2. A word from the author
Society has long held the
view that retirement can
be a life of leisure with
guaranteed relaxation and
happiness the day after
finishing paid work.
Our practical experience, combined with
neuroscience and psychological research, proves
that retirement can be a hazardous journey and
presents more health, relationship, mental and
financial issues than many people are aware.
We would like to briefly touch upon some of
these issues as well as provide handy action tips
to ensure that more people are aware of both the
‘pros’ and ‘cons’ when contemplating retirement.
The views expressed in this publication are solely those of the author; they are not
reflective or indicative of Millennium3 Financial Services Pty Ltd (Millennium3)
position, and are not to be attributed to Millennium3. They cannot be reproduced in
any form without the express written consent of the author.
This document has been prepared without taking account your objectives, financial
situation and needs, and because of that, before acting on any information, you
should consider the appropriateness of the information having regard to your
objectives, financial situation and needs. The Retirement Advice Centre is a
Corporate Authorised Representative of Millennium3 Financial Services Pty Ltd
ABN 61 094 529 987 AFSL No. 244252
The Retirement Advice Centre
3. Australian Research has shown that pre-retirees
have the following concerns when planning for
retirement: Challenger (Dec, 2012)
1. Transitioning from working life to retirement
2. Maintaining pre-retirement lifestyle
3. Planning for a longer life expectancy
4. Protection of savings
5. Lack of control over their investments
6. Ensuring reliability in investment returns
In an easy-to-read format, we’ve touched upon
each of these aspects based upon either academic
evidence or practical experience from our retiree
clients.
We trust you find our 50 Tips useful for your
retirement planning journey!
“Our aim is to make
retirement enjoyable
in planning, and
comfortable in living.”
Retirement Adviser, David Reed
4. 1
Neuroscience has proven
that your brain is a muscle.
Just like any muscle, if it’s
not active it can atrophy and
wither.
Keep your brain active by doing stimulating
activities.
It doesn’t necessarily mean ‘paid’ work, it can be
a hobby, volunteering, new business venture or
partnership.
Purpose and Meaning, ie. a reason to get out of
bed in the morning, is crucially important.
The well known adage of ‘retiring
today, dying tomorrow’ has an
element of truth associated with this
research.
5. Successful Retirees are those
that focus upon retirement
with Purpose and Meaning.2
Those who succeed in retirement are those who
obviously know what they are retiring from, but
more importantly know that what they are retiring
to.
Have a clear picture of what retirement looks
like for you, how you will engage your skills and
resources and how you will stay challenged.
For many robust retirees, retirement is an artificial
finish line that they will never cross.
6. Retirement is one of the top
10 most stressful life events.
(Holmes and Rahe)
3
When you are contemplating retirement, it is
recommended that you place a greater emphasis
on ‘be-ing’.
Ask yourself the question – “If I had my time over
at the start of my career and education, what
would I do differently (or what would I continue to
do)?”
Envision your transition into retirement less as
the encore, but rather as the next phase of your
lifetime journey.
Habits of thinking need not
be forever.
One of the most significant
findings in psychology in
the last twenty years is that
individuals can choose the
way they think.
- Martin Seligman
7. Retirement boosts your risk of
depression by 40%.4
Understand that there are inherent risks
in retirement, financially, emotionally and
psychologically.
George Vaillant conducted years of research from
the Grant Study that launched in 1939 to identify
that in his work ‘Aging Well’, he wrote “…it is social
aptitude, not intellectual brilliance or parental
social class, that leads to successful aging.”
Additionally, mature coping styles, ie. “making
lemonade out of lemons” is in social and
psychological terms the most powerful predictor
of successful ageing.
9 Recommendations by George Vaillant include:-
1. A good marriage before age 50
2. Ingenuity to cope with difficult situations
3. Altruistic behaviour
4. Stop smoking
5. Do not use alcohol to the point where your behaviour
shames you or your family
6. Stay physically active. Walk, run, mow your own grass,
play tennis or golf
7. Keep your weight down
8. Pursue education as far as your native intelligence
permits
9. After retirement, stay creative, do new things, learn
how to play again
Continued maturation no matter a person’s age can
influence these results.
To prepare ourselves, Vaillant writes “We can start by
admiring how other skilful people cope. Then ponder,
when things go badly for us, how we might have used self-
defeating mechanisms. Don’t try to think less of yourself,
but try to think of yourself less.”
