Thursday, June 12, 2008

Lifestyle Newsletter 15 June 2008

Our goal - helping you from zero investment properties to ten - for your retirement!


A recent survey by Lincoln Financial Group in the United States sought to capture a thorough understanding of how boomers perceive long-term care and long-term care insurance.

It uncovered a number of very interesting and thought-provoking findings. Most significant, however, is an “overconfidence” effect plaguing the baby boom generation.

For example, while more than 80% of boomers surveyed say they know that long-term care costs could significantly reduce their retirement income and assets, 73% can’t believe it will happen to them and are completely ignoring what they know will happen to everybody else.
If you personally are not “over confident that you can afford 20-25 years of dignified retirement” and plan to take action, contact me anytime: I’m Bernard Kelly at


I remember when Richard Nixon was elected President of the United States, a friend said to me “President Nixon – it’s difficult to pronounce, but we’ll get used to it”. As we did.
Now here’s a new word which, at the moment, is difficult to pronounce: 100th.

We’ll get used to it – as already you can buy birthday cards for someone you know who is having their 100th birthday.

If the birthday card people can make money out of these cards, they obviously see there’s a market emerging. They obviously expect that many of us will get there.

But if you don’t think you’ll have enough for 20-25 years of a dignified retirement, contact me anytime – Bernard Kelly mobile 0414 778 518 skype bernard.kelly1944 or just hit the reply email button.


Peter Cundell, the host of Gardening Australia on ABCTV, has announced that he will retire at the conclusion of this year’s series.

He is 80.

More and more of us will not be retiring at age 65. One reason is that we can’t afford to. Another reason is “why should I? I’m still young”.

If you want me to help you explore your options, feel free to contact me anytime.


Harrison Ford is 65 years old and still starring as Indiana Jones. Clint Eastwood is 78, and about to do another Dirty Harry movie.

Helen Mirren is 63, Faye Dunaway is 63 and Judy Dench is 73. They each continue to accumulate films and rewards.

Society continues to age, and Hollywood is moving with the times.
The point is, of course, that we will all live longer than our parents. For them, the expectation was to retire at 60 or 65 and die ten years later. The pension was adequate for their brief retirement.
But today, we have to self-fund our renaissance years.
If you feel that you won’t have enough for 20-25 years of an active, dignified retirement, phone me Bernard Kelly anytime on 0414 778 518.


Human beings, it is said, are distinguished from our animal cousins (no slur against the in-laws intended) by our ability to plan ahead. While that may be true, it's difficult enough for most of us to plan anything just six months ahead, like a summer holiday. So how on earth are we supposed to deal with something in the distant future -- like retirement?
In an effort to kick-start your retirement plans, we'll take a cue from the animal kingdom's "fight or flight" mentality and scare you into action: If you don't do something right now to assure your retirement, you may end up living in a caravan park, on the pension.

So to avoid that outcome, I offer my “Five Retirement Must-Knows”. They are pretty simple:

1. This isn't your parents' retirement.

Think back about 30 years. Our parents relied on the pension and savings. Retirement didn't last too long because life expectancy didn't go far beyond the age of 70. And the average male didn't even make it that far.

Your retirement will be very different. You will live longer, and you'll have a more active (i.e. expensive) lifestyle. Your parents may have survived on 70% of their pre-retirement income (perhaps you've heard this common rule of thumb?). But that's probably not enough for you.

2. No one's protecting your back. Sorry 'bout that.

If you’re basing your retirement on the pension, super and savings, think again.

The Pension: It’s just over $20,000 for a couple.

Now that’s under the Poverty Line. Imagine that you are fortunate and have your house paid off, but given the cost of living and increasing council rates and the need to keep paying for private medical insurance, retirees simply can’t survive on the pension.

But don't expect that to change. As the baby boomers retire and put a strain on government welfare, benefits will have to be cut.

Superannuation: When you think about how they are marketing superannuation, it’s all about the immediate tax savings. They never say “it will make you wealthy” or “you’ll have enough” or “it’s inflation protected”.

Superannuation is forced savings, but the major saving is in Canberra - the government won’t need to pay us all the pension. (They know they can’t afford to). So don’t rely on your super.

Go on. Do the numbers. In what year into your retirement will your super run out? And what will be the purchasing power of your entitlements in 10,15 and 20 years’ time?

Savings: No-one actually saves. We only save 5 cents in every $100 that we earn. However if we turn to investing, the good news is that this one decision -- to invest or not to invest -- will have the biggest impact on the quality of your post-work life. As we are good at paying our bills, we will keep investing automatically - once we start.

3. It's never too early -- or too late -- to start investing

Here are the facts about starting early

Let’s take four investors: A who is aged 25, B aged 35, C aged 45, D aged 55.

Let’s assume that each of them invested $5,000 per year for ten years, but after that never added another dollar to their investment.

As you know, three things -- that are completely under your control -- can have a sizable impact on your retirement nestegg: 1) how much you invest, 2) the rate of return you earn on your investments, and 3) the number of years those investments have to grow. So no matter your age, the sooner you start, the more money -- and options -- you'll have.

Even though each person invested the same amount of money, they have significantly different amounts at retirement. For example, Investor A began investing $5,000 a year when she was 25 years old and stopped when she was 35. For the next 30 years, she didn't contribute any more money and she didn't withdraw any money. She just left the account alone.
Investor B, on the other hand, waited until he was 35 years old and contributed $5,000 a year until he was 45. As you can see, that difference of a decade is substantial. At retirement,

Investor A has $420,000 more than Investor B -- over twice as much. In fact, each investor in the chart above has more than twice as much as the person who started 10 years later (except for Investor D, of course, but she's a lot better off starting at age 55 than someone who waited until age 65).

4. There's really only one place your retirement savings should go.

While we've got our calculators out, let's take a look at what an investment can do when you leverage the bank’s money into residential property investment.

When the tenant pays half of your costs, and the taxman paying between 25-33%, you’re riding the gravy train.

Think now about your retirement. When will it occur -- 20 years from now, five years, tomorrow? If you're close to it, or are already retired, how long must the money last? Now think about your retirement investments. Is the bulk of your money positioned for long-term growth (i.e. property) or short-term stability and income (i.e. shares, super and cash)? The mix you have in these instruments is something you must decide for yourself.

5. When Canberra gives you an inch, take a mile.

Our last revelation about planning for retirement is, quite simply, this: Be greedy.
The tax legislation lays out what the maximum the government can take from you – provided that you agree to let your money go to Canberra in the first place.

Remember, it’s your money, and it’s quite legal to spend it on your investment properties. The taxman doesn’t take your money – in reality, you give it to him.

So be greedy, and keep it for yourself.

If you feel that I can help you explore your options, contact me: Bernard Kelly mobile 0414 778 518 cell 61 414 778 518 skype: bernard.kelly1944

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