Dollars and Sense: Words of Advice from AW's Andrew Maggs

US Retirees Look To Reverse Mortgages (Fri, 30 Mar 2007 05:45:22 GMT)

Reverse mortgages mean you can borrow against your home equity, and make no repayments. With no repayments, your debt quickly compounds. The debt must be repaid, which is generally when you die and your property is sold. Which has concerns. But global consulting firm McKinseys survey of 3000 US baby boomers showed they will be forced to consider them. Half the respondents expect to work after 65, but only 13 per cent of current retirees do. The current average retirement age is only 59. So people have seven less years working and seven more years retired. One third or respondents said they'd be forced to savagely cut their lifestyle, while another third said they access home equity to help meet their bills. Is Australia different?

Socially Responsible Investing (Thu, 29 Mar 2007 05:40:49 GMT)

Socially Responsible Investing or SRI appeals emotionally, but what about financially? With SRI your money doesn't go to 'bad' industries. That might mean no alcohol, polluters or labour exploiters. SRI promoters argue while this restricts which companies then can invest into, these industries won’t be sustainable long term anyway. But research house Lonsec has just found concerns over SRI funds real life investment performance and consistency, relative to traditional funds. Another issue is that there is no agreed definition of what SRI means. So while uranium mining might be right out for one SRI fund, it might be perfectly allowable for another fund. Many SRI funds don't like resources at all, and they've been the main driver of recent share market performance.

Baby Boomers Missing Opportunities (Wed, 28 Mar 2007 05:40:15 GMT)

With all the advertising you'd think everyone knows about the coming super change. But an Asgard survey found more than 50 per cent of babyboomers approaching retirement are unaware of the Government's simplified superannuation initiatives from July 2007. The survey also found that of the 50 per cent who claimed they were confident in their knowledge about super, only 31 per cent could accurately pinpoint even one aspect of the new rules when pressed for details. While 9 in 10 people approaching retirement have assets they could use now to boost the balance of their superannuation, few were planning to do so, despite the looming 30 June deadline. The deadline won't shift, so you will miss out, if you don't make the changes required.

Government Lift Deeming Rates (Tue, 27 Mar 2007 05:37:50 GMT)

From the media you might believe financial markets aren't doing well. While prices are choppy, returns must have been good, and there is confidence this will continue. So the Government has just lifted deeming rates for the first time in three years, and by half a percent. The deeming rates are used in aged pension eligibility tests. They apply to financial investments such as bank accounts, term deposits, shares and securities. Even if the rate you receive is less than the deeming rate, the test uses the deemed rate. It stops pensions attempting to get higher pension payments through minimising returns. So, having idle investments won't help you. Get advice, and make the best returns you can, to provide you the best lifestyle possible.

Spouse Contribution Switching (Mon, 26 Mar 2007 03:58:16 GMT)

Have you done any Spouse Contribution Switching lately? While the title could be confused, it's about transferring the after-tax superannuation contributions from one spouse to the other. Say one spouse over 55 will be retiring, and the other working on. Where the couple need access to a lump sum payment, this is an excellent option. They have access to a larger lump sum, at lower tax, years before they otherwise would. Or if one spouse was about to commence a Transition to Retirement pension, they want the biggest super balance to get the largest tax advantaged pension payments. So again, spouse contribution switching helps. Each super fund has particular paperwork and deadlines. So, make sure you on't miss out for this year.