8. In the USA, rates for male
suicide spike significantly
after the age of 65 to almost
triple the overall rate.
In Australia, the rate of suicide of
those in retirement phase of life
exceeds that of teenage males:
5 Have a purpose.
Many retirees are of the view that it’s best to
‘transition’ into retirement slowly, rather than an
abrupt change in one day.
So rather than focus upon whether you have
enough money to retire, spend time contemplating
what a fulfilling lifestyle looks like in retirement.
Read books such as Authentic Happiness or
website material of Martin Seligman.
His work over many decades has led to important
findings around Purpose and Meaning as key
features towards building a fulfilling life and robust
attitude.
9. The average retiree spends
43.5 hours per week watching
television.
(Age Wave, 2012)
6
Identify your values in life and discuss with others
how your vision of retirement should be. Pleasure
is external (eg. TV), while Happiness is intrinsic (eg.
fulfilling activities aligned with your Values).
Diarise your time with these Values including
family time, friends, socialising, mini-break
holidays, hobby or courses.
Retirement is much, much
more than reaching a target of
accumulated cash.
10. The Paradox of Leisure -
A retirement that totally
consists of leisure must be a
good thing.
7
Psychologist Barry La Valley highlights an
important perspective on this myth:
“We like our holidays and weekends when we are
working, therefore imagine if that were now your
life.
Consider the paradox of leisure: we like leisure
because it is a break from work.
If you had leisure seven days a week for thirty
years, where is your break?”
Christmas time is an ideal
period to reflect and plan for
the future. 8
Complete an ideal year (a suggested tip is to start
with holidays first, then seasonal activities, etc).
Then complete your view of what an ideal week
would be (tip – start with the weekends first).
Finally, complete what an ideal day would look like
(tip – start with sleep and exercise as they are your
most important factors).
It can help to schedule your day just like you
would ‘going to work’ so as to get out of the house
or undertake activities.
11. 9
As investors move close
enough to retirement, they
may have 50c in every $1
at stake in their retirement
savings.
Trying to maximise returns with full
exposure to the stockmarket may
no longer make sense. The issue of
sequencing risk becomes crucial, ie.
the order of returns on the portfolio.
In the retirement risk zone, particularly a year
either side of retirement, your focus should
concentrate on portfolios that assure you a return
“of” capital rather than a return “on” capital.
Our preference is to take a ‘silo’ approach with
retirement savings to prepare your money for
virtually anything that may happen.
For example, a ‘safe income’ silo should
commence via a gradual glide path of money
being allocated over a number of years so as
to build a floor of income, that is preferably not
directly tied to volatile growth assets.
Continued exposure to growth assets is important.
Research shows that as a conditional probability
statement, the experience of zero returns (let
alone negative returns), in the first decade of
retirement may be associated with a 70-80%
chance of portfolio ruin (ie. your money running
out before you pass away).
Therefore, holding a second silo of money that is
invested into growth assets to maximise upside
potential and assure longevity of your retirement
savings is crucial.
12. Many people sell their family
home when entering Aged
Care facilities10
If you are part of the ‘sandwich generation’,
ie. caring for your own kids and parents at
the same time, then issues such as Aged Care
Accommodation may be an issue that will arise in
the future.
This is a specialist area where good advice can
give you more options than just selling the family
home, and may literally save you many thousands
of dollars. Seek out a meeting with an Aged Care
Advice specialist (and preferably before you
attend the first meeting with the Accommodation
provider).
13. As we age, our bones (a living
tissue) change and results in loss
of bone tissue. This weakens the
bone and increases risk of breaks
from bumps and falls.
11
Research shows that exercise can make bones
stronger and help slow the rate of bone loss.
Include activities such as walking, swimming and
the gym visits into your weekly routine.
Recent studies show that less than 1 in 10
Australians over the age of 50 do enough exercise
to improve or maintain cardiovascular fitness (Vic
Govt, 2014). Grab a gym or walking partner to
keep yourself disciplined, or hire a personal trainer
to ensure that you make exercise a habit.
14. Retirement is a transition,
not a destination. There are
going to be phases during this
transition.
12
Retirement is a multi-phase journey. But also
remind yourself that time isn’t always your friend—
getting older means doing as much as you can as
quickly as you can (never put anything off!)
“Longevity is only a luxury if you
can afford it”
15. For couples with a joint or
shared credit card, it may be
prudent to consider applying
for a credit card for each of
you prior to retirement.
