Monday, June 15, 2009


Business Week (online version) published an article 8 June 2009 that reflects the growing problem for governments worldwide – can the US government afford to keep paying its promises for the pension and medicare?

The article reports that the underlying problem is that today there are five workers for every retiree in the USA; in 20 years, there will only be three.

Which explains in part why the Australian government is to increase the pension age to 67, and to increase our superannuation vesting age to something much the same,

If you would like me to help you explore your options to avoid any reliance on government welfare, contact me – Bernard Kelly – anytime. My email is


69% of Australians support an increase in the superannuation guarantee from 9 per cent to 15 per cent.

Of those, 49% are prepared to contribute half of the extra themselves if employers do the same.

The findings, in a survey conducted by consultancy firm Mercer, reveal people are acutely aware the current level of superannuation saving will not ensure a comfortable retirement.

David Anderson, Mercer's Asia Pacific head of outsourcing, said the survey showed a "strong recognition among the working middle class that 9 per cent super contributions won't be enough to allow them to live comfortably in retirement".

"It seems most people, including the (superannuation) industry and the Government, accept that a 9 per cent contribution rate is not enough to provide an adequate and sustainable retirement income," he said.

Source “The Australian” 27 May 2009

Commentary: If you would like me to help you explore your options for 20-25 years of dignified retirement, contact me – Bernard Kelly – anytime. My email is


Financial Planners can use just paper and pencil and show that if your superannuation returned 7 percent a year every year, you could withdraw 4 percent the first year, increase withdrawals by 3 percent every year and still end up with more than double your original principal after 30 years.

However the problem with that approach is that it ignores the impact of inflation, and the consequent decline in purchasing power of what you withdraw, and the value of what you’ll have after 30 years.

Property investing doesn’t face that problem of the erosion in purchasing power because the rental yield remains relatively constant – say between 4.0 and 4.5 percent - and as the value of the property increases, so too does the rent.

The rent increases broadly in line with inflation, so you are protected against inflation when you have an investment property portfolio.


Jiri rang me from Canberra.

He will be retiring in two years, so he isn’t my normal client, but he still sought my advice how he could improve his income in retirement.

As we chatted, he mentioned that he has been giving yoga classes for the past ten year in the staff cafeteria every Friday, for anyone who cared to participate. He doesn’t charge for his expertise – it was “just a hobby” he explained.

But when he retires, he will most certainly be able to develop an income from this hobby – either as an instructor in an established school, or perhaps he could open his own business.

Do have a similar case study that I could mention in this column? My email is


The problems in retirement revolve around isolation and medical/health care issues.

But both can be overcome if you have enough on the day that you opt out of the workforce.

If you want me to help you explore your options for 20-25 years of a dignified retirement, contact me – Bernard Kelly – on mobile 0414 778 518. Or via email


Is retirement the next step in a normal and productive life, or is it The End?

For many, the traditional expectation of
retirement has been one of joy. But on closer examination, this is a myth for most of us.

Because the reality of retirement can also be a source of anxiety and fear – particularly if you don’t have enough money tucked aside.

However the baby boomer generation has always done thing differently, and we can anticipate that a new approach will also flow into a new concept of retirement.

Another myth that has to go is that retirement is the end of the productive part of life. This image of living a life of leisure, never working and letting others take care of us is not necessarily a healthy approach to retirement any more than it would be at any other phase of life.

Human beings are at their best when we are useful, creative, productive and pursuing a dream.

So the financial demand that most baby boomers face - that they will have to work on into what is considered to be their “retirement years” - may have a hidden blessing of extending their lives in a healthy way.

Second careers are often a great way for aging baby boomers to not only create a second revenue stream but to pursue a career path that had always been a dream in life.

Another alternative as well for staying active and useful in retirement is to become passionate about a cause in life that has always been important to you.

The world will be a better place for our involvement and the retired baby boomer will live a happier senior life as well.


The Serve America Act became law in April, and creates Encore Fellowships for Americans age 55 and older to serve in one-year management and leaderships positions with nonprofit organizations.

Each year, 10 Encore Fellows from each state will be matched with qualifying social sector organization from the education, the environment or nonprofit sectors.

In addition to their employment, they will receive leadership training and help in arranging their post-service placement in an “encore career”.

Encore Fellows will receive a minimum stipend of about $23,000, with the federal funding at least matched by the recipient organization.

The fellowships and other provisions of Serve America build on growing nationwide enthusiasm for tapping the talents and experience of Americans who have finished their midlife careers and who now wish to make a contribution to tackle society’s biggest challenges.