Introduction to Retirement

Module One: Most People

This presentation is part of Franklin Partners Courses for Clients programme 2014.

It is designed to give Clients a basic understanding of the challenges they may expect in planning for retirement.

The main sources used in this presentation are “Dynamics of the Australian Superannuation System The next 20 years: 2013 – 2033” by Deloitte& “The Future of Retirement” by HSBCFull credits and contact details are at the end of this presentation.

There’s a basic assumption we want to introduce you to

The developed world is getting older, but our financial system has not has not changed at the same rate.

For example, most managed funds are generally only able to invest in certain high rated securities.

We believe that this will cause more and more “BUBBLES” as massive amounts of funds are funnelled to where they generate the most fees with the least amount of risk TO THE FINANCIAL ADVISER.

Here is the nub of it, there is a basic and entrenched corruption/conflict in the financial planning industry

Ingrained ConflictRiddle me this!

How can a financial adviser represent your interests without conflict when

• Their remuneration is not totally aligned with your results

• They don’t take any losses

• The products and strategies they can introduce you to are determined by ratings agencies and professional indemnity insurers not by them.

To be a bit blunt, we don’t believe that the system works for most people.

Warren Buffet encapsulated what we believe when he said,

“you only have to do very few things right in your life so long as you don’t do too many things wrong”

Warren Buffet

During module one you’ll find out some pretty disturbing figures but don’t sweat it, as you work your way through the course we will be introducing you some proven ways of achieving your retirement goals.

Income

0 25 50 75 100

Retirement Income

Lower by 50% than they thought LowerA Gov Benefit Hit Zero during retirement

What happens to most people in retirement?

Well, according to HSBC, “The Future of Retirement Report: 2013”

Things are pretty bleak.

You can expect large falls in initial income followed by your independent income running out completely about 11 years before you die.

Women, live longer than men, but that means even more time on the breadline.

Where do Retirees get their income?Deloitte’s research tells us that 81% of Australian Retirees are currently relying on the government for some form of benefit.The graph at right from HSBC’s “The Future of Retirement” report shows what is happening on a global basis.Again from HSBC Australian’s expect their retirement savings to last 11 years, although they have on average 32 years of retirement to fund.

Working R eti red0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

24

37

12

1615

1119

1211

98

4

12 10

OtherPropertyInvestmentsCashPersonal PensionCom PensionGov Pension

Expectation and reality are a long way apart

Too much life, not enough savings?

Most Australians plan to retire between 55 and 60 years of age which creates its own problems.

This graph by Deloitte’s based on Australian Bureau of Statistics information shows how long a retiree aged 65 years can expect to live.

Remember this is average so if you’re unlucky enough to live to 85 years you will, on average, live 11 more years.

We haven’t met anyone who has prepared adequately for this!

How much savings are there really?

Source: Deloittes, ASFA amounts rounded to nearest $1,000

Average Australian Superannuation Balances

Male Female All

60-64 year olds $85,000 $59,000 $77,000

65-69 year olds $77,000 $55,000 $72,000

Working age people expect their savings to run out during their retirement.

11

21

Retirement Years

Funded Unfunded

Q: Some people plan or have retirement savings that they expect will last for a certain time. Do you expect your savings to last in retirement?

Q: Imagine yourself retiring today from all paid employment at the normal retirement age. How many years would you reasonably expect to live for in retirement?

Source: HSBC, The Future of Retirement 2013

It isn’t all doom and gloom!

AwarenessWhere am I now?What’s The Problem?Who can I trust?What are my options?

ToolsWhat can I use?Where can I get help?What advice can I trust?How do I find experts?How do I recognise them?

ImplementationHow do I decide on my priorities?What are my options?How do I put a plan together?

FPM insists you take responsibility for yourself but that doesn’t mean you’re out on your own.

Quite the opposite!

You are joining a community with a common goal, to retire with dignity and in comfort.

BUT, we did want to disturb you, make you think about things. This is module one, in course number one.This is also the first day of the rest of your life!At Franklin Partners we are sure that your future is about the actions you take NOW.

But enough of FPM, you’ve some homework, you have a task, before beginning the next module, to sit down with your significant other and write down 5 things each that concern you about retiring.

Further Reading

The Future of Retirement Reports by HSBC are very interesting reading.

Very comprehensive and broad research across 15 different countries and 125,000 interviews

AND in a great easy to read format

HSBC-Global-Report.pdf