13
If either spouse were to pass away, and the credit
card was in their name, then the bank may cancel
that card.
If there is little income, then it may be difficult for
the surviving spouse to obtain a new credit card in
their own name.
16. Emotions of Greed and Fear
are likely to have more effect
upon your retirement savings
than any other decision you
make.
14
If you don’t stand for something, then you’ll fall for
anything.
Construct an investment philosophy that you are
comfortable with.
Paying for expert investment advice can assist
you with this process, and also provide you with
a reliable external party to keep you from making
emotional decisions. A documented investment
philosophy can form the anchor point for all future
investment decisions for both the adviser and
yourself.
The behaviour gap is up to 3.96%
per year for stockmarket investors.
(Dalbar Inc 2012, USA)
17. Potentially 60% of your wealth
in your lifetime may come from
the day AFTER you retire.
(Russell, 2012)
15
At retirement, many people will have accrued the
most money they will ever have in their lifetime.
As compound interest commences after
retirement, and in an appropriately weighted
diversified portfolio, the earnings each year may
result in very significant numbers. This is what
Russell term 60/30/10 – ie. 60% of wealth from
compound interest in retirement, 30% of wealth
from compound interest while working and 10%
from contributions made during your working life.
As an example, let’s say you retire with $1m. A
10% return the first year of retirement is $100,000.
It may have taken you 5-10+ years of your working
life to save an equivalent amount to that $100,000
earnings.
This potential can be subsequently sacrificed
if your own conservatism at retirement results
in moving more money into cash. We also see
more so-called Lifecycle funds (that are gaining
popularity with institutions by moving your asset
allocation of money into a more conservative
weighting of assets as you age) do similar
conservative weightings.
As people are living longer, and drawing more
money out of retirement savings, this conservative
shift may not necessarily be beneficial in
retirement.
18. Often adult children and
grandchildren value the family
heirlooms as much, if not
more than financial legacies.
16
56% of people aged 50+ would prefer to begin
passing on their assets while living rather than at
end of life.
Give away some of your treasures and memorabilia
while you are alive so you can see and appreciate
how they are enjoyed by your beneficiaries.
The timing may be right if you are considering
downsizing your home.
19. Research shows planning for
retirement 5-10 years ahead
has an increase of wealth of
$157,427 for people with a
retirement plan, compared to
those without a plan.
(Texas Tech, 2011)
17
Constant buying and selling
of shares, fixed interest or
funds rarely work, particularly
over the long term. It sells
newspapers and magazines,
but it can be a wealth hazard.
18
Learn more about academic principles that are
evidence-based methodologies to save for, and
distribute income, in retirement.
A good place to start is with free websites such as
www.ifa.com (USA based), http://au.dimensional.
com, www.vanguard.com.au, www.ssrn.com, and
even our own www.smartretirement.com.au. We
will continue to build our library of educational
resources for both the psychology of retirement
and retirement income planning.
It’s never too late to start planning and saving
for your retirement, but the best time to start is
always today.
20. Studies on loss aversion show that
for most people, the pain of a $1 loss
is about as intense as the pleasure
of a $2 financial gain.
19
Overcome behavioural biases through
construction of assets into ‘silos’ that prepare you
for virtually anything that may happen.
Assets exposed to growth asset market volatility
shouldn’t influence your necessary living expenses
in the next 7 years or more.
Retirees are hyper-sensitive to
losses. They have a response that a
$1 loss is emotionally equivalent to
$10 in gains.
21. Random chance can
outperform active stock
management. Even cats beat
the experts.
20
Our belief is that saving for retirement should be
founded upon ‘evidence-based’ principles. These
principles include that markets work and we can
capture the market return with very low costs.
I appreciate that it sounds counter-intuitive to
what we learn growing up in school, but with
financial markets, working harder and more often
(ie. trading in and out of the market) often means
earning less when investing.
22. The most common regret was
having the courage to live a
life true to myself, not the life
others expected for me.
Be brave and individual, pursue your
potential.
21
Read ‘The Top Five Regrets
of the Dying’ by Bronnie
Ware
22
Minimise the
need to draw
down larger
sums of money
from retirement
savings in the first few
years.
Within your last 3 years of paid
employment, start replacing
expensive items that are likely
to need replacing such as white
goods (fridge, washing machine,
car, etc).
