Page 101 - Smart Money

Smart Money

The need for growth doesn’t end at retirement, but the need for equity
is instantly greater at retirement because you no longer have a salary to
replace any short term investment losses. Then it is just about monitoring
and managing your investments and keeping abreast of all the rules,
legislations and opportunities.

Key Point
We are living longer and the government is making it harder to qualify
for the age pension, and it is only going to get harder still. In 20 years,
the aged pension has gone from being an expected component of
everyone’s retirement income to becoming a supplementary piece.
Now, by the time people in their 30s and 40s retire, it is only going to be
a safety net. It is only going to be there for people who haven’t built an

investment base that is sufficient to generate their own income.
In my experience, the longevity argument is, strangely enough, the
opposite of the insurance argument. When I talk to people about their
life insurance, my clients say, “She’ll be right,” but when I talk to them
about their retirement planning and the potential to be retired in 30 or
40 years, they say, “No, no, no, I’ll be dead in ten years.” Pessimism about
mortality is misguided. People think that they are going to be retired and
they won’t make it to 70 or 75, but statistics show that, at the moment,
people are living into the mid-80s, and it is only going up.

You have to factor in that you are going to have to work for
longer, or you are going to have to compromise later in life, from
a fi nancial perspective.

Key takeaways

The sooner you start, the better you’ll be in the long run. Go for value,
not necessarily cost. Obviously, we want low cost, but we also want the
best possible value and sometimes the cheapest isn’t the best.

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