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Aged care made simple: what you need to know Navigating aged care can be quite a challenge, especially with the new rules that come into effect on November 1, 2025. If you were already in the system before entering care, you might still be eligible for the old rules to continue. It sounds complex because it is, but don’t worry, advisers can help you navigate the system. Before seeking any advice, here are some basic considerations you need to cover: What are you trying to achieve through the aged care you are seeking? Is the primary aim to give the person entering a facility their best future life? Is it to preserve assets while also securing retirement options? Or is it exploring all options and providing the family with the best financial outcome possible for all? Whether it’s a retirement village, apartment or care facility, moving out of an independent living arrangement comes with a cost. Retirement village costs For a retirement village, which provides accommodation in property where people just need to meet the age requirements (ranging from over 55 to over 70), the costs include the cost of the unit plus maintenance costs. When leaving the unit, a percentage each year or up to around 30 per cent is retained by the management – essentially the cost of the lifestyle provided. This may include a pool, entertainment areas, cafes/restaurants and exercise facilities. Aged care facility costs For an aged care facility, it may be just part of their pension or a number of daily fees set by the government, the care provider and potentially more if means tested. It’s important to realise that while aged care can seem expensive with accommodation fees plus additional fees (depending on Centrelink assessments), the money paid is providing a lifestyle – accommodation, food and care. Refundable Accommodation Deposit (RAD) For most people entering care, there is a refundable accommodation deposit (RAD) to be paid. This is the cost of the room and most of it is refunded on departure. The cost ranges from around $650,000 upwards. Many people may need to sell the family home to afford this but there are options for how it is paid. For example, you don’t need to pay it all upfront. There are ways to pay part of it and a higher daily cost or pay none of it and have an even higher daily cost. There are sound financial reasons why someone might want to delay these costs. In the new rules from November 1, a small percentage of RAD will be retained after the resident leaves the facility. Seeking financial advice A financial adviser can help with the complexity of aged care funding, helping people understand their financial obligations and how to manage their funds to ensure there’s income to support their needs and cashflow for the future. This may include selling the family home or keeping it and establishing funding from elsewhere. There is an aged care speciality accreditation which many financial advisers now hold. Source: Money and Life

Sharemarkets continued to make headlines in the 2024-25 financial year but the best performers for investors seeking high returns broadened to include a much wider range of investment types. Investors looking for strong returns were able to find them in a growing number of investment categories over the 2024-25 financial year as several investment types dramatically outperformed their 10 year average performance. Unhedged global shares – which may be affected by fluctuations in the currencies used to conduct the trades – were the top performer in the year to 30 June 2025, delivering a return of 18.7%. This was only slightly less than their 2023-24 financial year return of 19.3%, despite increased market volatility; and remained well above their 10 year average return of 12.1%. However, emerging markets, listed global infrastructure and even Australian bonds were among the highest returning asset types, delivering big gains compared with both the previous financial year performance and their historical averages. The results were revealed in market data showing how different investment types performed over the financial year to 30 June 2025*. They demonstrated the resilience of sharemarkets despite changed global trading conditions following the US government’s decision to implement widespread tariffs on imported goods. However, they also revealed that investors seeking high returns were less dependent on the tech-led and AI driven companies that fuelled performance growth in 2023-24, as other asset types showed dramatic improvements. Best investment performers included established and emerging asset types Among the star performers of the past financial year, emerging markets returned 17.5% for the 12 months to June. This was a big improvement on the 12.2% they generated in 2023-24 and close to triple their average 10 year return of 6.5%. Listed global infrastructure made a sharp gain in 2023-24, delivering a return of 15.4%. This was a sixfold improvement on the 2.4% return it delivered during the 2023-24 financial year, marking a spectacular turnaround with a performance that was well above its 10 year average of 6.8%. And Australian bonds returned 6.8% last financial year – more than three