23. Achieving your aspirations will
often require you to spend
one, or both, of two things -
time and/or money.
23
Develop daily habits to live your life on purpose.
Build a financial plan that aligns your money with
your values.
24. It’s never too late to be
the person that you have
always wanted to be. 24
Research shows that working towards a specific
goal boosts our happiness, and those with more
ambitious aspirations are happier than those with
lower expectations. Success has no age limit.
A terrific example is George Dawson, a slave’s
grandson, who learnt to read at 98 years old, lived
to 103, and co-authored an award winning best
seller on his life and lessons on living.
“Things will be all right.
People need to hear that. Life is
good, just as it is.
There isn’t anything I would
change about my life.”
—George Dawson
25. Income streams are important
in retirement. Consider the
use of cashflow instruments
that are conservative and
reduce longevity risks if you
live longer than expected.
25
Speak to a retirement specialist that can guide you
through the range of income focused investment
opportunities available.
I suggest that it would be beneficial to start
learning about annuities. They have the potential
to once again become a popular asset class that
assists to minimise longevity risk in an ageing
population.
When many pre-retirees walk
into our office at 50 to 65
years of age, they have their
retirement savings invested
the same way as it was when
they were 30 to 35 years old.
26
The order in which you receive your returns may
have a disastrous effect upon your retirement
savings. It is beneficial to change your mindset
from ‘growth’ of your portfolio to that of ‘pay-me-
a-smooth-monthly-income’ with assets potentially
tilted away from assets that can experience high
volatility.
26. A successful retirement is one
with no surprises.
27
Lifestyle planning should be focused around
your Life Values (eg. family, education, new
experiences, philanthropy, etc).
If you are spending your most precious resources,
ie. time and money each day on those activities in
alignment with your Life Values, then your day can
be seen as ‘fulfilling’. Alternatively, if your daily
activities are not in alignment, then you’re just
‘time-filling’.
Financial retirement plans should adopt prudent,
evidence-based investment philosophies, so that
you have scientific reason as an ally.
In total contrast to this methodology is
implementation of investments using mythical
people that supposedly can provide higher returns
than the marketplace, with lower risk. Consider
these types of claims as a hazardous warning to
your wealth.
Retirement income planning is complex. Professor
Wade Pfau’s research shows that up to 14% of your
lifetime of retirement wealth can be determined
by what earnings (or losses) are made on your
savings in the first 12 months of retirement.
Your retirement is too important to leave to
chance. Either use the services of an expert
on retirement income, or become one. The
choice is yours. The risk in self-managing your
retirement monies is that by it’s very definition,
it is impossible to be ‘objective’. Even if you hire
an experienced retirement specialist on a ‘second
opinion’ time basis, the cost would be well worth it
so as to have an impartial, disciplined perspective
on the maximising of opportunities and balancing
of risks and returns to your needs.
27. The ‘sandwich generation’ -
supporting both children and
parents can be difficult in
retirement.
Think about how you intend to support your
children and parents.
If suitable, a discussion with them about what
support you can provide would be beneficial. Be
aware that family issues can sometimes be one, if
not the, major derailer for a prosperous retirement.
28
If you are over 55, then
consider options to minimise
tax and maximise retirement
savings.
29
Learn more about Transition To Retirement
pensions or seek professional advice. They
offer an alternate means for you to potentially
reduce your working hours without affecting your
household income, or using the tax efficiencies
of the strategy to boost your superannuation
balance.
28. Financial literacy declines by
about 2% per year after age
60 - yet confidence remains
as high as when we were
young.
Reduced abilities and high
confidence can explain poor
investment choices as we age.
30
Establish a written investment policy statement to
adhere to for decisions.
Consider the use of a trusted adviser to assist
with portfolio management and ongoing financial
decisions that influence your retirement.
Actuaries estimate that
people aged 65 currently have
a 1 in 3 chance of living past
the age of 90, and 1 in 5 will
live past 95. (Actuaries Institute,
2013)
The use of longevity style investments such as
Annuities can be considered to reduce this risk.
Combined with other income focused investments
or benefits, such as Government or Corporate
Bonds, Employer Defined Benefit Pensions,
Centrelink Aged Pension, they can all assist to
form a “Lifetime Floor of Income.”
