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Planning for Retirement: Building Your Nest Egg - Boosting the Boomers.

We're going to live a lot longer.


AUSTRALIA'S level of retirement savings are taking a hit as many baby boomers are retiring with mortgages and in many cases using their superannuation to pay down debt.

The trend recently revealed in RaboDirect's 2012 National Savings and Debt Barometer shows that almost half (40 per cent) of baby boomers who expect to retire with a mortgage are planning to sell their property in order to pay it off. At the same time, nearly a third of boomers (30 per cent) intend to use their superannuation to pay off their mortgage; a plan that RaboDirect says is risky, particularly as a number of pre­retirees have recently seen the value of their super portfolios suffer.

According to RaboDirect Australia spokesperson Renee Amor, the survey highlights that because we are living longer than previous generations, we need larger nest eggs to maintain our living standards. Everything that can be done to bolster savings and secure a reasonable retirement income is a step in the right direction.

Amor says one of the best ways to help eradicate debt and ensure that you are making the most of your money is to consult a professional.

"And the sooner you start, the better," she says. Financial Planning Association of Australia CEO, Mark Rantall, states that Australians just simply need to have a plan. He cites the rather worrying statistic that around half of all Australians have no plan and over 60 per cent of all retired Australians still rely on some form of aged pension.

Rantall says planning your financial future really means planning for your retirement early as most Australians have expectations regarding the sort of lifestyle they want to lead when they retire. On average, people need around $1200 a week to live which translates to around $1 million in investable assets,'' Rantall says.

''The current superannuation guarantee is a good start, but not enough and young Australians should be putting extra into their superannuation, because the earlier you start, the longer you've got to take advantage of the compounding effect. Rantall believes most Australians spend more time planning their annual holiday than putting together their financial plan, and that translates to bad financial management. His advice is people should seek out a qualified professional financial planner who they feel comfortable with.

"The role of a financial planner is to protect the c1ient - protect their goals, desires and aspirations by keeping them on track to some sort of plan," he says.
Eureka Financial Group Managing Director, Greg Cook says planning your financial future is a little like getting fit and you've got to be motivated.

He says you've got to work on your strategy and see a financial planner.

''Accountants might provide incidental advice but financial planning is a lot more about actual planning- it's another discipline.''

Cook believes Australians have been put off financial planners and superannuation in recent years as funds have performed badly but there are other alternatives.
''People have to stop thinking of superannuation as just investment funds,'' he says. ''Superannuation is just another ownership entity and you can choose to invest your super in just cash or term deposits if you're worried about equity markets or you could invest in property.

''The beauty of superannuation is by investing in it (even your own self-managed fund) you do receive a number of tax incentives such as the concessional cap which allows you to invest up to$25,000 a year tax-free." Cook is keen to point out that people who have a blinkered view of superannuation are missing the boat in terms of maximising their government entitlements and don't understand super is just another way of owning assets.

Michael Burton, the co-founder of one of the nation's leading finance firms Lachlan Partners, says there is a lot of information out there for consumers but most of us don't know what's any good. He suggests that with markets being pounded in recent years, consumers have decided that if they're going to lose money anyway "we might as well lose it ourselves".

He adds: '' A lot of people take general advice from the media, for example, without knowing the whole story. People often make emotional rather than rational decisions and a good financial planner helps people make smart decisions," Burton says.

He says a good financial planner should take a whole-of-life approach. A good planner is more about the relationship than just straight numbers and works with you to cover the different stages of your life. "lf you're in Generation Y, you're worried about the now - your credit card debt, your future mortgage and you want to solve those problems now,'' Rantall says. "Your planner should be your coach a trusted person who guides, protects and provides you with a good outcomes long term."

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