Recent decades have seen huge gains made in the financial empowerment of women. However complete financial equality won’t happen soon and in some cases may be unattainable. So what are the areas where women lag financially, and when it comes to retirement planning, what can be done?

4 key issues

• Gender pay gap. Across all industries, including those in which female workers outnumber males, men are, on average, paid 18% more than women. For non-managerial clerical workers the gap is relatively small at 8.8%, but in key management positions women receive 26.6% less than their male peers. Large gaps also occur in the legal and medical professions.
• Lower superannuation balances. While the pay gap is one reason why women have less in superannuation savings than men, another big contributor is time out of the workforce to raise children. Of 20 OECD countries, surprisingly Australia has the third lowest employment rate for mothers, particularly sole parents.
• More expensive disability insurance. While pure life insurance is cheaper for women, income protection and disability insurance is more expensive. This is because women have longer life expectancies than men, but they make more claims, and for longer periods, on both temporary and permanent disability policies. For trauma insurance younger women pay more than men of the same age, and older women pay less than their male counterparts. Future advances in medicine may help to even out these differences.
• Being single. Single women (and men) lose out on the financial economies of scale enjoyed by cohabiting couples. About 24% of Australians live in one-person households, and across all age groups, 55% of those living alone are women.

Focusing on super

While it will take significant social and political change to redress some of the financial imbalances between the sexes, there are things that women can do to improve their long-term financial position:

• Understand the situation. If you are planning on taking time out of the workforce, what are the implications? As an example, 35-year-old professional Simone earns $120,000 per annum and has a super balance of $60,000. She plans on having three children and expects to be a full-time mum for seven years before returning to full-time work. As a result she may likely have around $77,450 (17%) less in super at retirement at age 67[1] than if she didn’t take time off.
• Consider the options. Simone’s partner could plug some of this gap and potentially receive a tax benefit each year by making spouse contributions to her super fund while she is out of the workforce. This isn’t an option if Simone is (or becomes) single.

Another possibility is to increase contributions upon her return to work. If Simone salary sacrifices 2.9% of her pre-tax income to super, she could wipe out the estimated shortfall by the time she retires.

She could also consider changing her investment strategy or, less appealingly, delaying retirement.

Planning is the key

It certainly isn’t fair, but the reality is that more women, particularly single women, face greater financial hurdles than men. Planning for the range of scenarios is essential. To make sure you’re on the right track with insurance, superannuation and saving, talk to your licensed financial adviser.

For more information about planning for your future please contact us on 03 836 8399.

Millennials – take a bow. Not only are you concerned about how your super is invested, you are more likely than other age group to act on your beliefs when choosing a super fund.

Research commissioned by the Responsible Investment Association Australasia (RIAA) reveals that 75% of Millennials prefer to invest in a responsible super fund than one that only considers maximising financial returns. Well ahead of Gen X on 66% and Baby Boomers on 68%.

Across all demographics, the proportion of people who would rather invest in a super fund that “considers the environmental, social and governance (ESG) issues of the companies it invests in and maximises financial returns”, as opposed to a fund that focuses solely on maximising returns, has risen by 27% since 2013.

That’s a pretty strong trend which sends a clear message not only to superannuation and investment fund managers, but also to the wider corporate community – people care about more than just profits. They also want their investments to contribute to the greater good.

What makes an investment ethical?

Ethical investment funds may use positive screens to select companies that are doing ‘good’ things, or negative screens to exclude companies doing ‘bad things’. Or they may do a bit of both.

There are, of course, different views as to what is ‘ethical’. Someone with strong religious convictions may be interested in a very different range of investments than someone with deep environmental concerns. Typically, though, ethical funds tend to avoid investing in companies involved in weapons manufacture, alcohol, tobacco, gambling or fossil fuels while favouring renewable energy companies, sustainable technologies or healthcare.

Even then it can be difficult to decide if a particular company is ‘good’ or ‘bad’. Many people avoid investing in companies that mine uranium, but those same companies may also extract the materials needed to build wind turbine towers. Or a bank that finances coal mines may also lend to solar farms and energy efficiency projects.

Given the wide range of ethical considerations, you may need to do some in-depth research to find the fund or funds that best match your values.

Is your fund doing the right thing?

While you may have an ‘out of sight, out of mind’ attitude to your super, it’s important to remember it’s your money and you get to choose where and how it’s invested. Start with your fund’s website or disclosure documents and look for the environment, social and governance section.

