Talk Investing Podcast
The Talk Investing Podcast & Blog discusses investment advice from our previous podcasts and radio shows by Remo Greco & Marco Mellado. Learn all things around retirement and investing.
Talk Investing Podcast
Retirement Plan Audit Basics Part Two
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Retirement doesn’t sneak up all at once, then politely wait for you to be ready. One day you realise your “someday” plan needs actual numbers, and that’s where a retirement plan audit earns its keep. We walk through how we go from a retirement vision to a realistic retirement budget, then work backwards to check if you’re on track, using practical tools like the ASFA Retirement Standard and the retirement calculators on major super fund websites.
We also talk about the limits of most online superannuation calculators, especially if you’ve got assets outside super like shares, cash, term deposits, or investment property. From there we get into the real-world decisions people face: how to avoid having all your eggs in one basket, how to respond if you feel behind at 50 or 60, and why tiny savings hacks rarely move the needle compared to the bigger levers like contributions, time in the market, and your retirement date.
The conversation goes deeper into the risks retirees actually worry about, including illness and medical costs that Medicare may not cover. We explain why liquidity matters, how a cash buffer and lower-volatility assets can stabilise a portfolio, and what to watch for with Centrelink and the Age Pension, including what counts as an asset, how home contents are valued, and the five-year gifting rule that can catch families off guard. If you want clearer next steps for retirement planning in Australia, hit subscribe, share this with someone who’s avoiding their numbers, and leave us a review with the question you want answered next.
DISCLAIMER: This podcast contains general financial information only. That means the information does not take into account your objectives, financial situation, or needs. Because of that, you should consider if the information is appropriate to you and your needs, before acting on it. If you’re confused about what that means or what your needs are, you should always consult a licensed and trusted financial planner. Unfortunately, we cannot guarantee the accuracy of the information in this podcast, including any financial, taxation, and/or legal information. Remember, past performance is not a reliable indicator of future performance. The Rask Group is NOT a qualified tax accountant, financial (tax) adviser, or financial adviser. Access The Rask Group's Financial Services Guide (FSG): https://www.rask.com.au/fsg
Why A Retirement Audit Matters
SPEAKER_01The Talk Investing podcast and blog discusses investment advice from our previous podcasts and radio shows by Remo Greco and Marco Melado. Learn all things around retirement and investing.
SPEAKER_06On the money.
SPEAKER_03It's 10 past ten at the moment. You're listening to ABC Radio Melbourne and Victoria. You're with Lisa Leong and Super Specialist Marco Millardo will join you. A couple of weeks ago we looked at the retirement plan order. You basically have dreams for your retirement, but are you on track to realise them? And if you have a question for Marco, 1-300-222-774, we did part one. This is part two. Anything we share here is general in nature and doesn't take into account your personal circumstances, financial situations, or needs. Marco, good morning. Good morning, Lesa. How are you? Very well, thanks. We had a bit of excitement this morning, didn't we? We ran into a different studio. So I'm just catching up actually and getting comfortable in this uh new studio. Yes, it's like a mural one, but there are little things that are slightly different and you're getting things put around you as I'm talking. Um so I want to recap a little bit. So why should I break into my Sunday brunch time to bother with something which sounds so boring? Retirement plan auditing.
SPEAKER_06Audit or checklist, yes. It's boring until I guess you start thinking about boy, I am going to retire one day in my retirement might be very long. I might live till I'm 90 or 100. From stopping work at 65. Gee, that's a long time. You've got to have enough money to last, a really good framework around what retirement looks like. So this isn't just about money and assets, it's about shaping the type of lifestyle that you want to live, making sure that you don't just have your financial needs met, but your social needs met as well. So there's a lot you need to plan for. The earlier we can begin, the much more at peace you're going to be when the time comes and not be a bit of a nervous wreck or in a panic.
SPEAKER_03Last time we looked at this, which was part one really, so we looked at reducing debt first, then creating a sense of what you'd like to do in retirement, your retirement vision, if you want to talk about it like that. And then we created a realistic budget for retirement. So say, let's say $50,000 a year is what we're thinking we're gonna spend for a sort of modest to comfortable retirement. So once we have a yearly retirement spend budget, how do they how do we work backwards to figure out whether we're on track or not, Marco?
