Are you financially literate? Survey results revealed

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Are you financially literate? How would you rate your level of financial literacy?

We recently invited YourLifeChoices members to participate in our Retirement Income and Financial Literacy Survey. In just three weeks, 5064 members responded. We had several aims. One was to understand our members’ degree of financial literacy. Did they manage their own financial affairs? If so, how well and with what degree of comfort and success?

We also sought feedback on key financial fronts including the adequacy of the Age Pension, understanding of products such as health insurance and energy and phone plans, and to gauge which issues were causing most concern.

We learnt a lot about our members.

But first, how to define financial literacy?

Financial literacy is the ability to understand how money works, how someone makes, manages, invests and spends it wisely – or has the nous to employ a financial adviser and/or accountant to perform some of these tasks.

Does that describe you?

The survey indicates that many respondents would say, ‘Yes, it does’.

A massive 86 per cent said they managed their own financial affairs.

Just over 70 per cent said they had managed their finances in the past few years either well (50.4 per cent) or very well (20 per cent).

Sixty-three per cent said they understood their finances and investments well (50.5 per cent) or very well (13 per cent).

More than half (52 per cent) said they were either confident or very confident about their long-term future.

But for some retirees, could self-confidence – and perhaps a distrust of the financial services sector, given the events that prompted the banking royal commission – mean that they are missing out on maximising income and savings? Could it sometimes be a case of not knowing what you don’t know?

The Australian Securities and Investment Commission (ASIC) says: “Advisers mostly add value by helping you sort out your financial goals and working with you to develop a plan to achieve them over time.

“Most importantly, working with an adviser will help you turn thought into action, especially if you tend to put things off.”

Joe Stephan, Director at Stephan Independent Advisory, told YourLifeChoices that clients often remarked they weren’t aware certain strategies existed.

He said financial planners regularly reviewed plans to adjust the impact that outside forces (legislative and market changes) could have on them.

“If you choose to manage your own affairs,” he says, “how much time will you spend reviewing all aspects of your strategies? How accurate, non-conflicted or detailed would your reviews be? How effective and confident will you really be with your own review?”

The counter argument was summed up by James Shipton, the Chair of ASIC: “… financial services is one of the least trusted industries. We need confidence that the people in banking, insurance and funds management will keep their promises, act in our interests and live up to community expectations. We also need to trust that directors, auditors, mortgage brokers and financial planners will do their jobs with competence and honesty.”

The YourLifeChoices survey also canvassed your concerns in other key areas.

Eighty-six per cent of respondents said the Age Pension was either too low or far too low for a ‘reasonable retirement’.

Seventy-two per cent said they had private health cover, but 25 per cent said their health insurance bill was the single biggest challenge to being able to live within their budget. Fifty per cent said health insurance policies were too complicated to understand properly.

Energy costs (18 per cent) were the second biggest challenge, followed by housing (17 per cent).

With the main political parties already jostling ahead of the 2019 Federal Election, a banking inquiry in full swing, downsizing legislation taking effect from 1 July and costs always heading north, we’re here to keep you informed.

Key findings of the Retirement Income and Financial Literacy Survey

Which best describes where you live?
Own your own home outright 68.44%
Own your home with a mortgage 15.86%
Rent 10.96% 

Do you manage your own financial affairs?
Yes 86.41%
No 13.59% 

How well do you think you have managed your financial affairs over the last few years?
Well or very well 70.6%
Poorly or not well 9.04%

How well would you rate your current understanding of finances and investments?
Well or very well 63.37%,
Poorly or not well 9.45% 

The Age Pension entitlements are too complicated to understand properly.
Agree or agree strongly 46.46%
Disagree or disagree strongly 26.7% 

Superannuation is too complicated to understand properly.
Agree or agree strongly 40.52%
Disagree or disagree strongly 32.65%

Do you have private health insurance?
Yes 71.98%
No 27.68%

Health insurance is too complicated to understand properly.
Agree or agree strongly 50.48%
Disagree or disagree strongly 27.47%

What is the single greatest challenge to your ability to live within your income?
Health insurance 25.03%
Energy 18.23%
Housing costs 16.91%
Health bills 10.61% 

What are your preferred strategies to stretch/supplement your retirement income?
Downsize 39%
Annuity 11.11%
Reverse mortgage 4.4% 

Do you or your partner own shares?
Yes 45.81%
No 52.76%

Is it time the family home became part of the assets test for an Age Pension?
Yes 21.34%
No 70.15%

For more details from our financial literacy survey, read the March edition of our Retirement Affordability Index™.