times their 2.1% average return over 10 years. Investment market performance over 2024-25, 5 years and 10 years*   Strong investment returns across the board All major investment types outperformed their 10 year average returns during the 2024-25 financial year, the performance data shows. Australian shares returned 13.7% during 2024-25, significantly better than their 11.9% return during the previous financial year and well above their 8.8% historical return. Hedged global shares provided a return of 13.6%, down from the heady 19.8% growth they offered in 2023-24 but well above the 10.0% they delivered over 10 years. Even low-risk asset types, such as global bonds, delivered returns more in line with the traditional returns of ‘growth’ investment types. Global bonds provided a return of 5.5% – well above their 10 year average return of 1.9%, while cash delivered 4.4% growth – the lowest of all but more than double its 10 year average. * Benchmark performance annualised for periods greater than one year is shown for: Bloomberg AusBond Bank Bill Index; Bloomberg AusBond Composite 0+ Yr Index; Bloomberg Global Aggregate AUD Hedged; S&P/ASX 300 Accumulation Index; MSCI ACWI Ex-Aus Index Special Tax Net AUD Unhedged; MSCI ACWI Ex-Aus Index Special Tax Net AUD Hedged, MSCI Emerging Markets (AUD), FTSE EPRA/NAREIT Dev ex Aus Rental Index AUD Hdg Net and FTSE Dev Core Infrastructure Index AUD Hdg Net. Source: Colonial First State

It’s exciting to get a pay rise and when you’ve earned it, you often feel like it’s a deserved reward to treat yourself with, but used in the right way it can also help you build towards a more financially fulfilling future. Typically, the more people earn the more they spend which is often unfulfilling if you are constantly living day to day paying bills with nothing left over to give you confidence in your long-term or short-term future. If you have been able to afford your lifestyle on your current salary and you receive an increase, then you should technically be able to save the extra money. You’re likely to want to improve your lifestyle with an increase in salary, so you would like to use at least some of it. Perhaps you could save half and use half, thus improving your lifestyle plus building towards a more secure future. Or, if not half, a certain percentage or fixed amount of saving and a certain percentage or amount of spending. Saving made easy It’s easier to commit to a savings plan if you have it automatically transferred out of your main spending account into another account, so you don’t see it. The idea is that if you don’t see it, you won’t miss it. Several financial institutions have savings accounts which pay extra interest (and act as an incentive) to not make withdrawals from this account. Saving is really delayed gratification – not blowing all you have today but stretching out the ability to spend the money later. If you are saving for short-term goals – deposit for a home, or a car, or a holiday you might like to use term accounts or easily accessible savings vehicles. If you are saving for longer term projects – like children’s private school fees or your retirement, you might like products such as investment bonds or superannuation. It’s all about choices – is it more valuable to you to spend your money today or are you keen to give yourself greater choices later in life. One of the ways of thinking about your money and what you use if for is by consciously spending. Think about what you spend now and the opportunity cost of not having it to spend later. Choose the expensive holidays, dinners and lifestyle now or put some away so that you’ll be able to afford more later. Making no change If you’re not tempted to use your pay rise to save for the future in a formal way but you have a budget which for example, according to the 50-30-20 rule where you use 50% of your income for needs, 30% for wants and 20% for savings – you will still increase the amount of money you allocate for both now and for the future. Compound interest will allow your savings to build quickly over time – and what you may not have been able to afford in today’s dollars may become more achievable in future dollars. Super boost Even if you do nothing with your pay rise, your super will be getting a “pay rise” from 1 July 2025. From this date your employer paid Super Guarantee will be increasing from 11.5% to 12%. This means that for a salary of $80,000 you will now be earning an additional $400 a year. The Super Guarantee began in 1992 at 4% and has increased incrementally until the final legislated increase to 12% where it will remain. Source: Money & Life

