30th Nov 2017

Retirees worried they’ll run out of time before money is spent

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Retirees worried they’ll run out of time before money is spent
Leon Della Bosca

Retirees are panicking and spending big because they fear they will run out of time before they run out of money, say Australian money experts.

Buying luxury river cruises seem to be the big-ticket item as retirees feeling the effects of ageing splurge on once-in-a-lifetime experiences.

“They get addicted to cruising,” said financial planner Patrick Canion.

This “addiction” is threatening the life savings of many retirees. And their children are worried that their inheritance is being spent.



“There’s an element of spending the inheritance – kids in their 40s often might be doing it pretty tough with mortgages and school fees, when parents are living it up,” said HLB Mann Judd Sydney’s Head of Wealth Management, Michael Hutton.

“Sometimes their children are giving them a hard time about their spending because the children already think of the money as theirs.”

He went on to say that this type of spending will leave many without enough money for their later years, which are typically more expensive.

“Healthcare costs can rise dramatically after the age of 70,” said Mr Hutton.

However, not all kids are playing “Scrooge” to their parents’ retirement spending, with social researcher Mark McCrindle saying that while some adult children are expecting an inheritance, many believe their parents have earned the right to spend their money as they see fit.

Some children were just concerned about their parents’ welfare in later life, knowing that health-care costs can be quite high.

“Sometimes the kids don’t want to be in a position where they are torn between mum and dad having less than ideal care or them having to find the money to fill the gap,” said Mr Canion.

Are you worried that you’re spending too much? Will you leave your kids a financial legacy? Do you feel you’ve earned the right to spend your money however you like?

Related articles:
New inheritance laws: rush to write your will
Are you spending too much?
How your spending will change





COMMENTS

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Rae
4th Dec 2017
10:00am
I imagine the 2015 budget changes encourage spending down to the point a part pension or even full pension cuts in together with the concessions that make medical affordable once again.

It would be nice to gift the money to kids but the rules stop that and the decisions made before 2015 no longer work for hundreds of thousands of retirees.

Many a frugal saver has just given up now. It has nothing to do with running out of time and everything to do with feeling ripped off and betrayed.

The falling cash flows in Superannuation tell this story rather well.

Wait until they start pulling those term deposits. This was what you wanted wasn't it?
Old Geezer
8th Dec 2017
1:15pm
You are only talking about a small minority here as fully self funded retirees and those on the full OAP would not been affected by these changes. I haven't heard of anyone that has given up saving.
Old Geezer
4th Dec 2017
10:34am
As you get older your expenses actually fall as your bucket list is full and there is nothing less to spend it on. Medicare takes care of your medical expenses. Many in nursing homes actually save money as there is simply nothing to spend it on.
Rainey
5th Dec 2017
8:35am
You are shallow and short-sighted, OG! For some, expenses fall. For those with health problems or care needs, and/or aging homes and furnishings, costs rise sharply. Stop thinking EVERYTHING in this world is about you.
Nan Norma
4th Dec 2017
10:42am
The budget caused the change. Having money in the bank is now cost affective. With Centrelink taking 3.25% of your deemed account that pays 1.8% and $3 pft off your pension for every $1000 asset, pensioners are going backwards. Never before has it been cheaper to spend than save.Whoever thought this one up was crazy.
Old Geezer
4th Dec 2017
10:57am
Buy the banks instead and you will get nearly 10% on your money plus capital growth.
Rae
4th Dec 2017
12:30pm
You'd need to buy a lot of shares to make yo for losing close to $500 a week and pension concessions OG.

Like you I'm self funded and the whole shemmozle is discrimination pure and simple.

The effects of that 2015 budget are just beginning I suspect.
Old Geezer
4th Dec 2017
12:40pm
$800,000 invested at 10% will give you over $1500 a week so it doesn't need much to get $500 a week.
Baysider
4th Dec 2017
9:41pm
Where are you safely going to get 10% old geezer??
Bonny
5th Dec 2017
6:58am
It is certainly not one of the most risky investments many think is safe. Money in the bank is very risky as it rarely makes money after inflation and tax. Own the banks instead and get approx 10% income pa.
Rainey
5th Dec 2017
8:09am
With bank share values crashing, new taxes on banks, screams about them making too much money and an inquiry into their conduct, and company tax reductions killing franking credits, how long is the return likely to continue? 10% return is a wild dream for most Australians, OG. 5% is the government-declared average - and that's from people who research and deal in FACT, not from bigoted old fools who make judgements based on their own situation and a few caravanners they see going north in winter. Many retirees are struggling to get even 5%. A significant number are receiving far less income than they would if they had less than half the savings and drew a pension.

