Friday, May 15, 2009

Lifestyle Newsletter 15 May 2009


My friend CH retired nine years ago, after a career as a solicitor.

After two years he had become bored, but had started to go to computer swap meets, held on Sundays in a local hall, really only to fill in the day. He had really no knowledge of computers before that (but he did have a logical mind).

It gradually dawned on him that every website had to be “hosted” and realised it was a fairly easy to establish one himself – for his own hobby websites and for a few friends.

Not needing an income, he priced his services very low, and selected a name that would reflect this pricing, and found he was attracting clients who needed to host multiple sites.

Now – after only seven years – he has 7,000 clients but because everything is automated, it’s still a one person “hobby”.

But you do the maths. If each client pays him say $100 pa, that’s a lot of revenue for a one person hobby with little overheads.

His URL is


The pension age in Australia is being progressively lifted to 67.

While no detailed rationale is widely available, an annual report published by the US government in May shows what could happen there.

Because of the increasing cost of medical procedures and an aging population, it has warned that the American health insurance plan for the elderly (known as Medicare) will be insolvent by 2017 - two years earlier than predicted in 2008.

A separate fund for Social Security, their government’s pension plan, will be exhausted by 2037 - four years earlier than reported last year.

The demographics in Australia are broadly similar. Which is why we all need to tuck something extra aside come close to 20-25 years of dignified retirement.

Let me know if I can help you explore your options. My email is


AARP has just released a retirement planning video “Mission Retirement” to show Americans the importance of saving for the future.

Just about everyone’s mission is to retire comfortably some day. It isn’t impossible, but it will take work.

According to AARP, there are big holes in the security net of government welfare, therefore, it’s everyone’s responsibility to start early. In fact, the video mentions that to have an adequate nest egg you need to save 15% of your income each year for 40 years!

Go to


Retrenchment, a health problem, or the illness of a relative can derail
retirement plans in an instant.

This new survey of 1,200 adults between ages 40 and 79 found that the number of seniors who need or want to work during the traditional retirement years is rapidly growing, AARP Financial Inc. and Boston Research Group found.

About 433,000 unemployed Americans age 65 and older were actively seeking employment in February, more than twice as many as in November 2007, just before the recession began.

“This is a daunting economy for older people. A lot of older people are coming to see us that are scared or bewildered,” says Cynthia Metzler, president and CEO of Experience Works, a nonprofit organization that helps older people retrain for new jobs. “We have people who are in their 80s who are taking on new jobs.”

If you want me to help you explore your options – now – to enjoy your eventual retirement, contact me Bernard Kelly anytime. My email is


The formula for a financially successful retirement used to be straightforward: Work for decades for one employer and then live happily ever after on the pension and whatever personal savings you were able to amass.

So the amount of savings was important but not critical.

Today, with superannuation vanishing and an economic crisis withering savings, it’s increasingly up to individuals to take charge of their finances to fund retirements that can stretch for up to 30 years because of longer lifespans.

Is your retirement IQ up to the challenge?

Take the test and find out. (Answers at bottom):

1. What percentage of your savings can you withdraw annually in retirement without risk of running out of money?
(a) 3 percent (b) 4 percent (c) 7 percent (d) 10 percent

2. Approximately what percentage of pre-retirement income is generally needed to maintain a person’s current lifestyle in retirement?
(a) 45 to 60 percent (b) 60 to 75 percent (c) 75 to 99 percent (d) 100 percent or more

3. Working full-time for three years past one’s anticipated retirement date and continuing to save 15 percent of salary could raise annual retirement income by how much?
(a) 7 percent (b) 12 percent (c) 17 percent (d) 22 percent

4. At what age will most of today’s workers be eligible for full pension retirement benefits?
(a) 62 or 63 (b) 64 or 65 (c) 66 or 67 (d) 70

5. What is the amount in a superannuation fund for the typical person aged 60 retiring today
(a) $87,000 (b) $147,000 (c) $247,000

6. The number of workers age 65 and over is expected to grow by how much over the next decade?
(a) More than 20 percent (b) More than 40 percent (c) More than 60 percent (d) More than 80 percent

7. What percent of homeowners age 50 to 65 plan to use home equity to finance ordinary living expenses in retirement?
(a) 6 percent (b) 10 percent (c) 20 percent (d) 50 percent

8. A job retrenchment in one’s 50s or 60s typically reduces total household wealth by what percent?
(a) 11 percent for married couples and 23 percent for single people (b) 16 percent for married couples and 28 percent for single people (c) 21 percent for married couples and 33 percent for single people (d) 31 percent for married couples and 43 percent for single people
1. (b)
2. probably (c) as it’s best to plan for the high side since health and medical costs are impossible to predict.
3. (d)
4. (b) if you retire today but it will soon be (c)
5. (a)
6. (d)
7. (a)
8. (c)

Acknowledgements: 6 April 2009

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