Supporting your adult children or grandchildren in purchasing their first property can be a fulfilling way to help them achieve financial independence. However, it’s crucial to ensure your own retirement savings remain secure. Here are some strategies to help your loved ones get onto the property ladder without compromising your financial future. Financial strategies Guarantor loans How it works: A guarantor loan allows you to use the equity in your property to help your child or grandchild secure a home loan. This can be particularly useful if they have a small deposit but need additional security to meet lender requirements. Considerations: While this can be a powerful tool, it’s important to understand that you’re responsible for the loan if your family member defaults. Ensure you have a documented agreement and consider seeking legal and financial advice to understand the implications fully. Gifting the deposit How it works: Providing a financial gift for the house deposit can significantly reduce the financial burden on your child or grandchild. This can be a one off gift or a matching scheme where you match their savings efforts. Considerations: Be mindful of the gifting rules specifically if you receive government benefits or age pension. It’s also wise to ensure that this gift does not deplete your own savings, so speak to your financial adviser about your specific situation. Loaning money How it works: Instead of gifting, you can loan the money to your child or grandchild. This can be formalised with a loan agreement outlining the repayment terms and any interest. Considerations: This approach can protect your financial interests. However, it’s essential to have a clear and legally binding agreement to avoid potential family conflicts. Rent free living How it works: Allowing your child or grandchild to live with you rent free can help them save money for a deposit. This can be a temporary arrangement until they have enough savings to purchase a property. Considerations: Ensure this arrangement is clearly communicated and agreed upon by all parties. It can be a great way to support them without directly impacting your finances substantially. Joint ownership How it works: Co-purchasing a property with your child or grandchild can help them enter the property market. This means you both own a share of the property and contribute to the mortgage repayments. Considerations: Owning property with another person can have tax implications and affect your entitlement to government benefits. It’s important to seek financial advice to understand the full impact of this arrangement.     Protecting your retirement savings While helping your loved ones is important, safeguarding your retirement savings is crucial. Here are some strategies to help you stay financially secured: Diversify your investments Diversification can help protect your retirement savings from market volatility. By spreading your investments across different asset classes, such as stocks, bonds and real estate, you can reduce the impact of any single investment’s poor performance. Maintain an emergency fund Having an emergency fund can provide a financial cushion in case of unexpected expenses. This can prevent you from dipping into your long-term investments during emergencies. Adopt a sustainable withdrawal rate The 4% rule is a common guideline, suggesting that you withdraw 4% of your retirement savings in the first year and adjust for inflation in subsequent years. This can help your savings last longer during your retirement. Speak to your financial adviser about your specific circumstances. Consider annuities and IRIS products Speak to your financial adviser about annuities and innovative retirement income stream (IRIS) products that can provide a steady income stream in retirement – these reduce the risk of outliving your savings. They can be a valuable addition to your retirement plan, offering financial stability. Regularly review your financial plan Periodically reviewing your financial plan with your financial adviser can help you stay on track and make necessary adjustments. This helps ensure your retirement savings are aligned with your goals and risk tolerance. Limit large financial gifts While it’s generous to support your children or grandchildren, it’s important to balance this with your own financial needs. Consider how much you can give away while ensuring your retirement savings are enough for your own needs. Inspiring the next generation Your financial support can do more than just provide immediate benefits; it can inspire your children or grandchildren to achieve their own financial independence. By setting a positive example and providing the tools and resources they need, you can help them build a solid foundation for their future. Helping your adult kids or grandkids purchase their first property involves a combination of financial strategies and careful planning. As with any big financial decisions, we recommend you speak to your financial adviser or a financial coach to ensure your plans are appropriate to your personal situation.Source: MLC