Most large super funds offer a range of investment options, only some of which may match your idea of ‘ethical’. However, there may be a direct share option, allowing you to construct your own portfolio of shares in companies that are compatible with your values. Or you may look to the increasing number of investment managers that apply ethical filters across their entire range of funds.

Advice moves with the times

Fortunately it’s becoming easier to track down the investment funds that suit you.  Talk to us about the issues that are important to you so we can help you invest your super where your heart is. For more information about ethical investing please contact us on 03 9836 8399.

Sources:

“From values to riches. Charting consumer attitudes and demand for responsible investing in Australia.” Responsible Investment Association Australasia https://responsibleinvestment.org/

Important:

This provides general information and hasn’t taken your circumstances into account. It’s important to consider your particular circumstances before deciding what’s right for you. Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business, nor our Licensee takes any responsibility for their action or any service they provide.

You can’t go anywhere these days and not see people glued to some device. Some of us wonder what we ever did without this modern-day “must have”, but love ‘em or hate ‘em, mobile (aka smart) phones are here to stay.

With all good things, there can be a downside. The cost of mobile phones and other devices is often not in the purchase but in the upkeep, and as many teenagers are discovering (many too late), mobile phones can lose them a good credit rating even before they’ve left school.

Numerous young people (and some not so young!) get caught up in the advertising hype, and think that they must have the latest toy with all the bells and whistles only to find out that their cheap monthly rental is a cover for restrictive terms.

The result of these savvy sales deals is that many thousands of Australians are talking themselves into unnecessary debt – a high price to pay for staying in contact with friends.

However, used sensibly, mobile devices can be very cost-effective. It all comes down to making sure you’re aware of all the costs associated, and controlling your habits.

Easier said than done when peer pressure abounds, but there is a smart alternative – choose prepaid. You know how much you’re paying upfront and when you run out of credit, you simply “buy more time”… and you stay in control.

Other suggestions for managing your mobile device include:

• Be sure of what you’re signing up for… read the small print and ask questions;
• Ignore the advertising spin that tempts you to constantly upgrade to the latest model;
• Use a PIN to access your phone. This stops others using it without your consent and is particularly helpful if you lose your phone.

Help is available

If you are in the market for a new mobile device and are bamboozled by the seemingly hundreds of options, there is a plethora of comparison websites available. These compare the phones, plans and telecommunications companies. Some provide calculators – type in your current usage and you receive a comparison of the alternatives available.

If you or your children are looking to buy or upgrade a mobile phone, take the time and do your research first… before you talk to a salesperson. As always, the time spent in the short term will be well worth it in the long run.

For information about cashflow and money management please contact us on 03 9836 8399.

Important:

This provides general information and hasn’t taken your circumstances into account. It’s important to consider your particular circumstances before deciding what’s right for you. Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business, nor our Licensee takes any responsibility for their action or any service they provide.

Many of our best laid plans rarely follow through exactly as we might have hoped. However, it’s another story when it comes to planning for what happens after we’ve left this planet. Our ideas about who will benefit from our estate could potentially change often during our lifetime.

Estate planning ensures that when we die, our assets can be passed promptly and tax-effectively to the people we love or to the charities we support.

Just like life, an estate plan is not static. As life changes, a will should be adjusted to ensure it remains relevant. There are many events that can trigger a need to review an estate plan, for instance:

• Marriage – which revokes the wills made by the spouses when single;
• Divorce – which revokes any gifts made under a will to the ex-spouse;
• Changes in the family such as births and deaths;
• Changes in relationships such as children entering or leaving de-facto arrangements;
• Death of a person who plays a key part in the estate plan such as an executor or trustee.

Here are some examples of when a life changed and the estate plan did not keep up.

Who gets the house?

Joel was a young executive married to Jane, a corporate lawyer. They were both busy and successful in their careers and had no children. They drifted apart and Joel started a new relationship with Sophie. They rented an apartment together and six months later were delighted to discover Sophie was expecting their first child. Joel was finalising an important deal and would “get around to arranging things” as soon as the ink had dried on the contract.

That never happened because he was killed in a car accident driving home from the office. Joel and Jane were still married and as they had owned their house as joint tenants, it passed automatically to her. The trustees of Joel’s super fund split his super between Sophie and Jane. Sophie was left to raise their child on her own without the financial support Joel would have wanted.