31
29. In general, we identify 8
commonly found financial
risks in retirement.32
Read more about, or receive advice to minimise
these following risks:
1. Enough savings
2. Sufficient income stream
3. Sequence of returns risk
4. Market volatility risk
5. Longevity risk
6. Liquidity risk
7. Inflation risk
8. Investor behaviour risk
30. At the Retirement Advice
Centre, we consider Seven
Option Solutions (SOS) for
Retirement Income Planning.
33
When in withdrawal phase of your retirement
savings, the options are generally limited as to
what action you can take. Here are our Seven
Option Solutions:
1. Die sooner
2. Work longer
3. Adjust inflation
4. Spend less
5. Save more or delay withdrawal
6. Increase your rate of return
7. Combination of options
Intentions with paid ‘work’
for retirees is undergoing
significant changes. 34
Think about your options.
The most popular intent in the USA is for 43%
retirees to cycle their week between work and
leisure (for example, contract work then learning
and leisure).
31. UK research, as well as our
own practical experience
with clients, shows that
retirees have a high risk of
overspending in the early
years of retirement.
(LV= Survey, 2014)
Be prepared. Think ahead as to what you intend
to do in retirement and what your expenses are
‘likely’ to include.
This spending issue is commonly tied to the male
retiree losing status that they had with their job.
The search with hobbies, travel, expensive toys
can result in overspending for the initial years in
retirement. One in five surveyed in the UK strongly
regret overspending during their first few years of
retirement.
35
32. Draft a budget that focuses
upon a ‘need’ level of income,
and a ‘desired’ level of income.36
Use software such as Xero, ANZ Money Manager
or Excel to analyse your budget history.
Then plan out your yearly/monthly/daily lifestyle
to give you a better understanding of what an
active retirement would appear like, and the likely
expenses that would include. This provides a much
better framework to understand your Needs and
Desired Income.
Also, visit http://www.superannuation.asn.au/
resources/retirement-standard as they provide
financial estimates for Moderate and Comfortable
retiree living standard research on a quarterly
basis.
33. Retirement is a journey that is
not linear.37 Age Wave (2005) have provided this
research for retirement’s emotional
phases:
Phase Duration Comments
Imagination 5-15 years prior
to retirement
88% surveyed expect to be happy
Anticipation 0-5 years prior
to retirement
91% expect to be happy and 80%
believe that they will achieve their
desired retirement
Liberation 1st year of
retirement
78% say they are enjoying
retirement. Highest use period for
professional advice.
Reconfirmation 1-15 years after
retirement
Depression risk, and realisation
stage. Health issue risks. A purpose
to get up in the morning is needed.
Reconciliation Deep in
retirement
Come to terms with their lives.
Substantial concern about the cost
of living.
34. For every $20 that you put
into your retirement savings, it
can generate $1 of retirement
income per year.
(Russell Investments, 2009).
38
No matter how small, or how
close to retirement, continue
to maximise your savings into
superannuation.
35. Since 1996, those aged
between 55 and 64 have
had a higher rate of
entrepreneurial activity than
those aged 20 to 34.
Dane Stangler, 2007
39
Don’t let your dreams die because you’re retiring.
For many retirees, it’s a time of energetic reflection
and an opportunity to pursue your passions and
interests
You are who you are -
Continuity Theory
40
Human beings don’t like change in our lives, so
when we try something new or change situations,
our brains find ways to find normalcy. It’s a good
idea to attempt habitual changes well before
retirement.
36. Advertisers sell products
based upon the allure of
‘pleasure’ under the guise that
it will make you happy.
41
Understand that pleasure is tied to external
influences, happiness is linked to internal
satisfaction. Pleasure is generally fleeting and non-
permanent.
Happiness is longer lasting and has greater
permanency.
Spending time and money on your values and
experiences, rather than products, can increase
happiness.
37. 230,000 previously retired
Australians, the majority
women, were back at work or
looking for work in 2010-11,
according to the ABS.
The most common reason was
money (41 per cent) but boredom
came next (28 per cent).
42
Preparing yourself financially through budgeting
and forecasting, combined with understanding
what you are retiring ‘to’, can prevent you from
suffering boredom or lack of money.
38. A recent phenomenon that
is becoming increasingly
popular with retirees is for
them to have a ‘year off’ prior
to ‘official retirement’.
43
A gap year is often defined as a year of transition
out of education or paid employment. Typically,
a gap year conjures up an image of 18 year olds
travelling to Bali, Europe, etc for parties and life
experience.