Nan Norma is right. The government made a very stupid decision that has made it better to spend than to save, and it will come back to bite.
Old Geezer
5th Dec 2017
12:33pm
Rainey now is the time to buy the banks and reap the rewards. They have had a small pullback that's all. If you bought the CBA when it floated at $5.40 today it is paying more than that in dividends. Not bad for your idea of a bad investment at all. Note that $5.40 left in the bank would not even be worth $5.40 I today's money.
Rainey
5th Dec 2017
12:48pm
Now you are giving financial advice. That's actually illegal, OG.
Old Geezer
5th Dec 2017
1:41pm
No that's not financial advice just common sense Rainey.
roy
5th Dec 2017
9:03pm
10% is nothing, I'm just about to send a load of money to Nigeria because they can pay me 20%.
Bonny
5th Dec 2017
10:59pm
20% I thought they had mega millions for you to collect. I was talking to a lady who works with people who get themselves caught up in these scams. She said they have invested so much in them she can't get through to them that they are scams. Many promise no more and then go home and send the next instalment the scamsters ask for.
Rainey
6th Dec 2017
9:52am
It's financial advice, OG. And it's illegal. It's NOT common sense to predict the future of bank shares.
Old Geezer
6th Dec 2017
10:49am
Common sense says they have a greater change of going up than down. It's not advice as no one is paying me for it. If I get no financial benefit it is not advice.
ex PS
8th Dec 2017
12:25pm
Just stay away from the Nigerian Princess who wants me to marry her so that she can bring herself and her fortune to Australia. I have her airfare and living expenses ready to go, all I have to do now is send her people all of my banking details and we are good to go.
Old Geezer
8th Dec 2017
1:17pm
Forget about Nigerian Princesses as there are more than enough here in Aussie who think they are princesses looking for their prince to fleece him of all his money for small favours.
Happy cyclist
4th Dec 2017
11:25am
If your kids begrudge you spending your money on a treat or two in your retirement then you have raised selfish, self-centred kids. Often those same kids have bought a house which far exceeds what they needed or could afford, are probably running multiple vehicles, probably bought new at that etc etc. they want it all. If you raised your children to be like that then maybe you should stay home and hand it all over.
heyyybob
4th Dec 2017
11:59am
Absolutely ;)
Rae
4th Dec 2017
12:32pm
Yep. Can anyone explain the young people driving huge SUVs and utes with enormous bull bars in urban centres? Must be the 1% finance has sucked a heap of people in.
ex PS
5th Dec 2017
9:38am
There is no such thing as 1% finance, the interest cost will be there it will just be disguised as something else.
Bonny
6th Dec 2017
6:28pm
There is 0% finance at a dealers on new cars. However you have to pay the listed price. Now we all know that nobody other than those who want 0% finance pay these prices. Most will take $5000 or more off for a decent car. So that 0% finance can be very expensive.
Tib
4th Dec 2017
12:07pm
After Dad died my mother went to European again and again till there was no money left. I guess she felt she deserved it. It didn't bother me it's her money but she had trouble paying medical bills after that and has been in financial trouble ever since. It didn't seem worth it to me. Its very common for this to happen, I guess dad took care of the finances and she couldn't cope on her own.
Old Geezer
4th Dec 2017
12:11pm
Many women go on spending sprees after their husbands die. Why shouldn't they after being denied all their married life?
Rae
4th Dec 2017
12:37pm
It's the inability to see consequences I guess and people do odd things in times of grief.

One of the biggest problems I see in marriages is the expectations people place on spousal roles and responsibilities.