Using ASFA And Super Calculators
SPEAKER_06Very good. So unless you're a mathematician of sorts, you're gonna need a calculator to do it. And so the good news is ASFA has done some of this work for us. So that's the Association of Super Funds of Australia. Not for profit body, doesn't lean any particular way. Reliable, credible, uh, no biases, they're just out there to help Aussies understand retirement and live a you know a good retirement. So they've done some numbers on their website, which are around uh what they aim to be what they deem to be sort of a comfortable retirement versus a bit more moderate, sort of basic retirement. So that is a good place to start. But that is just one set of numbers. What you can then do, if you've started to uh put together some of the numbers for yourself, is go to just about any super major super funds website and they will have a retirement calculator on there. And that will let you plug in when you want to retire, uh how much you want to spend, they'll make some assumptions about investment returns and uh and and and uh expenses along the way, and then that will calculate a lump sum figure for you. So it'll give you some kind of target, I guess, for one of a better term, or lump sum value that you want to try and get to by retirement.
SPEAKER_03In terms of our super?
SPEAKER_06In terms of your super, but also other assets. So it's not just about super. You might have investment properties or shares.
SPEAKER_03Does it cover just the whole lump sum? So the one blob rather than telling you about it.
SPEAKER_06Uh that's a good question. So those calculators will really just uh stick to superannuation and the amount in superannuation. So it's a very basic kind of forecast for you. It's fairly helpful for most people, but we must also remember that lots of people have investments outside of super. That's also gonna form part of that big lump sum that can help you. So that might be properties, it might be shares, it might be term deposits. To do that, it gets a bit more sophisticated with your modelling. So you've got to be a little bit better, or you've got to use an advisor to help you do that.
SPEAKER_03So we're looking at doing our retirement plan audit, and this is when you have dreams for the future. This is what I want to do in retirement, I think. Then you work out a realistic budget, and then we're going back and saying, okay, so if that's our budget, then where are we at now?
Balancing Super And Other Assets
SPEAKER_03You mentioned that those calculators look at mainly superannuation. What do you like? Would you generally caution against putting all your eggs in one basket, whether it be only in superannuation, only in your home, only in share market investments? Is that the sort of gist of how to be smarter with money?
SPEAKER_06Well, this is exactly what we do, right, as financial advisors is we look at the client's current circumstances and see where everything is, and then determine based on things like their age, their estimated retirement date, expenses that might be coming up. We try and work out how much should be in each bucket. And that bucket might be one might be superannuation, one might be just owning investments in their own name, another might be owning investments in a trust or a company. So we've got to work out as advisors the split between all of those and what's going to work for each client. It's unique for everybody, so there's not one size fits all.
SPEAKER_0316 past 10 on ABC Radio. We're crossed um Melbourne and Victoria this morning, and you're with Lisa Leong, and we're doing on the money with Marco Mulado.
Quick Detour On Celebrating Wins
SPEAKER_03But we're going to interrupt this broadcast because our favourite Roz has called in because I wanted to know how do you celebrate a wind? Because I noticed that Rabukina last night. I mean, she's a cool as a cucumber kind of player anyway, but she was quite muted in her celebrations, and it was noted by the ABC commentator. Roz, good morning.
SPEAKER_02Good morning, Lisa. Thanks for taking my call. I guess it's contextual. For example, a happy dance might be appropriate, but I work for myself. And when I win business, I have to keep my gameplay when I do a fist pump under the table.
SPEAKER_03I like that. Do you know some pl places they ring a bell when they win work? Would maybe you could uh sign this and ring a bell. Great idea. Thank you. I love that. Thank you so much. Roz from Berlin there calling in to tell us how does she celebrate? Um, because you know, we all celebrate in different ways. I'd love to hear from you. Uh 0437-774-774 or 0 um 1300-272-774 is our phone number as well. Uh, we are doing on the money, we're talking about a retirement plan audit, and we have decided that we're going to go somewhere nice, say, and live a beautiful life when we are retired, but do we have
What To Do If You’re Behind
SPEAKER_03enough money? What happens if we've done the sums and we don't have enough? We feel behind. What can we do?
SPEAKER_06Okay, we've got to start working at it. So we've got to start thinking about our current spending, how much cash flow we have, what can we start to direct into super or other assets to start to build those assets a bit more quickly. We need to, in maybe some circumstances, realistically rethink our retirement date. Is it too early? Do we need a couple of extra years just to bulk up our lump sum? So there there's all the sort of stuff we've talked about over many, many shows over the years, but it really is understanding where you are now, what the gap is between where you want to be and then the strategies that we always employ to get there. So it's not the end. It just means we have to maybe fine-tune what you're doing.
SPEAKER_03Have you seen people who you know sort of think, oh my gosh, I'm quite behind, and they've managed to rectify things even at the age of 50 or 60?