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Written by Janelle Ward


Total Comments: 25
  1. 0

    Not me – I’m just opening the ball here….. in some ways I agree that pension rules, healthcare, and such can be a bit complicated – that’s why I always advocate simple, streamlined, one simple set of rules for all in those areas.

    A cessation of government funding is a start – the removal of these things from the hands of governments is another (the only responsibility and duty of government is to transfer the funding for pension/retirement packages into that separate fund out of their own hands – after returning the ‘futures fund’ to these shore – OR amending that to become the retirement packaging scheme for all, and NOT handled by any of their old mates etc, but by an elected body employing carefully selected advisors).

    To me it is absurd that governments should be subsidising private healthcare out of the same till as the public system that is the main area utilised by that same ‘private’ healthcare system, thus depriving public of a serious proportion of funding for public patients, while achieving little real benefit (if any) for those who pay private.

    • 0

      “A cessation of government funding is a start – the removal of these things from the hands of governments is another”

      No!!! That argument has had disastrous consequences in the past. Private enterprise is about profit-maximization, and that is often inappropriate.

      “To me it is absurd that governments should be subsidising private healthcare out of the same till as the public system”

      Agreed. If people opt for private, it should be totally private and not milk the public system.

    • 0

      Well, Bob, your comment “simple, streamlined, one simple set of rules for all in those areas” would be nice but there are people out there who will try and beat the system which has complicated rules to try and cover every eventuality. May I respectfully suggest that we are alike in that we are both honest and will not try and break the rules. Every Budget, there is a group of lawyers and tax accountants who are paid to seek out the loopholes in the proposed legislation so “simple, streamlined, one simple set of rules for all in those areas” won’t cut it.

    • 0

      Yes – my idealism comes out at times….silly me.

    • 0

      Not talking about privatisation, KAL – talking about publicisation with an elected board etc.

    • 0

      People have a right to choose. When people pay for private health cover they are paying for zero or little wait time, to choose their own doctor, to choose their hospital, etc.
      Wouldn’t it be less milking of the public system to pay some of your way?
      If you are happy with the public system, that is fine too!
      Many wealthy people use the public system and many poorer people pay private health fund fees.
      When I use public like day emergency use I contribute by swiping my private health card as it helps.

    • 0

      How is it milking, Kathleen? We’ve already paid for the health system, and that has provided the basics that many ‘private’ funders rely on to get in.

      Without those public hospitals that are used, the ‘private’ health people would have insufficient avenues to even get in for an op etc.

      I’ve had first class treatment in the public system – albeit with a few small privileges earned – without spending a cent…. and not on any waiting list, either.

      I had a serious dispute with the Department of Veterans Affairs some years ago – they lost my medical records (hello? – nothing ‘secret’ about those.. apart from my association with intelligence networks etc) – my ex (for whom I’m full time carer) is 100% public. I’ve had the best surgeons in short time over and over – leading her to ask why and how I get it while still being ‘on the outer’ from ‘my’ government.

      You need the knowledge to read between the lines re my personal history to understand that. (thank you, OM)…

      My point is that the basic healthcare facilities used by the ‘private’ system, which is heavily subsidised, are already in place in the main due to the public system, based on taxation.

      If you were to take out the cost of subsidies to ‘private’ healthcare – that system would work better for all.

      It is, in reality, only the ego issues of ‘private health’ people that are making this system so hard, and I hear over and over how they are NOT fully funded for their privilege of being ‘first in the line’, to the tune of often thousands of dollars.

      Sounds like a fool’s game to me……. and I have little to no personal stake in that game….

    • 0

      Not my words Trebor! I was referring words already used here.
      No one is milking it. I was making a point.
      If you are a Vet then I assume you are well looked after so you do not have the issue of choosing to pay private health or not.
      I can not afford not to have private cover. It is as important to me as insuring our home. Who would think that was a waste of money?!
      People of course can choose not to insure and take a chance on getting timely medical attention.
      Recently, a young man, barely out of his teens, required what I believe what urgent surgery but was sent home to wait for elective surgery!
      Having the top half of your leg detached from the bottom half is elective?
      No way will we drop our private cover. We just can not afford to do so.