Humans really do have odd ideas at times about how others should behave and can be very self destructive.
Gammer
4th Dec 2017
1:35pm
My husband died nearly 13 years ago and I’ve not had a holiday in all that time. I just don’t want to go anywhere without him.... Been retired for 5 years now and happily mooch around at home, volunteer at a residential facility, a bit of grandchild care when needed. I’d rather help the young ones take a holiday than go anywhere myself.
Tib
4th Dec 2017
3:03pm
OG I have no problem with her spending the money though I don't think she missed out when dad was alive. But if she hadn't been so keen on having a good time maybe she wouldn't have to suffer so much now. A little common sense would have helped.
Old Geezer
4th Dec 2017
4:20pm
When my mother was in a nursing home she used to get catalogues sent to her. She would then order all these clothes of the wrong size and then I would have to send them all back. Try as we might she still managed to get hold of these catalogues and phone her orders through when no one was around. She couldn't hear very well on the phone so she said yes to all sorts of cold callers and I never knew what was going to arrive next. Got phone call from the nursing home that she had ordered a test drive in a BMW and they had taken her for a drive. She didn't even have a licence.
Nan Norma
4th Dec 2017
4:45pm
Well Old Geezer, for once I agree with you 100%.
Tib
4th Dec 2017
6:59pm
OG sounds like she was struggling, my mother was OK intellectually but never learned to control money" .Dad just gave her everything, so she never grew up.
Tib
4th Dec 2017
9:59pm
Nan Norma what OG statement do you agree with.
JAID
6th Dec 2017
12:00pm
Pleased to say that my 90+ mother is quite parsimonious in regard to world tripping. She does spend too much on birthday and christmas presents for we and her grand and great grandchildren. My father was similar. Never wanted to see waste. I wish each thought a little more about themselves for they know/knew that their children have had opportunity and can find what they need themselves.
KB
4th Dec 2017
12:45pm
Expenses can still be quite high whether you end up in a nursing home or still live at home. There are medical and cost of paying for in home care. Along with all the bills
Old Geezer
4th Dec 2017
12:47pm
That is what nursing homes want you to believe. Most people I know in nursing homes actually save money.
Rainey
5th Dec 2017
8:11am
You only know a handful of rich people, OG.

Most people in nursing homes struggle, with very little left after paying the very high fees these places charge. And many face very high costs in retirement due to medical and care needs.
Rainey
5th Dec 2017
8:13am
Also, maintenance costs rise in retirement as people are less able to do things themselves and homes and appliances age. Add skyrocketing rates, electricity costs, water bills, food costs, etc. and it can be very hard to get by in later life. But the rich and privileged will always BLAME THE VICTIM of their cruel policies. That's what the rich and privileged do, because it's the only way they can live with their conscience.
Old Geezer
5th Dec 2017
1:41pm
You really have no idea do you Rainey?
roy
5th Dec 2017
8:43pm
Rich and privileged, you mean like Shifty Shorten do you Rainey and he really is a sycophant as well?
Rainey
6th Dec 2017
9:51am
Yes, Roy. Like Shifty Shorten, and Mal Turncoat, and all their stinking buddies. And the greedy Gina and all her friends. And many more on a long list of shifty, selfish, self-serving people who are destroying this country.

OG, YOU have no idea. You are so privileged that you don't understand what privilege is, and you certainly can't comprehend hardship.
Old Geezer
6th Dec 2017
10:45am
I certainly do understand hardship Rainey. I now have less spending money as I no longer get a credit for my electricity but have to pay a small bill now. That's hardship to the extreme.
Rainey
7th Dec 2017
7:48am
There you go, OG. Proof positive that you don't understand hardship. Your sarcasm isn't clever. It just further exposes your very ugly character.
Old Geezer
8th Dec 2017
1:18pm
Gee Rainey I gave myself a pat on the bad for that one. Life must be very dull for you indeed.
Vonveevee
4th Dec 2017
2:43pm
I was a single Mum and had to struggle to bring my kids up while working full time all my life. The last time I had a holiday was 20 years ago. I am in my 70's and still working full time as I cant afford to retire. I have been saving madly and now I think I deserve a European holiday and I will have to dip into my tiny super to help pay for it. My kids understand all this and know there will be no inheritance from me.
Rae
4th Dec 2017
6:12pm
Good on you. you deserve it.
Tib
4th Dec 2017
6:48pm
Fair enough but just don't get yourself into financial trouble. By the way usually if your taking a tour all the side trips are extra so budget for it.
ex PS
5th Dec 2017
9:53am
Good for you Von, the first time we went to Europe we tried many different types of travel. We did coach tours, car travel, trains and River Cruises.
For sheer convenience and value for money we found the river cruises to be the best ( For our tastes), you get on board you unpack and when the tour is finished you pack up and go home or onto the next phase of the trip. We also found that the majority of side trips on the cruise were included with just a couple of exceptions.
Whatever you choose I hope you have a trip to remember.
Sundays
4th Dec 2017
3:52pm
We went without when we were young, so have no qualms about spending our money now on the holidays we never had. We have helped the kids at various times, but really why would you worry about their mortgages and school fees. The dilemma however, is knowing how much to spend and how much to keep for old age. I don’t want to be old with lots of regrets. We tell the kids they can have the house when we go and hope that will be the case.
Tib
4th Dec 2017
6:50pm
Having all the nice trips and things is great but not having enough money for necessities is a nightmare. Keep that in mind.
ex PS
5th Dec 2017
9:43am
We have no intention of being the richest corpse in the graveyard, the reason we worked so hard was so that we could enjoy our later years, and as long as we are capable of doing so we will.
I figure that if you own your own house and have no debt, you should be able to manage on a Pension. And if I get to a stage that i can't, I will take that as a sign that it is time to stop being a burden on this planet.
Raphael
4th Dec 2017
8:57pm
Do whatever you feel like doing and have no regrets at the end of it
ex PS
5th Dec 2017
9:36am
Bugger spending the kids inheritance, we are going to blow ours to stop the government and their banking buddies getting their filthy claws on it.
Rae
5th Dec 2017
10:48am
They will need to watch that carefully with this RC into Industry Funds.