New babies are a wonderful addition to your life. Planning ahead for parenthood can help you give your growing brood the best of everything. The costs of raising a child Children don’t stay small for long and the costs you face in the early days, like nappies, bouncers and prams, can pale into comparison with the subsequent cost of raising teenagers. Nonetheless, when two becomes three (or four, or five) you’re going to face additional household bills for food, clothing, energy consumption and of course all the equipment a new baby needs from cots and car seats to bibs and bassinets. Remember too, taking holidays is likely to cost more in terms of fares and accommodation. And later on, you’ll face the expenses associated with giving your child a quality education. Investing for your child One of the best steps new parents can take to manage the financial aspect of parenthood is investing for their child’s needs. This can mean setting aside funds to cover school fees, a university education or helping your older child buy a first car or even a first home. Single and having a baby Raising a baby on your own can be a rewarding though challenging experience and it can pay to build to a personal support network. Remember too, if you are a single parent you may be eligible in receiving certain financial government support. You may also be eligible in receiving child support payments from your baby’s other parent. Maternity leave and parental leave If you are working, you may be entitled to maternity or paternity leave. It is worth letting your employer know at an early stage when you would like to start your maternity leave – some employers will stipulate the stage of your pregnancy you must begin maternity leave. Aim to set a date for when you’d like to return to work also. This allows your employer to make arrangements for an interim employee. These days it’s not unusual for both mums and dads to take leave, one after the other. By tagging your maternity and paternity leave this way, you both get to spend time with your baby, avoid child care costs and give your newborn the benefit of an extended period with mum and dad. If you plan to return to work after the birth of your child, aim to make arrangements for child care at an early stage. It can be competitive to secure a spot in a centre near your home or workplace. Government assistance for growing families There are a raft of government support payments designed to help parents meet the costs of having a baby and raising their child. Be sure to apply early as it could take some time to be processed and for the payments to start coming through to you. Private health insurance – does your family need it? It is not essential to have private health cover and many public hospitals offer excellent ante and postnatal care. But if you prefer to have your own obstetrician or if you’d like to have your baby in a particular private hospital, it is worth reviewing your private health cover. Be sure any policy you select meets your needs as a family. Many policies will let you cherry pick the services you most need at this stage of life. This means you are only paying for what you need. Check out the government’s Private Health website for an ‘apples for apples’ comparison of different policies. Life insurance – keep your family protected The arrival of a new baby is a key life event and that should always be a trigger to review your personal insurances. Be sure to check you have adequate protection in place to provide for all your dependents if something were to happen to you. Remember too, to be sure your other half has up to date insurance cover. Financial advice for families Financial advice can be especially valuable for families. Whether you need help drafting a household budget or a complete financial plan to help ensure you can give your children the best opportunities possible, good financial advice can be a good investment. Source: BT

In today’s world, we manage a significant part of our lives through emails. We use them to communicate with friends, family and colleagues. We also use email to sign up for online accounts and services. Checking and managing your emails may seem like a mundane and repetitive task. But if you don’t stay vigilant, someone else could access and control your email account. This can lead to devastating personal and financial impacts. Cybercriminals can learn a lot about you from your emails. It is crucial to secure your email account, apply good habits and know how to protect yourself from scams. Understand the threats Poor cybersecurity makes it easier for someone to hack your email account. This can expose you to identity theft, fraud and further attacks. Learning about online threats is a first step in protecting yourself from cybercriminals. Phishing Phishing is when someone tricks you into giving them your personal information by pretending to be a person or business you trust. They may ask you to open a malicious link or attachment to steal your login or other details. Account compromise You need your email to access many online services such as banking and shopping. But if a cybercriminal gains access to your email account, they could get into any account linked to your email. They can then lock you out of these accounts and steal your money and personal information. Unusual account activity may be a sign of a compromise, such as a password reset or bank transfer you didn’t make. Identity theft Identity theft can occur when a cybercriminal gets access to your personal information. Common details they steal include your date of birth, address and tax file number. They can then use these details to impersonate you for financial gain. Malware Cybercriminals use malware (short for ‘malicious software’) to gain access to your data. You might open a link or attachment that downloads malware without you knowing. Some malware may even pose as antivirus or security products. Business email compromise Cybercriminals can