Sunday, March 14, 2010

Bernard Kelly - Australia's Retirement Strategiest (right)


We are now seeing what the new age of retirement will look like.

Baby boomers are likely to live longer, be more healthy, and have more active lives than any retirement generation has had previously.

However few will enjoy the generous pensions and retiree health benefits enjoyed by many of their parents. Boomers will be saddled with the headache of continuing to manage their own investments, and if they haven't saved enough, they'll likely have to work long after the previous generation dropped out of the workforce.

Here is a snapshot of the new lifestyle:

Living longer. It is now generally accepted that a long life will become commonplace and that a growing number seniors will be retired for more years than they spent in the workforce.

Reduced pension entitlements. Living longer means more retirement years that will need to be financed, however with the demographic surge in the number of the aged population the government won’t be able to afford to pay the level of pension at historical levels.

Managing Superannuation. Boomers will need to make decisions about how much risk to accept in order to beat inflation and decide how much they can prudently withdraw each year from their superannuation. In this new age of retirement, everyone will need to acquire some understanding of finance.

Part-time jobs. Many Australians will continue to work during the traditional retirement years because they need the income. Others will continue working because they enjoy the mental stimulation and social opportunities a job can provide. And more early retirees will undertake retraining in a new career, understanding that this will be an up-front investment in an encore career that could last 15 or 20 years.

Staying active. These days, baby boomers don't see retirement as a withdrawal from activity but as a new adventure. Many seniors will travel, volunteer, consult, and remain active, in addition to reserving time for leisure and spending time with grandchildren.

Sandwich generation. Because baby boomers married later, or remarried later, many are still paying for their children’s education. At the same time, boomers may be financially supporting aging parents. So there’s nothing left to boost retirement savings

Retiring with debt. Virtually everyone has a credit card, and a growing percentage are retiring with a mortgage on their family home. Carrying debt into retirement means seniors will eventually have to use their savings to eliminate it.

Acknowledgements : US News and World Report 16 February 2010


I’ve been directed to an American magazine “MORE” which targets “stylish and sophisticated women” over 45.

You can check it our for yourself at


Well, here is a movie – just invest the next three minutes :


There are many Indian and Chinese students who yearn to improve their English – however they never get an opportunity to practice speaking within the environment of an “aussie” family.

If you turned off the TV and opened your home to a small number of students between say 5-8 pm every Friday, you would have a very interesting and profitable “hobby business” – virtually without any overheads.

Your only real expense would be to keep advertising in Indian and Chinese newspapers that these students read.

You will need to structure their learning experience, however it is likely that your family members would enjoy the participation and become their tutors.

If you charged each student $25 per hour for such a premium experience, you would be well on the way to paying your grocery bill each week. (Or more, naturally, if you did this twice each week).

Limit the participation to three students (each from a different language grouping to ensure that they must speak English) and the timetable should reflect the academic year of the collages they attend.

Just make sure they pay for each semester at the start of that semester.

And the next step would be to enrol other local families to do the same. You would then be moving away from a “profitable hobby” as soon you would have a simple – but genuine - business up and running.


Here’s some interesting statistics – from the US admittedly – but I feel that comparable Australian figures would be similar.

While a healthy 65-year-old man has a life expectancy of age 81, he has a 50 percent probability of reaching age 85 and a 25 percent probability of reaching age 92.

For a woman age 65, the odds rise to a 50 percent chance of reaching 88 and a 1-in-4 chance of living past her 94th birthday.

The odds of at least one member of a 65-year-old couple reaching 92 are 50 percent, and there is at least a 25 percent chance of one of them reaching 97.

(Source: American Society of Actuaries, Annuity 2000 Mortality Table.)


In the United Kingdom, it is common to buy an annuity with your lifetime savings.

The rates on annuities – which are used to convert savings into an annual income for life – have declined in recent years due to falling gilt yields, shrinking stock markets and increased life expectancy.

Annuity rates are set by the yield – or annual return – on a Government bond, known as a gilt. This is because insurance companies, to finance an annuity, buy gilts. If the yield on a gilt falls the insurance company is forced to cut its annuity rate.

Based on monthly contributions of £100 into a pension savings plan over the previous 20 years, a male aged 65 who retired with an average pension fund of £103,000 in January 2000 was able to secure an annuity rate of 8.6 per cent, according to the figures produced by Moneyfacts.

So those retiring in January 2000 were able to purchase an annual pension of £9,000

By contrast, the average pension savings plan – again based on monthly contributions of £100 into a pension savings plan over the previous 20 years - has shrunk to just over £40,000 today and average annuity rates have dropped to 6.2 per cent.

It follows that the average pension purchased today would provide only £2,500 pa for a pensioner.

Source “The Daily Telegraph” 12 February 2010


To enable you always to be keep abreast of new pathways to retirement, we have now established a membership site.

Go to

You can either join as a Free or Full member.

Naturally Full members – who pay $110 pa for membership – receive many more privileges.


You probably know many people who need my experience and expertise right now.

Here’s the deal – you invite a few people to a lunch or after-work seminar, and I’ll present Retirement Strategies for Employees.

I’ll pay you $150 for your expenses, and a further $1000 for every participant who has me share an investment property with them.

About Bernard Kelly:

Bernard Kelly BEcon MBA CRPC Australia’s Retirement Strategist, is a highly sought-after advisor, retirement authority, thought-leader, author and radio commentator because he makes the complicated and mundane topics of investing and retirement fun! Bernard has over 20 years experience providing families with financial thought. He is the author of Live Your Dreams in Retirement, Property Investing for Couples, Goolwa by Breakfast and Raising Decent Kids into Substantial Wealth and publishes a fortnightly newsletter that reaches thousands of subscribers worldwide.

19 Prospect Street, Box Hill 3128 Australia. Tel 61-3-9899 8577 mobile 0414 778 518


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