There is no trust left.

The cashflows are not looking good for banks or super funds.

Those last few changes by Howard and then Hockey are going to cause huge damage before it's over.

Possibly the plan was to break the Superannuation system.

The fascist far right are crazy at the best of times and have had a pretty good run over the past decade or so.
Rainey
6th Dec 2017
9:54am
Local council is helping retirees in our area. 40% increase in rates in just 3 years.
Old Geezer
6th Dec 2017
10:43am
Agree Rainey as OAPs don't pay rates. The rest have to pay 60% extra to pay for the OAPs share.
JAID
6th Dec 2017
12:15pm
It goes on just about everywhere Rainey. They have a local monopoly; a unique power to adjust price without restraint or competition. they forget who owns them, they pay wages much higher for work done than any local businesses can afford to pay, they seldom bother to attempt to maximise the quality and quantity of their employees work (because it doesn't matter you can just go out, employ extras and charge higher rates, they even give employees free admission to Council owned facilities while their owners pay handsomely. If they are large (and inefficient, goes without saying) they clamour for amalgamation so they can control the margin not exhorted by smaller bodies who are usually more responsive to ratepayers capability to pay. They respond to the whimperings of those who feel they don't have enough often duplicating resources and finally, extending the romp, governments think they can lumber them with any manor of responsibility passing on costs. Here rates have risen about 300% in the time wages have risen less than 30%. Here, Council staffing has risen enormously while the ability to contact and talk turkey has diminished enormously.

Costs, rules, regulations, unnecessary interdiction and general fiddling around all rise year on year. is the only hope a serious recession?
Rainey
7th Dec 2017
7:46am
More dumb ill-informed crap from OG! Of course OAP's pay rates. They get a concession. In some places it's up to 20% - rarely more than that! In our area, it saves barely 7.5%.

Yes, Jaid. They are a law unto themselves and they don't give a hoot about efficiency. I had dealings with them a few years ago over a town planning error and their very highly-paid chief engineer proved to be a complete idiot. He blew $1 million of ratepayer money hiring a hot-shot Sydney lawyer to defend Council in a dispute, only to have the lawyer forced to quit and tell Council no lawyer could represent them under law because they were asking the lawyer to lie in court in order to defraud a ratepayer!!!! When I pointed out to the Mayor what was going on the Mayor told me to be aware he had access to hundreds of thousands of dollars of ratepayer money to launch court appeals until his opponent gave up trying to get justice, so it didn't really matter who was in the right in the dispute. Council would win because it had deeper pockets. And the engineer was promoted!!!
JAID
7th Dec 2017
2:10pm
A largely miserable state of affairs Rainey, saved only by a lawyer with integrity...even if he/she did end up with a cool million for their tribulation.
Rainey
8th Dec 2017
12:06pm
No, Jaid, sadly the lawyer had no integrity. He ran scared when threatened with a report to his professional body because he knew there was strong evidence of him acting dishonestly as well as supporting dishonesty by his client. Dumb fool put it in writing that he'd been to personally inspect the problem area and quoted time and date, and three independent witnesses swore Affidavits that he drove by but did not stop and leave his vehicle. Plus, he quoted measurements that he claimed he took and the measurements were a full 1.2 metres out.
Old Geezer
8th Dec 2017
1:13pm
If they get so little why do people want that pensioner concession card so badly then? Is it just a badge of honour?


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