That’s all starting to change.
A recent study by Halifax in the UK (2013), found
nearly half of 55 to 64 year olds would love to take
a year out travelling and the idea is catching on
fast.
Prior to the commencement of official retirement,
pre-retirees are now planning a year ‘off’ work
prior to transitioning into the next phase of their
life. The popularity of this holiday has seen the rise
of the term ‘grey gap year’ and niche travel agents
catering for this demand.
Your first reaction may be that it sounds like a
novel idea. I’d suggest that it might be worth
serious consideration as you fulfill some of your
travel aspirations, while giving you the opportunity
to explore a new environment and contemplate
your lifestyle values, as well as the challenges and
opportunities you would like to engage in your
next phase of life.
Retirees have expressed their view that a Grey
Gap Year allows them to explore more of the
world, while many are undertaking voluntary
philanthropic work so as to feel that they are
giving something back. They also comment that
they are viewing this time as a break in their
career, as they intend to do similar or different
careers upon their return. Food for thought.
39. Maximise your tax efficient
income in retirement.
44
If you have assets that are owned personally,
or outside of superannuation, then they may
be subject to income tax, and capital gains tax,
regardless of your age. If those assets are owned
within superannuation, and you retire past the
age of 60, then the earnings on those assets may
be tax free, and if sold, capital gains tax free. In
addition, the pension stream that you receive may
also be tax free. This is a significant benefit and a
key reason why structuring your assets correctly
prior to retirement can have benefits in the tens of
thousands of dollars in a lifetime.
Please note you should seek specialist tax advice
for your particular situation before making any
investment decisions.
40. I married you for love (but not
for lunch).
Divorces for those at pre-
retirement age are rising fast
worldwide.
In the UK, divorce has tripled among
people over the age of 60 (ONS,
2013), while in the USA, couples in
their 60’s are divorcing a rate faster
than any other decade in history (US
Census, 2014). In Australia, divorces
ending after 20 years of marriage
has more than doubled from 13%
(1990) to 28% in 2011 (AIOFS, 2013).
45
While we may believe that introspectively, it is us
an individual that is retiring from work, it is also
likely that retirement will have a significant impact
upon life as a couple. Each person is likely to have
their own view of what the next phase of their lives
will look like, and what’s necessary to achieve it.
As partners, if you have had a history of low
communication, then it’s possible that this
problem will only be emphasised in retirement.
Discuss with your spouse how your retirement will
look like for you as individuals, as well as a couple.
Talking about what your ideal year, month and
day in retirement will look like for each of you will
enable you both to talk about any compromises
and plans for retirement and how that can be
achieved, shared and enjoyed.
41. Self Managed Super Funds
(SMSF’s) are undoubtedly
popular, flexible and a terrific
structure for many people to
build retirement savings.
Yet we are receiving queries more
often now from pending retirees
that have one, and the consideration
of closing them down at retirement.
46
SMSF’s can vary from simple to highly complex,
therefore it is impossible to have a hard and fast
rule. Getting advice is my first recommendation
and see a SPAA Accredited Adviser (ie. SMSF
Specialist).
My next suggestion is to learn more about how
much it costs to run your SMSF, whether you have
illiquid assets (eg. property) that mean you have
no choice to keep the SMSF unless you sell the
property, and whether there are simpler options
for you in retirement with other superannuation
funds such as wholesale, retail or industry pension
funds.
Finally learn more yourself about terms such as
‘anti-detriment’ benefits, creating reserves within
an SMSF and think about your estate planning
wishes. These factors, as well as many others, may
influence your decision to keep or wind up your
SMSF at retirement.
42. Consider Generational Wealth
plans prior to retirement.47
Seek professional advice from an adviser and
estate planning solicitor. They can touch upon
issues such as nomination of beneficiary types,
how your estate could be distributed, anti-
detriment benefits or re-contribution strategies.
Your estate plan may wish to give consideration
to a general and an enduring power of attorney
as well as guardianship and testamentary trust
inclusions.
43. Take advantage of every
government incentive
available to maximise your
retirement savings.
48
Learn more, or seek advice early, about Centrelink
eligibility strategies particularly with regards to the
Health Care Card and Seniors Card.
44. When it comes to choice of
home, staying in your home
(also known as ‘Ageing-In-
Place’) is much more common
than retiring to a sea-change
or a tree-change.
