When will the Age Pension be axed?

And, in today's Sydney Morning Herald and The Age, 'Six financial foundations you need in place (long) before retiring'.

In this edition

There’s just one massive newsletter each week now, so I’ve crammed heaps in…

• Letters: When will the Age Pension be axed?

• From Bec’s Desk: On the road with the funds; extra last minute course deal

• In today’s Newspapers: Six financial foundations you need in place (long) before retiring

• Prime Time podcast: Tales from a truly Epic Retiree - Mike Chesworth

But first, I am thrilled to welcome Viking Cruises as a sponsor of the Epic Retirement newsletter, and thank them for their support. (And check out their amazing deal for Prime Timers and Epic Retirees!). If you’re planning a trip, they offer both ocean and river cruises and they’re all about meaningful experiences!

Explore the world in comfort with Viking - Voyages for the curious minded

As an award-winning small ship cruise line, we have developed a deep understanding of our guests' unique, inquisitive nature. We take you closer to the unique art, heritage, traditions, architecture and people that define each destination and focus our energy on creating meaningful experiences that linger long in the mind after you’ve returned home.

With no kids, no casinos, fewer sea days and more time in port, every day on a Viking voyage is an opportunity to discover more.

Book your next voyage before 31 July 2024 to save $4,600 per couple and experience 'The Viking Difference'.*

When will the Age Pension be axed?

“Hi Bec, I heard the age pension is not available to those born from 1965. Is that correct? For clarity I understand pension is not paid till age 67. But many years ago the govt announced the age pension would cease for those born after 1965. Is there an alternative pension income? - Katrina”

I get asked questions like this all the time on radio, at events and in our Facebook Group, so you’re not alone in fearing the end of the age pension. And I’m pleased to report that it’s all an urban myth. The government has not announced any plans to completely eliminate the age pension for those born after 1965 and I highly doubt we will see that happen in our lifetimes. If there were any such significant policy changes, they would be widely publicised and involve substantial public debate and extensive legislative process. And, with about 30% of the population over 55 years of age, I think it would be political suicide. And then it would be overturned later.

If you’ve read my book, you’ll see that over the next two decades, as the number of people who’ve contributed super at higher compulsory contribution percentages throughout their lives grows, the number of people who are eligible for for the age pension will decline. This is simply because more people will be in excess of the assets and income tests. They will be able to self-fund their retirement. And, over time, the country’s dependence on the age pension will dramatically decrease. I don’t believe any government will ‘take it away’, nor will it be a significant rising cost or risk to the nation. We are in an excellent position, likely very close to ‘peak number of age pensioners’ with superannuation contributions now climbing to compulsory 11.5% of salary in July 2024. Instead, policy efforts all look to be focussed on ensuring the sustainability of the pension system while encouraging greater self-sufficiency through superannuation. That’s a win for all I think.

Here's a summary of the current age pension eligibility:

• Born before July 1, 1952: Eligible at 65 years

• Born between July 1, 1952, and December 31, 1953: Eligible between 65.5 and 66 years

• Born between January 1, 1954, and June 30, 1955: Eligible at 66 years

• Born between July 1, 1955, and December 31, 1956: Eligible between 66 and 67 years

• Born from January 1, 1957, onwards: Eligible at 67 years

It was a big week! We successfully closed the early bird deal on the upcoming Epic Retirement Course on Monday, and on Tuesday I jetted off to speak at a super fund event series in Melbourne, Sydney and Brisbane, held by the Funds Executive Association of Australia (FEAL).

I spoke about ‘How funds can make retirements more epic!’ and I am delighted with the interest from funds. Basically, I shared what an epic retirement is (the six pillars you know well) and dove deep into the insights and lessons for funds gathered from the Retirement Planning survey we did a couple of months ago with you.

The rooms were frankly packed to the gills! The people were interested and it was really fun to talk about what you need to retire well with all the right people in super-funds to see action. The team at Allianz Retire+ sponsored all the events and the research, so I am very grateful to them for helping to give us a very loud voice among the funds sector! I’ll do a longer piece on the research for you in weeks to come.

The Epic Retirement Flagship Course Workbooks have arrived! Mailbags are packed and sent, and the course kicks off on 6th June (this Thursday). I can’t wait.

******If you haven’t yet booked your place, I have dropped a special coupon code that will be available to our community until 3pm Sunday giving you 25% off RRP with the code WINTER25. Click here to book with the code. After that, we’re done on discounts. There’s hundreds of people booked so you’ll be part of a great cohort learning together! ******

And the other highlight this week is The Epic Retirement Club Facebook Group which has been growing like topsy and is packed with so much joy of retirement. Many thanks to our new moderators, David, Jillian, Yvonne, Jane and Colleen. If you have a hankering for a like-minded community - this is pumping with it.

Meanwhile, How to Have an Epic Retirement, the book, has been holding court on Amazon’s top 100 books for a few weeks now. This week it’s at #68. Amazon just got heaps more stock if you’re keen for a copy. Order it here.