Who controls the money?

Trevor and Jennifer had planned their retirement meticulously including an estate plan. Their wills provided for a testamentary trust to be set up when they died. Trevor’s older brother agreed to be the trustee because he knew their family and understood what Trevor and Jennifer wanted. Their intention was that the trust would support their grandchildren through their education and establishment of their lives.

A few years later, Trevor passed away after a brief illness and Jennifer followed shortly afterwards. By this time, Trevor’s brother was in a nursing home suffering dementia and therefore could not fulfil the trustee’s obligations. The family had to approach the courts to appoint a replacement which meant the trust might not have been administered in the way Trevor and Jennifer had earlier wished.

Who supports Alex?

Mandy had brought up three children on a tight budget since divorcing their father. She arranged her finances well and took out insurance to ensure her children would be supported if she died or could not work. Mandy’s will appointed her sister, Penny, as guardian of her children and executor of her estate.

Unfortunately, Penny became seriously ill and Mandy agreed to look after Penny’s son Alex, as well as her own family. When Penny unexpectedly died Alex was left some money from her estate. When Mandy was revising her financial plans to cope with these events, her financial adviser recommended she apply to become Alex’ guardian, increase her insurance cover, appoint a new guardian for the children and include Alex in her will.

These are common scenarios, so if your family situation or ideas change, be sure to ask for professional guidance in updating your estate plan accordingly.

As we welcome 2018 and ponder how fast the last 12 months have come and gone, many of us find ourselves thinking about the coming year and our aspirations for the future.

Let’s face it, we worked hard last year and now is the time to reflect on what we have achieved; where we want to go; and what we need to get there. These times of reflection are critical to our lives whether we run our own business, are employed or retired.

A financial checklist is an excellent tool to see how you are progressing towards your goals and to help identify any specific areas you might need to focus on in the immediate future.

The key issues to consider are:

Home loan review

If you’re still making repayments, is it time to revisit your progress? Are you able to increase your payment amounts or frequency to save interest? With interest rates so low, should you refinance for a better deal or lock in a low fixed rate?

Other debts

Review the amount of personal loans, credit card or other debts currently being paid off. If the total of all loans exceeds 10% of household income, you need to implement a plan to reduce them as a matter of priority. Consolidating debts could help control interest costs but take steps to ensure this doesn’t become an excuse to spend more.

Savings

How much money did you save this past year? Are you spending first and saving what’s left? If your savings aren’t as healthy as you would have hoped by this time of the year, remember to pay yourself first by allocating up to 10% of your income to a regular savings plan.

Insurance

When illness or accidents strike, most people are caught insufficiently protected. It’s important to regularly review your insurance policies to ensure that you and your family have adequate cover. When was the last time you reviewed your insurance cover?

Superannuation

What is the current value of your super? If you don’t know, now is a good time to check. Is it working as hard as it should be? Are the fees reasonable? Are you on track to meeting your retirement needs or should you start making extra contributions?

Your will

Making a will itself is not particularly difficult or even terribly expensive. It is a fact of life that people get married, have children, change relationships, get divorced or establish new interests. Left unaddressed, any of these may result in a will being legally challenged. Estate planning matters such as Powers of Attorney and Medical Directives should be regularly reviewed in addition to your will.

Another year is over – how was it for you? Did you achieve everything you’d hoped?

Are you better or worse off financially than you were this time last year?

With a new year in front of you, what can you do to make the most of every moment?

We’ve put together a guide to get you started.

January to March

Make a start by turning wishes into goals. Some might be long-term like becoming debt-free, saving a home deposit, or retiring in a few years’ time. What can you do this year to support those goals? Write it all down and give it a name – something you can own.

At the same time, don’t forget living for now. Prepare a month-by-month budget that makes room for the fun times – holidays and celebrations – as well as covering the necessities.

Anticipate spikes in your spending. Do your car, home and life insurance premiums all seem to fall due at the same time? Investigate monthly premium payments, or spreading renewal dates across the year.

Use this first quarter to bed down the budgeting habit and track your actual spending against your plan.

At the end of March, do a quick review of your progress so far and make adjustments if necessary.

April to June

It’s time to prepare for the end of financial year (EOFY). By June 30 you will want to have made any intended additional superannuation contributions (make sure you stay within relevant limits) and finalised donations to your favourite charities.