49
If you are considering moving from your home,
carefully consider the implications such as health
care facilities, and potential isolation from friends
and family. It can be difficult to move away from
your support network.
An idea may be to rent your existing home, and
rent in the area you are considering. Buying and
selling real estate is an expensive exercise with
stamp duty, real estate agent costs, etc, so to
minimise mistakes, dip your toe in the water first
by simply renting for a 6-12 month period and then
make a decision to buy or sell your home.
If there are financial constraints, then other
options to allow you to stay in your home may
include:
1. Convert your land into a dual occupancy so
that you can live in half, and the other half
rented or sold.
2. Rent out some rooms or as is growingly
popular, build a granny flat in the yard so
that you can rent out or move into. There are
social security and tax implications so seek
advice before acting).
3. Consider a reverse mortgage loan if you need
extra cash. It’s a good idea to discuss this
move with the beneficiaries of your estate so
that they have an understanding before you
seek advice from professionals.
45. Renowned ageing scientists,
such as Martin Seligman, have
identified that from age 25 we
get slower neuroconductivity,
have less stamina, poorer
memory and reasoning that is
poorer and slower. Our originality
also deteriorates.
The first four health issues are
irreversible. The fifth, originality, we
can act upon.
50
46. Appreciate and utilise the benefits that Seligman
has shown that Ageing provides. Focus upon the
positive attributes that Ageing provide, particularly
when it comes to Creativity. Seligman outlined
these recently:-
1. Knowledge – To be creative, we need
expertise. As we age, we may have forgotten
more, but we know more both in general life
terms, as well as domain focused niches. We
are aware of how to apply that knowledge.
2. Pattern recognition – As we age, out intuition
builds and can recognise patterns from past
experience.
3. Shortcuts (heuristics) – As we age, we take
more and more shortcuts. Seligman in his talk
in Sydney (March 2014) spoke about how at
21, he would read all of the academic papers
from front to back. Nowadays, he reads
about 10% of each paper as he knows the
foundations and research methods of each
paper through experience and education.
These are shortcuts not available when young.
4. Diversity of experience – We get more rigid
and less original as we age, but we get more
perspective and diversity through experience
and understanding.
5. Sense of the audience – We get better at
perspective taking for the audience around
putting ourselves in place of other people. It
is also beneficial for persuasion.
All of these 5 factors are teachable and can be
done at any age. This is beneficial for the future as
an ageing population can build more creativity in
the world.
47. “Providing prudent guidance
about retirement income
is much harder than giving
advice on investing for a
given retirement goal –
both theoretically and
practically.”
Nobel Laureate Dr Harry Markowitz
(RIAA Journal 2012, V2 N.1).
48. 9) How safe are safe withdrawal rates in retirement? An Australian
perspective (Prof. Drew and Prof. Walk, Financial Services Institute
of Australia, 2014)
http://www.finsia.com/docs/default-source/policy-archive/rrz---
final-030314-web.pdf?sfvrsn=0
11) Healthy Ageing Literature Review (Department of Health, Victoria,
2012)
http://www.health.vic.gov.au/agedcare/maintaining/downloads/
healthy_litreview.pdf
14) Quantatitive Analysis of Investor Behavior (2013) Dalbar Inc,
Research and Communications Division
http://ww.qaib.com/public/downloadfile.aspx?...
advisoreditionfreelook.pdf
15) The Russell 10/30/60 Retirement Rule
https://www.russell.com/CA_FP/PDF/Invest4Retir_InvestrFinal.
pdf
16) Family & Retirement: The Elephant In The Room. (Merrill Lynch
study conducted with Age Wave (2013))
http://www.wealthmanagement.ml.com/wm/Pages/Age-wave-
Survey.aspx
17) Behavioral Finance for Financial Planners (Professor James,
Texas Tech University, 2011) http://www.slideshare.net/rnja8c/
behavioral-finance-for-financial-planners (Slide 42)
Listed References (As per each item)
1) Aging and muscle: a neuron’s perspective (Manin, Hong and Clark,
2013)
http://www.ncbi.nlm.nih.gov/pmc/articles/PMC3868452/
2) So You Think You’re Ready To Retire, (Barry La Valley & David
Reed, 2014)
3) The Holmes-Rahe Life Stress inventory, The American Institute of
Stress
http://www.stress.org/holmes-rahe-stress-inventory/
4) Work Longer, Live Healthier (Institute of Economic Affairs, Paper
No.46), Sahlgren, G, May 2013.