And the Prime Time podcast is just such a dream to make. This week I chatted with a truly epic retiree… it was a real thrill to hear and share his stories. I hope you enjoy it as much as I did. Links below.

Until next week… make it epic!

Many thanks! Bec Wilson

Author, podcast host, columnist, retirement educator, and guest speaker

Six financial foundations you need in place (long) before retiring

This Article was first published in The Age, The Sydney Morning Herald, WA Today and the Brisbane Times.

Life’s changing fast. People are living longer, rethinking retirement, and aiming for a future filled with choices. But to live it up in our later years, we need to lay down some solid financial groundwork earlier in life.

It’s about saving smart, making savvy choices, and understanding how systems can back us up. No matter our dreams for the future, setting these foundations in place sooner rather than later is key.

When you look at people facing retirement today it’s easy to see what the important foundations are. Those who know how to budget, save and invest, own their own homes outright, have learnt to understand and use their superannuation, and only spend money they can afford on luxuries are the ones headed into retirement feeling financially secure.

So let’s spread the word about these vital basics and help everyone grasp them. With these pillars in place, we can all make the most of our longer lives and enjoy every moment.

1. Maintaining a household budget

Budgeting might seem boring to many, but those who commit to it regularly reap significant rewards.

By tracking our cost of living, trimming unnecessary expenses, and striving to create a surplus in our day-to-day lives we can invest and use our funds to achieve our lifestyle goals.

Most people learn to budget properly when they decide to save for their first mortgage. But over the years after, as salaries rise and hopefully housing values too, the need to budget tightly and diligently wanes for some, and they may not exercise these important skills again until the years before retirement.

Or they might fall out of the pattern of driving a surplus during the middle years under financial stress and resist re-evaluating their position. And we as a community don’t like to discuss the ‘boring act of budgeting’. But we should, and then we should get on and do it, updating it regularly.

2. Setting lifestyle goals within our means

Everyone lives the ‘good bits’ of their lives differently. It’s easy to covet thy neighbours’ ways of living well, wishing for fancy holidays and nice new furniture we can’t afford. In these modern easy credit times, it’s pretty easy to spend like that neighbour, even if we can’t afford to.

But fundamental to good financial management is knowing when we can afford to spend up on life’s little luxuries and when we need to buckle down and save up before we can have them. In an era of buy now, pay later, this important lesson can get lost.

So my suggestion is that we each create a lifestyle budget that is separate from our cost-of-living budgets, so we can see the difference between our needs and our wants.

Plan up to three years ahead for the one-off or regular lifestyle purchases and epic experiences you want to do, and put a price tag on each in today’s money. Work out how much you need to save for each to be viable, and only do things you can afford to.

3. Understanding compound investing and managing risk

Understanding compound interest is a game changer for financial success. Yet, this fundamental concept often gets overlooked.

Many people don’t realise that money invested over the long term at a 7 per cent compound return will double every 10 years, and money invested at a 10 per cent return will double every seven years.

Teaching this concept also underscores the need for risk management. It’s not always about chasing the highest returns but diversifying investments, considering insurance to protect against losses, and building an emergency fund.

4. Buying a home and paying it off

Buying a home isn’t just about having a place to live. It’s a cornerstone of financial stability. But with the current housing affordability crisis, owning a home seems out of reach for many.

Paying off a home offers a few unparalleled benefits: we get financial security, and we get a lower cost of living every year for the rest of our lives – because we don’t have to have the cash flow for rent.

The other thing we get, as our house grows in value over time, is a growth in our asset value that can be used to fund our lives in retirement.

Many people downsize from their family homes that are paid off later in life, and contribute some of the funds into superannuation, providing them with income generating assets for the years they need it. Others choose to stay in their homes and access their equity through a reverse mortgage.

5. Understanding and leveraging taxation benefits

Understanding the ins and outs of the tax system early in life offers numerous benefits. (More)

You can read the rest of this article here in today’s The Age, and the Sydney Morning Herald today. It is not behind their paywall, but you may need to sign into their website to read it.

Tales from a truly epic retiree

This episode really is a doozy. I don’t know anyone as proactive about living their retirement well as Mike Chesworth. He’s a truly epic retiree. Seven years into a retirement that he chose to kick off fairly young, Mike has plenty to say on how he’s shifted away from his big career as the former GM of Financial Planning and Advice for Westpac and BT into a new life packed with things he loves doing.

LISTEN HERE:

• LISTEN ON APPLE PODCASTS

• LISTEN ON SPOTIFY

He has gone from being “the guy from financial services” to “Mike the bike guy” in his neighbourhood and he embraces that. In fact he’s thrilled with the transformation and listening to him talk about the joy in his life is exciting.

So today Mike and I chat through tales from his retirement so far. There’s stories about his transition, stories about his sense of purpose, stories about his really meaningful passions and stories about travelling to places that are packed with culture and experience.

I hope everyone can take away some inspiration and some lessons from Mike’s attitude to getting out there and living life well.