Cameron Teague* sees many Public Service employees unsure if their super will finance their retirement plans but he finds ‘Income Modelling’ can have the answer.
In my role as a financial adviser I meet many clients who are looking forward to the freedom retirement promises.
They are aspiring to travel around Australia or around the world, help out with raising their grandchildren or pursue passion projects such as working at an NGO.
However, one key theme that underpins most questions, concerns and discussions that I continue to handle with clients is whether or not they will have achieved enough financially to be able to take their planned next steps.
I term this “retirement anxiety”.
By this, I mean that ‘middle-of-the night’ worry that many people experience when they think about what happens after the last pay cheque comes in.
It occurs when people don’t know what they can expect financially in retirement and often expect the worst.
In my experience, there are two main factors driving these worries:
Media reporting: The financial press regularly reports on very large, unattainable figures that are ‘required’ before retirement is possible.
In many cases the figures quoted are far greater than most people will actually need.
Unfortunately, these figures are frequently quoted by finance professionals which can often led to ordinary people becoming disillusioned and disengaged with their finances.
Over-complication: of the superannuation industry which has made people’s ability to predict their retirement benefit too challenging meaning they worry about the unknown.
In combination, these two factors create the perfect ‘retirement anxiety’ environment.
The finance industry has recently experienced a lot of bad press.
But negative media reports commonly emphasise issues with inappropriate product-related advice while overlooking the valuable financial strategy-related advice a good financial planner can provide.
A good planner can provide a very effective remedy to retirement anxiety using financial modelling techniques.
These take into account all of your investments, including any superannuation and government pension entitlements.
Financial modelling will identify when you are likely to be able to retire, your projected retirement income to life expectancy, and provide an estimate of estate assets.
These techniques allow for the exploration of various scenarios e.g. retiring at 58 versus 63 or working at an NGO versus staying in your current government role and can give you the clarity you need.
Members of defined benefit funds such as PSS and QSuper are fortunate in that it is very easy to project the expected retirement benefit with a high level of certainty.
Retirement modelling is equally applicable, however, to other government super funds such as PSSap and QSuper Accumulation accounts though it does involve more assumptions.
Financial modelling will provide you with a retirement road map including annual checkpoints to compare against each year to see how you are travelling compared to the projections.
If the road map identifies there is a mismatch between your goals and these projections, then you can take steps sooner rather than later to alter both the road and ultimately the destination.
It’s an instant cure for retirement anxiety.
* Cameron Teague is a Certified Financial Planner® at Cameron Teague Wealth Advisory. Further information about getting advice can be obtained from his website www.ctwealth.com.au
CTWealth Pty Ltd T/A Cameron Teague Wealth Advisory is a Corporate Authorised Representative (001275442) of MFG Advice Pty Ltd ABN 76618661108 AFSL 499010. The information contained in this article is general in nature, is not financial product advice and does not take into account any individual’s objectives, financial situation or needs. Please arrange a meeting with Cameron Teague for personal advice before you make any changes to your investments.