impersonate a business by using a fake or compromised email account. This is a form of targeted phishing made to look like a real company or employee. Their goal is to trick victims into providing sensitive information, money or goods. Know the warning signs of email compromise Your login details don’t work. Your password recovery details have changed. You notice multiple login attempts at unusual locations or times. You get an unexpected email to reset your password. Your contacts are receiving emails from you that you didn’t send. If you notice any of these signs or suspect your email is compromised, reset your password and sign out of all sessions and follow this advice below. Strengthen your email account security There are several ways to make your email account more secure. Start by using multi factor authentication and a strong password. Turn on multi factor authentication Multi factor authentication (MFA) is one of the best ways to protect your email account from cybercriminals. MFA means you need 2 or more steps to verify your identity before you can log in. For example, using your login details as well as an authentication code. This makes it hard for cybercriminals to gain access to your account if they know your login details. Use a strong password If MFA is not an option, use a strong password such as a passphrase to protect your email account. A passphrase has 4 or more random words like ‘crystal onion clay pretzel’. Passphrases are easy to remember but hard for someone to guess. Don’t include personal details in your passphrase or share it with anyone. This includes the answers to your security questions if you need to recover your account. You may also want to consider using a password manager. A password manager can help protect, create and store strong and unique passwords. We recommend you to search online to compare their security features and the reputation of the service provider. If you are unsure, ask a friend, co-worker or IT professional for a recommendation. Set up account recovery options Make sure to set up recovery options for all your email accounts. If you lose access to your account or it is compromised, you can reset your login using your recovery option. Keep your devices and software up to date Regular updates are important for keeping your email accounts secure. Cybercriminals hack devices by using known weaknesses in systems or apps. Updates have security upgrades to fix these weaknesses. Make sure your devices and software are up to date. Check automatic updates are on and install updates as soon as possible. The longer you leave it, the more vulnerable you could be to a cyberattack. Practice secure habits Improving your email account security is only the first step. You also need to be aware of what to do and what not to do when using your email at home and in public. Check your recent login activity Make a habit of checking your email login activity often. This will allow you to catch any suspicious activity that can lead to an account compromise. This may include frequent login attempts, or login from an unrecognised device or location. If you notice any suspicious activity, sign out of all sessions and change your password. But be aware, it’s possible for your device to detect a different location than what you expect. For example, it may display your location based on the closest data centre in a major city. Use antivirus protection Antivirus software provides protection against malware. It helps to keep your devices secure and protect your personal information. Your devices likely come with built in antivirus software. Third party antivirus products can also offer more security features over free versions. If using these, make sure you research the provider online. Pay close attention to the services they offer and terms of service. Also, look for customer reviews and feedback. Avoid public WiFi Public networks are convenient but can also … Read more

In short: The Reserve Bank cut interest rates by 0.25 percentage points in August to 3.6 per cent, after July’s shock ‘on hold’ decision. The average owner-occupier with a $750,000 mortgage as of February will see their minimum monthly repayment fall $111 if their bank passes on the cut, taking the cumulative reduction this year to $340, according to Canstar. What’s next? The next RBA rates decision will be delivered on September 30. After that, there are two further meetings this year, in November and December. The Reserve Bank has delivered its third interest rate cut of 2025, with a 0.25 percentage point reduction at its August board meeting. That takes the cash rate to 3.6 per cent for the first time since April 2023. The move had been overwhelmingly anticipated by financial markets and economists after the surprise decision to hold rates steady in July. It was a unanimous decision by board, which had been divided last month. Tuesday’s cut follows a further easing of inflation in the June quarter, which RBA governor Michele Bullock last month highlighted as the crucial piece of data the monetary policy board was waiting for. “Updated staff forecasts for the August meeting suggest that underlying inflation will continue to moderate to around the midpoint of the 2–3 per