Why you still need a planner

In the wake of recent revelations at the financial services royal commission, it could be logical to assume most planners do not have their clients’ best interests at heart. You might, therefore, decide not to work with a financial professional to maximise retirement income.

But there are really strong reasons why this is an unwise response to the scandals that have been unearthed. Yes, it is true that thousands upon thousands of Australians have been adversely affected by poor advice, and thousands more have paid for services never delivered.

But the headlines about the bad apples are not sufficient reason to conclude that all planners are corrupt, or that seeking financial advice is a bad idea. On the contrary, the experience for our members tells us the exact opposite:

  • Sixty per cent of YourLifeChoices members have visited a financial professional to discuss or plan their retirement, according to the most recent YourLifeChoices Insights research (6665 responses to 45 questions)
  • Of those who had seen an adviser, 34 per cent found the visit “very helpful” and 37 per cent found it “helpful”. This 71 per cent positive result underscores the value of financial planning both in and for retirement.

Below are five other key reasons to visit a planner. But before you go, to ensure you are picking the best person for your needs, budget and long-term goals, be sure to read our article, Get tough with your planner. Often, doing your homework will pay rich dividends, and since you are discussing your long-term retirement income, this is one such situation.

Why you could benefit from financial planning advice:

  1. You don’t know what you don’t know.
  2. The less you have, the more valuable advice can be.
  3. Are you an expert in the big three: tax, superannuation and Centrelink rules?
  4. Are you sure you are maximising your Age Pension entitlement?
  5. Are you one of the 81 per cent who are concerned they will outlive their money?

You don’t know what you don’t know.

Seriously. We often hear retirees declare that they are very financially literate and so are the best people to fully manage their own financial affairs. And in a small number of cases, this is no doubt true. But the fact is, we really don’t know what we don’t know. So it is highly likely a change in entitlements, government legislation, superannuation reporting requirements, taxation levels and a wide range of investment returns may slip by, unnoticed, by an individual. Meanwhile, a financial professional will be at his or her computer every day reading alerts about what has changed or is set to change. Financial services and government regulation are dynamic, not static, areas of activity and only ongoing study will keep you fully informed in order to make decisions about your retirement income.

The less you have, the more valuable advice can be.
We often hear pre-retirees and retirees say, ‘Oh I don’t have enough to worry about’. But let’s flip that argument on its head. Let’s assume you are a single woman who is planning to retire and you have the median super balance for your gender at retirement – $36,000.

You may well believe that is such a small amount, you will not benefit from advice as you will qualify for an Age Pension. But there is a case to be made that it is worth at least an initial discussion with a planner to see if there are ways of making more of your small nest egg.

t may be that the timing of your retirement will affect the level of your pension, and the way you draw down or invest this nest egg might mean an increase of three or four or five per cent. These numbers matter when you are on a limited income. And it is worth remembering that although Centrelink Financial Information Services Officers are not able to give financial advice, they can help you get your head around the myriad rules governing retirement income. 

Are you an expert in the big three: tax, superannuation and Centrelink rules?
You may be strong in one or two aspects of retirement income rules and regulations, but few people are fully informed across all three – and throw in property law and estate planning and it is highly likely you need assistance in one or more of these subjects. So why risk the overall health of your hard-earned dollars by assuming you know all the strategies to maximise your income for the next 20 or 30 years?

And even if you consider yourself wealthy, surely it’s better to make the most of what you have, so you can continue to pay for private health insurance, travel, treat the grandkids and cover later aged care costs?

Are you maximising your Age Pension entitlement?
The Centrelink application form, when printed, runs to 25 pages, with little assistance to understand the information you are being asked to provide. Many people apply online and literally cross their fingers that they have reported accurately. Others wait in a queue at a Centrelink office. Still others join the long line waiting on the phone. Given the complexity of assets and income limits, it is definitely worth your while to fully understand all implications before your fill in your application. A qualified professional, whether accountant or adviser, is often your best friend at this time. 

Are you one of the 81 per cent who are concerned they will outlive their money?
|YourLifeChoices’ financial literacy survey revealed two sorry statistics:

  • 56 per cent of respondents occasionally or frequently run out of money before Age Pension payday
  • 81 per cent are concerned they will outlive their savings.

If you are one of the people worried your savings might not last, this is likely to be causing financial stress. Life in retirement should not be spoilt by ongoing financial concerns, so the first and best step is to fully understand all your options and whether you are properly maximising your assets, be they cash, superannuation, private savings or super.

Most of us feel better when we know the facts of a situation, and when it comes to money, this is almost always true.

What about you? Do you go it alone when it comes to retirement income planning or do you agree that a professional is needed to make the most of your savings?

Written by Kaye Fallick

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