    • 0

      Everyone in this country is covered by the public health system. Private health insurance gives you to option to go private but does not take away your right the public health system.

  2. 0

    I think that if you ask the questions 1 Is superannuation too complicated to understand and 2 are aged pension entitlements too hard to understand again in 6 months time the very same people will give the very same answer if they don’t understand. There is a wealth of information out there, most of it free or several books at around the $40 dollar mark that their should be no excuse really. You have to simply absorb it, follow the rule changes and future predictions of rule changes to enlighten yourself, and put yourself in the best position you can
    Of course you have no control over the big stuff ie external forces, but you can stay up to date by reading and getting out a calculator now and then and put your own situation down on paper and compare with previous year and re calculate for next year. I feel that too many people just give up too easily.

  3. 0

    I am well educated and have a high level of financial expertise but that level doesn’t extend to the intricacies of investing required by the rules of a SMSF. I am prepared to pay the people who are trained and have the expertise in that area.

    • 0

      Managing a self managed super fund is easy if you remember one basic rule. The money in your SMSF is to be kept at arms length and not used for anything else except for the activities of the SMSF. eg If you borrow from it to pay your bills you are in big trouble.

      I managed mine for many years until I found someone to do the paperwork that could do it for about the same as it was costing me with software costs and high audit fees.

  4. 0

    If 72% have health insurance then the OAP must be adequate for the majority of people.

  5. 0

    With both super and the OAP one needs to learn the rules so they can use the rules to play the game their way and not someone else’s way ie Centrelink’s way. Neither as very complicated and even so you only have to learn the rules that suit your own circumstances. You need to be able to fill in those forms so you get the maximum you are entitled to get and not fill them in and hope you get something.

  6. 0

    No thank you, After the STORM episode where we lost just about everything I TRUST NO ONE

    • 0

      I just cant see how people could have got caught with Storm myself. Surely common sense told them it was all too good to be true. I had a look at what they and others had to offer and there was no way I wold of given them a penny of my money invest. Far too risky for me.

      Only thing that comes to mind here is that people were way too greedy and ignored common sense.

  7. 0

    I wish I could AFFORD A FINANCIAL ADVISOR! I use but don’t trust the FIS that work through Centrelink, they used the word “we” to much…hmmmm they are supposed to be independant from Centrelink, aren’t they? But they have access to all you information…hmmmm. And in past years while my husband and I had “medical reviews” at Centrelink by Government employed doctors, there was never ever proof in the room that he/she was qualified? I thought a doctor had to display their credentials by law. Oh dear, forgive my rant….!

    • 0

      They’re employed by Centrelink and their role is to explain which benefits suit you best. Plus any changes to the rules. We went to a Centrelink Seminar and the FIS explained how we could qualify for a part pension. We made an appointment for a detailed look at our finances and he was great. I wish I had the spreadsheet he used. I actually feel we received unbiased advice and he did not try and sell products the way a financial advisor we paid $360 to did. The same expensive advisor also told us we didn’t qualify for any OAP.

  8. 0

    Why financial advisors? Haven’t you been watching the royal commission into banking lately. No way would i just any of their advice.

  9. 0

    That we’ll realize some good and a marked change of practices past within the Financial Services Industry is to be expected – just as surely as finding a rat in a sewer.
    industry bilge rats that haven’t already jumped ship will serve time appearing contrite and voluntarily offer to eat humble pie, but once the spotlight is turned off they’ll quickly reestablish their rat runs and reline their nests.
    Massive bank profit’s are common public knowledge, posted regularly by the media. Banks are businesses that cannot fail due to government guarantees.

    Banks therefore; as a sign of faith and goodwill – given that all social benefits are paid into accounts held by them – should be required to provide either a no, or minimum charge advisory service that is fully conversant with all aspects of government services: prioritizing (but not restricted to) specifically Dept Human Services.
    A service of this calibre exists already within said govt dept and is staffed by professional and caring people who talk clients through a step by step process and provide all relevant information.
    Were both govt and financial institutions to implement a measure of this nature would help to re-establish some (varying) degree of faith in each of them.

    As both parties rely directly/indirectly on public support then surely some small show of reciprocal service by the banks isn’t asking too much… is it ?

  10. 0

    For you to live longer , someone will have to pay . That should be clear to all . Health insurance increase because we are living longer .



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