SPEAKER_06Oh, yes, so yeah, we absolutely have some people come to us that are uh, you know, we would have hoped they would have come to us earlier, but they didn't. So we just we work on things over time and we we always eventually get there, but sometimes there are some compromises and sacrifices we have to put forward to our client to make sure we get them where they need to get. And they're generally pretty good with that because once we do the modelling and we show them what the outcome is, they're pretty eager to get started.
SPEAKER_03Is nickel and diming so you know, this idea of oh my gosh, coffee's so expensive, I'm gonna not have takeaway coffees ever again compared with other ways of changing things, what have you seen be more successful?
SPEAKER_06Yeah, the the let's call it the little stuff, the more trivial stuff, that doesn't really have a big impact. You've got to do the stuff that has big impact. So saving a bit each week is lovely and it's nice, it's not really gonna change your world. So the most important thing is to start earlier. Okay? You can't think about this at 62 if you want to retire at 65. You've really now got to start, you know, maybe in your 50s, early 50s, start thinking about that. It may seem a m a mile away, kids still on your hands, education expenses, debt, mortgage, but all of that needs to be taken into account to develop the right plan to just make it easier for you to ease into retirement.
SPEAKER_0319 past ten. We're doing on the money and we're interrupting your brunch plans to talk about retirement plans. Basically, to do an audit to say if this is what you want to be doing when you retire, then how are you placed right now?
Health Costs And Safety Net Buffers
SPEAKER_03Keith of Carlton writes, Marco, when working out how much you need in retirement, you need to prepare for illness, especially illness that Medicare doesn't cover, such as Alzheimer's disease. My wife's treatment costs 7,500 per month. Illness.
SPEAKER_06Yeah, so this comes into trying to plan for expenses. And there are two clearly two types of expenses that we need to try and think about. One are the ones you know about. I want to update my car every seven years, I'm going to help the kids, I'm going to pay for grandchildren's education, I'm going to take an overseas trip every five years. That's the stuff we know, we can put a dollar to it, we can put a timeline to it. Then there's the stuff we don't know. The stuff that's going to come from nowhere that you didn't expect. A lot of that will be around illness and medical expenses. Uh, sometimes helping out family that gets into trouble. So, how do we plan for that? We have to have a safety net within our portfolio. So we have to have an amount that's uh almost always in cash or cash-like type securities or investments that's there for you to draw on when you need to. That's really important.
SPEAKER_03How do we figure that out? What's the rule of the case?
SPEAKER_06Well, generally it's a percentage. Yeah. And what we like to do is have at least one or two years in cash that will fund your ongoing income stream. And then we have another couple of years worth, or maybe another 20 or 30% of the portfolio that we call fixed interest or debt securities, which are low risk, low volatility, pay some interest. They're not really there to make your gains and investments, they're there to keep your portfolio ticking along, for you to draw on when you need to, but also to to kind of quash volatility when markets get a little bit erratic. So that that part of the portfolio plays a really important role. It gives you a bit of stability, but it also gives you liquidity when these sorts of things pop up. And we generally always recommend if we can and if we can afford it, that we have a really good level of private health insurance because that is going to help cover what Medicare doesn't.
SPEAKER_03Does ASFA actually include any of this?
SPEAKER_06Yes, they do. So they're pretty good. So there's private health insur insurance in both.
SPEAKER_03Right.
SPEAKER_06Obviously the higher levels. Depending on that's right, different levels on what your your spending is for the year as a retiree, but that's how important it is. We know Medicare doesn't cover everything, and we know waiting lists can be long. So if we can, we encourage private health cover as uh a bit of a have to have.
SPEAKER_03Twenty-two past ten. At this one, uh okay, so we've got a text here, Marco. I'm sixty years old, writes this texture. Separated. So now on one income. I have a second job to make ends meet. I'm terrified for my retirement and if I have enough money. Can you please advise?
SPEAKER_06Okay, so yeah, this is hard, so we'd need to l know a lot more about the cooler circumstances. But 60 means we're seven years away from the age pension. So it probably does mean working right through, I think, to that age. And that's seven years of hopefully some savings we can have. If we can't really inject more savings into our supervisor, yeah, it's just make ends meet.
SPEAKER_03I don't know whether there's much spare.