http://www.iea.org.uk/sites/default/files/publications/files/
Work%20Longer,%20Live_Healthier.pdf
5) Population Reference Bureau (2006, USA); Australian Bureau of
Statistics (2009)
http://www.prb.org/Publications/Articles/2006/
ElderlyWhiteMenAfflictedbyHighSuicideRates.aspx
http://www.abs.gov.au/ausstats/abs@.nsf/ 6) Age Wave, Dan
Veto (2007)
http://finance.yahoo.com/news/pf_article_103649.html
7) So You Think You’re Ready To Retire, (Barry La Valley & David
Reed, 2014)
49. 34) Americans Perspectives on New Retirement Realities and the
Longevity Bonus (Merrill Lynch and Age Wave, 2013)
http://wealthmanagement.ml.com/publish/content/application/
pdf/GWMOL/2013_Merrill_Lynch_Retirement_Study.pdf
35) New retirees spend 33,00 pounds on luxuries in five years (Nelson
Research for LV=, 2014)
http://www.lv.com/adviser/working-with-lv/news_
detail/?articleid=3213362
37) The New Retirement Mindscape Study (Ameriprise, Age Wave,
Harris Interactive, 2005)
http://www.agewave.com/research/landmark_
retirementMindscape.php
38) The Russell Retirement Rule of $20 (Russell Investments, vol.9,
issue 1, 2009)
http://www.tedlee.ca/The%20Russell%20Retirement%20Rule%20
of%20$20%20(Russel%20Investments).pdf
39) Ewing Marion Kauffman Foundation, Dane Stangler via Small Biz
Trends, Scott Shane
http://smallbiztrends.com/2010/05/should-we-worry-about-
older-entrepreneurs.html
40) A continuity theory of normal aging, Robert C Atchley, PhD
(Oxford Journal)
http://gerontologist.oxfordjournals.org/content/29/2/183.
abstract
19) Behavioral Finance and the Post-Retirement Crisis (Shlomo
Benartiz, UCLA, Allianz, 2010)
http://www.dol.gov/ebsa/pdf/1210-AB33-617.pdf
20) Moggy shames experts in shares game (SMH, 15 January 2013)
http://www.smh.com.au/executive-style/culture/moggy-shames-
experts-in-shares-game-20130115-2crbz.html
21) The 5 principles of no-regrets leading and living (Forbes 12 Oct
2013)
http://www.forbes.com/sites/kevincashman/2013/12/10/the-5-
principles-of-no-regrets-leading-and-living/
27) Lifetime Sequence of Returns Risk (Professor Wade Pfau, 27
September 2013)
http://wpfau.blogspot.com.au/2013/09/lifetime-sequence-of-
returns-risk.html
30) Old Age and the Decline in Financial Literacy (Finke, Howe and
Huston, 2011)
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1948627
31) Actuaries warn of retirement underfunding risk (Actuaries
Institute, 14 November 2013)
http://www.actuaries.asn.au/Library/
MediaRelease/2013/131114RetirementUnderfunding.pdf
50. 42) Retirement: who’s a happy little vegemite? (Adele Horin) reference
Australian Bureau Statistics
http://adelehorin.com.au/2013/07/15/retirement-whos-a-happy-
little-vegemite/
43) Could you take a grey gap year? (Lima Curtis)
http://www.thirdage.co.uk/could-you-take-a-grey-gap-year/
45) 20 year itch – increase in divorce after long marriages (Australian
Institute of Family Studies - 27 May 2013)
http://www.aifs.gov.au/institute/media/media130527.html
The number of people aged 60 and over getting divorced has
risen since the 1990’s (Office For National Statistics, 6 August
2013) http://www.ons.gov.uk/ons/rel/family-demography/older-
people-divorcing/2011/sty-divorce.html
Is the US divorce rate going up rather than going down?
(Professor Robert Hughes Jr)
http://www.huffingtonpost.com/robert-hughes/is-the-us-divorce-
rate-go_b_4908201.html
50) Your Brain and the Future (Ideas at the House, 9 March 2014
https://www.youtube.com/watch?v=FnhHLjYnW
Qby+Subject/4125.0~Jan+2012~Main+Features~Suicides~3240
51. The Retirement Advice Centre
admin@smartretirement.com.au | 1300-78-55-77
www.smartretirement.com.au