Is there any other tax-deductible expenditure you can bring forward?

June is also the month for EOFY sales – an opportunity to grab some bargains on early Christmas shopping and birthday gift purchases. Don’t forget to include these in your budget.

July to September

If you’re expecting a tax refund for the financial year just finished, lodge your tax return early.

What are you going to do with the windfall? Whether you put it towards one of your goals or blow it on a big night out is up to you. Just make sure it’s part of The Plan.

With your tax return out of the way, the third quarter is a good time to start a bit of financial spring-cleaning. Review your super and savings, insurance and will, loans and credit cards, power of attorney, and overall financial strategy. Is everything up to date?

How’s your super doing? Would salary-sacrificing help?

Can you consolidate debt or refinance at a lower rate?

October to December

Into the final strait and how are you tracking? Are you ‘on plan’?

Maybe the plan you came up with back in January wasn’t realistic. It’s not too late to adjust both your strategy and your expectations.

If things are looking good, it’s important to stay focused. Christmas is looming with its temptations to over-spend.

Once the turkey and plum pudding have settled, it’s time to review the year just gone and to give yourself a pat on the back for what you’ve achieved. Then take a deep breath, check your goals, and update your plan for the coming year.

Invaluable help

Your financial adviser is an expert in working out the financial details of how you can achieve your goals. Just as important is the regular encouragement they can provide along the way.

Ready to start planning?

Give your adviser a call and make a date to nut out your plan for the coming year.

Please contact us on 9836 8399 to discuss.

Australians are living longer. According to the World Health Organization, we enjoy the fourth best life expectancy in the world behind Japan, Switzerland and Singapore.

Great news for Millennials! Your life expectancy has been tabled at 74 for men and 80 for women. Astounding advances in medical technology could mean you will live much longer! With all that living to be done, how on earth will you fund it?

Well there’s always the Bank of Mum and Dad, right?

Doubtful, you see, according to a 2017 joint survey by National Seniors Australia and Challenger, the main issue concerning older people is ensuring they have regular and sufficient income.

This is because they are also living longer and are structuring their affairs to ensure they don’t outlive their savings. Your parents are healthier and more financially savvy than their own parents were and they’re considering their options.

It might seem like an historical event now, but self-funded retirees took an unexpected hit during the Global Financial Crisis (GFC). Ten years on, and investments have still not recovered. A recent report by the SuperGuide announced the top-performing super fund for the last ten years to June 2017 earned an average of 6.1%. That’s not much.

It’s probably not a good idea to rely on an inheritance either. From the survey mentioned above, only 3 percent of respondents planned to leave their savings to their children.

A combination of longer life expectancy and sluggish investment growth has seen many retirees opting for strategies like downsizing their homes to supplement retirement income.

It’s common to live with Mum and Dad to save a healthy home deposit. Sometimes parents even offer financial assistance to give their children a leg-up into their first home. As a result, it’s quite reasonable to assume there’ll be further help later on.

These days, it’s increasingly likely that you’ll find your parents are simply not in the position to give further help, much as they’d like to.

But independence is empowering! It means taking control.

Borrowing from family can be awkward; they may want a say in how you spend the money, or it can leave you feeling you must consult them before making decisions.

Controlling your own destiny might be challenging, but financial self-reliance is rewarding. You just need to know where to start.

Financial advisers consider your income, expenses and financial goals. They work with you to tailor a plan to manage debt and develop a good savings habit to put you on track to getting what you want.

Contribute even the smallest regular amount and you’ll be amazed at what you can achieve.

This is because interest is calculated on your savings balance. Regularly topping-up your balance – even once a month – really boosts your savings as the interest combined with your contributions compound one on top of the other, over and over. It’s like free money!

What could be better? Only the fact that professional advice costs less than you might expect.

Please contact us on 9836 8399  if we can assist you .

Important

Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business, nor our Licensee take any responsibility for any action or any service provided by the author.

Any links have been provided with permission for information purposes only and will take you to external websites, which are not connected to our company in any way. Note: Our company does not endorse and is not responsible for the accuracy of the contents/information contained within the linked site(s) accessible from this page.

Incredibly, Australians are now literally throwing away coins rather than using or saving them. This article highlights this issue and recommends some ideas to reduce wasting money; whether it is as coins or other expensive habits. It provides a simple example of how much a small amount can grow into a substantial figure.