SPEAKER_06Well, there's not much spare, so we really have to work on how we're invested. So and when we think about that, we need to think about not just the seven years to retirement. That's not this caller's time frame. This caller's time frame is actually their entire life. So when we invest, we need to think about what that time frame is. It could be 25 or 30 years. So I don't think there's any value in being too conservative with our investments. I think we need to go for some decent investment returns here and start to look at a portfolio that's maybe a bit more growth oriented than normal. And then we get to age pension age. Hopefully, we've got a lump lump some lump sum, and then the age pension will work in combination with your lump sum, and that's gonna get you, I'm gonna estimate, probably about $40,000 a year, which is a little bit higher than what ASPA's sort of modest retirement lifestyle is. So not it not all is lost. The age pension itself for a single person is you know $30,000, $35,000. So if we can have something that can augment that a bit, we're gonna do a bit better than that.
SPEAKER_03And that will only kick in at 67.
SPEAKER_0667 is age pension now, so this is why working through to 67 is just gonna become a lot more common. Um uh and even beyond that, because people want to build up a bit more.
Age Pension Asset Rules Explained
SPEAKER_03Laurie here writes this texta. In a couple, what is classes assets and what is the amount the pension is cut off? Do you have those details, Marco?
SPEAKER_06Yeah, so for a couple, what is assets is essentially everything except your family home. So Centrelink will count everything that you own as an asset, and they'll exclude your family home. So for a couple, uh you can have quite a bit in assets. So you can have close to $1.1 million in assets before you get completely cut off. So you can have a home worth whatever it is, and then have say a million dollars in assets, and that is things like super cash, shares, investment property, etc. You'll receive a very, very small age pension though, but you won't be cut off. Okay, so up to about say 1.1 million in assets will get you a very small pension. Less assets obviously is going to get you a bit more pension. Now there's an income test as well, but most people at that point are more asset-based than income deriving. And so the asset test is one of the more prominent ones.
SPEAKER_03All right, and this one, can you talk about super in relation to assets, maximum holding to qualify for a pension, type of assets, and maximum income, including type of income, wages, dividends, as this can vary. Is there a good way to get into this? That's quite broad.
SPEAKER_06Yeah, that is really broad.
SPEAKER_03It's a Is it about assets?
SPEAKER_06It's a bit like the question beforehand, I think, in that if we're looking at how much we can have in assets before our age pension gets cut off, it's about as a couple that million and a bit. And as a single person, I think it's about 700 odd thousand. So it's quite a bit we can have. Now assets are assets. They refer to super, shares, properties, term deposits, cash. So Cynelink doesn't really care what type of asset it is, it's going to count it as an asset. It will count your car as an asset, it will count your home contents as an asset. I won't put a much of a value on them, but assets are everything that you own. They exclude the family home because that's your home and you need to live in it, you're not deriving any income from it. But all of those assets get lumped together. That's what determines whether or not you're eligible for some part age pension or not.
SPEAKER_03And is that why it might be better? I was thinking about um the person who's separated a bit later in life. Is it better to try and funnel any excess funds into a house because it's an excluded Yeah?
SPEAKER_06So this is a great question, and this is this comes up quite a bit. Yes, your home is excluded, and so you can funnel as much as you can into your home. You can renovate, you can do all these things. Just bear in mind It's stuck in there. It's stuck in there, you have no liquidity, right? So you can't get anything out of it. But if you're happy with what the age pension amount is, and you believe you can live on that, then that's not a bad strategy because that will make sure you'll maximize your age pension. But I would say in what we have seen, you're much better off trying to build some of your own wealth. Be in a home, be very comfortable, make sure it meets your needs, but you're much better off channeling some, let's say, surplus income into investments or superannuation. Superannuation or investments, either, to build a lump sum that can deliver you A, some extra income, but B, liquidity. You need money to access as things happen, as your life evolves, as your circumstances change. You can't have it all tied up in your home and not be able to get it out.
SPEAKER_03Thank you. Uh it is 10.30 right now, and for on the money with superannuation specialist Marco Mulado, we are looking at retirement and we are looking about doing a snapshot into whether or not you are at the right place in terms of how are you tracking. Uh, Steve has said, but what is an asset? Is it shares? Is it a car? Is it furniture? Is it paintings?
SPEAKER_06It's all of those things. It's everything. And um obviously your home is an asset as well, but that is specifically excluded in the legislation by Centrelink. But everything else that you own is an asset and there'll be a value applied to it.
SPEAKER_03Oh, I see, and Steve's given us further and better particulars with
Centrelink Valuations And Gifting Traps
SPEAKER_03his questions. So that was from Steve, right? And then he says, So if I have eighty thousand dollars in home contents insurance, is that what will be considered as contents valuation? Great question.
