can provide to maintain your physical health to the highest standard possible. This not only benefits you but also your family, with stress taken out of your circumstances.

But quality of life in aged care is about more than just physical health, it’s also about mental, social and emotional wellbeing.

There are many ways to maintain quality of life in an aged care facility.

You can continue to enjoy your usual activities outside the nursing home, such as attending any regular classes, meeting friends in your favourite coffee shop or attending family events.

Exercise classes, arts and crafts, bingo, concerts, outings and other leisure options are generally offered at the facility and can all be ways of maintaining quality of life in residential aged care.

Many nursing homes have strong links to the local community and residents benefit from being involved with activities such as meeting local school children or other people from community groups.

You can choose to get involved in activities with other residents of the home, find a quiet spot to read or watch television or stay in your own room to enjoy your own company.

Family members and friends are encouraged to visit as often as they can and many nursing homes also have special areas available for private functions, so you can still hold special events for family and friends in your home.

While most homes do not allow residents to have their own personal pets, a lot now have ‘live-in’ animals such as cats, rabbits, dogs and birds.

Many nursing homes also arrange for a variety of animals to visit – something which staff and residents alike enjoy.

If little luxuries and comforts will lift your wellbeing you can sometimes opt to pay more for extra services. These are considered 'hotel-type services', which provide a higher standard of accommodation, food and entertainment - for example, a bigger ensuite or daily newspaper delivery.

There are some myths which perpetuate the stigma around nursing homes.

Many people believe that an aged care facility won’t feel like a home, but in reality facilities will do their best to make you feel at home and provide you with opportunities to live the lifestyle you choose. The widely held belief that moving into an aged care facility is like moving into a hospital is also untrue. Although the main focus of the facility is care, there is a much larger emphasis on lifestyle and overall wellbeing than in a hospital, meaning residents live in homely environments.

Another common misconception is that residential aged care is not affordable. The Federal Government subsidises the majority of the cost of aged care and for the remainder of the cost you will not be forced to pay more than you can afford. You also don’t have to sell your home to move into aged care or to afford residential care, which is a widespread myth.

The final myth around aged care is that residents have no rights. In reality, regardless of what services you choose to take part in, all nursing homes are required to provide a certain level of care and uphold the same rights for residents as others in the community have.

All Government funded aged care homes have to meet certain standards and are reviewed on a regular basis to make sure they deliver the best care and services to their residents.

These standards cover areas such as staffing, health and personal care, lifestyle, living environment and safety and security and include:

  • Consumer dignity and choice (to treat residents with respect and allow them to maintain their identity as well as make informed choices about care and services)
  • Ongoing assessment and planning with consumers (to help residents to get the care and services they need for health and wellbeing)
  • Personal care and health care (that both safe and the right care for the resident)
  • Services and supports for daily living (for the health and wellbeing of residents)
  • Organisation’s service environment (having an environment in which residents feel safe and comfortable)
  • Feedback and complaints (residents feel safe, encouraged and supported to give feedback and make complaints)
  • Human resources (residents get quality care and services when they need it from people who are knowledgeable, capable and caring)
  • Organisational guidance (residents are confident the organisation is well run)

The aim of the standards is to give consumers confidence that aged care providers will work in partnership with them and their families and to ensure the care they receive supports their health, wellbeing and quality of life.

The Aged Care Quality and Safety Commission is responsible for the review of aged care homes.

Call to speak to a placement consultant about the best aged care services for your particular circumstances on 1300 903 627.

Life in an aged care home

Information guides

Browse our collection of informative articles covering different topics around the cost of aged care.

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If you feel like your control and choice over how your super is invested is not being met by your current super fund, then you may find self-managed super funds (SMSF) a better fit.

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What to consider when choosing a super fund

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It is pretty easy to set and forget about your super - which isn't always a good thing. You should be checking your superannuation at least once a year to see if it is performing well.

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