SPEAKER_06Yeah, so lots of people don't know this and they get a bit caught up when it comes time to declare this. But the value of your contents is not what you have them insured for. The value of your contents is what they could be sold for today. For example, in some kind of fire sale type situation. So the fact that you'd have eighty thousand dollars as contents insurance is what you would need to spend to buy those goods today. Whereas what Centrelink is wanting to know is what is the value of those goods today if you sold them? Your goods, not replacement goods. So that could be as low as $10,000, for example. If you had to have a garage sale and put everything for sale in your driveway, you're not going to get $80,000, you might get $10,000. So I'd be inclined to put a very, very low realistic figure, which CentreLink in almost all cases will accept because it's fire sale value.
SPEAKER_03That's really interesting, isn't it? Uh Fred Wright, how does superannuation affect disability support pension if you access it early? Do you know?
SPEAKER_06Uh so uh I think it would have some impact, but uh you would have to have access to super first. And so accessing you might not have met a condition of release to actually access your super to make it have an impact.
SPEAKER_03Um this text here, this whole conversation about retirement is very much geared towards middle and upper middle class social strata. There are so many people who have little to nothing. How do they retire apart from the absolutely despicable amount of money that the government offers?
SPEAKER_06Yeah, I mean that's more of a statement, isn't it? And that's true. We have uh a huge cohort of people that will only ever be able to have the age pension and they have. For a variety of reasons, have not been able to save enough to have a lump sum externally. It's very difficult. The age pension does go up twice a year. Uh it's supposed to be linked to inflation and CPI, but we know it's not enough. And we know that those that are just on the age pension really struggle.
SPEAKER_03And when it comes to the age pension, is there anything in your experience, Marco, um, that we should be aware about so that, for example, we don't accidentally lose the age pension, especially if we're reliant on it? Have you sort of seen little things that happen and then suddenly p the person accidentally gets knocked out of age pension?
SPEAKER_06Yeah, so I mean going over the limit, but again, you got quite a bit of money if you're going over the limit, so that might knock out some age pension for a period of time and then it sort of comes sort of comes in and out, if you like, if you're near that limit. But the one thing I guess we have seen in the past that perhaps people are unaware of is gifting. So when you gift some money to kids, for example, or anybody, that counts for five years from the date of that gift. And so most people aren't aware of that. They just think they'll gift it before age, pension age, and it'll reduce some of their assets. It doesn't. It counts for five years post that, and then after the fifth year, then it it sort of drops off. But gifting is something you need to be very careful about. How does that but aren't you giving away an asset rather than You're giving away an asset, but uh Centlinick may view that as you're doing that purposely to reduce your assets to gain more age pension. So they claw it back. They claw it back for five years, uh and then in the sixth year you get to be scot-free again. But that is something a lot of people get tripped up on because they don't realise the five-year rule is there.
Advice Costs Calculators Inheritance Wrap
SPEAKER_03Uh and Jane writes, Good morning, great programme. Thank you. Uh could you please give the approximate fee for this type of financial advice? So basically, if you're going in there and you're trying to figure out, you know, and get some um calculations, I mean it could be quite expensive, but it's not cheap because there's a lot of work that needs to be done.
SPEAKER_06The financial advisor really has to dig deep into all of your circumstances, all of your assets. We have to produce some modelling to make sure that we our numbers work, and then we have to produce some uh financial projections to see how that looks in the future. Look, it could be three or four thousand dollars, I think you would need to spend to get good quality advice in this area.
SPEAKER_03Retirement plan audits is what we're talking about with super specialist Marco Mulato. 1300 222 774 is the number, and Michael has called in. Good morning, Michael.
SPEAKER_00Good morning. Um, I would like to ask a question about online superannuation calculators. There are several available with different features, and I wonder which one of them is the best or the one to avoid, or have they no relevance at all? Or what's your verdict?
SPEAKER_06Good question. I I must say I haven't road tested all of them. I've been on a few. Uh and and I won't name names, but certainly the the major larger funds generally have the better calculators. They've been able to put a lot of resources into them. And now just remember they're quite basic, but I think provided they have these sorts of inputs, estimated retirement age, uh, inflation, investment return, and then how much you want to draw per randomist? I think as long as you can put those inputs in, and then you read the assumptions that they have within each calculator, so you think they're reasonable, it's a pretty good start.
SPEAKER_03Thank you, Michael, for your call. Uh before you go, Marco, this one just intriguing me. What happens to your pension if your partner receives an inheritance?
SPEAKER_06Right. So when you're coupled, uh Centre Link treats you as a couple. So even though one of you receives an inheritance, it's as if you have both received that asset. So it will count and your pensions will be recalculated.
SPEAKER_03Thank you so much, Marco.
SPEAKER_06Pleasure. See you next time.
SPEAKER_03See you next time.