cent range, with the cash rate assumed to follow a gradual easing path”, the post-meeting statement read. ABC News / Source: Reserve Bank of Australia The inflation pull back, alongside “labour market conditions easing slightly, as expected”, led the board to deem “further easing of monetary policy was appropriate”. “This takes the decline in the cash rate since the beginning of the year to 75 basis points”, the RBA board noted in its statement. The central bank cut interest rates at its February and May board meetings. Before that, the RBA’s cash rate had sat at 4.35 per cent since November 2023, after a series of 13 rate hikes, beginning in May 2022. Treasurer Jim Chalmers described it as a “very welcome relief for millions of Australians”. “It means the lowest interest rates for more than two years”, he said shortly after the decision. “It reflects the substantial and sustained progress we’ve made on inflation in a volatile and uncertain global environment”, the treasurer noted in a statement. Cash rate at 3.6pc, further rate cuts expected The Australian dollar fell following the decision, dipping just below 65 US cents as Ms Bullock addressed a media conference in Sydney. The RBA governor indicated the board was prepared to cut interest rates further if necessary. “The forecasts imply that the cash rate might need to be a bit lower than it is today to keep inflation low and stable, and employment growing, but there is still a lot of uncertainty”, Ms Bullock told reporters. “The board will continue to focus on the data to guide its policy response”. Where are rates heading? The Reserve Bank’s economic outlook suggests further room to cut interest rates, but it’s not all good news for most working-age Australians. Betashares chief economist, David Bassanese has forecast further interest rate cuts, with the next easing more likely in November, rather than at the next meeting in September. “Indeed, the [central] bank’s own forecasts of underlying inflation stabilising at 2.6 per cent over coming quarters incorporate further declines in the cash rate in line with current market expectations”, he wrote. “That said, barring a major growth scare, the RBA does not seem in any rush to cut interest rates. “All up, my base case remains that a rate cut on Melbourne Cup day is an odds on favourite –following release of the June quarter consumer price index report in late October”. The governor would not be drawn on what specific cash rate the central bank considers to be “neutral” – that is, the level where the rate is not stimulating or putting a handbrake on the economy. Instead, she gave a “very wide range” of between 1 and 4 per cent, and noted a neutral rate is for when there is an absence of economic shocks. “We are very often not in the absence of shocks … we’ve got shocks, particularly at the moment”. While the central bank’s forecasts put inflation around target over the period ahead, it has downgraded its growth forecasts. It now expects gross domestic product (GDP) expanded 1.6 per cent over the year to June (compared to 1.8 per cent forecast in May); and GDP growth to only pick up to 1.7 per cent by the end of the year (it had previously forecast 2.1 per cent). “Its forecasts assume that the cash rate will continue to ‘follow a gradual easing path’, implying that without further easing growth and inflation will be lower and unemployment higher”, AMP chief economist, Shane Oliver said. AMP has forecast further rate cuts in November, February and May to take the cash rate to 2.85 per cent. “We continue to see further rate cuts as growth remains sub par, the risks to unemployment are on the upside, underlying inflation is likely to remain around the 2.5 per cent target and monetary policy remains tight”, Dr Oliver wrote. How much will home loan repayments fall? Some lenders were quick off the mark to confirm they would be passing on the interest rate cut to home loan customers, with Macquarie, Commonwealth Bank, Westpac, ANZ, NAB and AMP among the first handful of announcements. The cumulative effect of three rate cuts so far this year have added up to a substantial reduction in minimum mortgage repayments for many home loan borrowers. According to calculations by financial comparison site Canstar, the savings from this month’s cut range from $74 on a half a million dollar mortgage, to $148 on a $1 million home loan. Based on an owner-occupier paying principal and interest with 25 years remaining in Feb 2025 at the RBA average existing customer variable rate. Calculations assume the banks pass on each cut in full to … Read more

Protecting retirement income from inflation The fall in inflation from multi decade highs is good news for the Australian economy. Many retirees are struggling to manage their cost of living because of the cumulative impact inflation has had on their financial position. Looking forward, retirees need a portfolio that is protected from inflation risks so that they don’t experience another cost of living crisis when inflation has another upturn. Maintaining the long-term real value of investments The key to a successful investment strategy is the ability to generate returns over the long term. Managing inflation is an important piece of the strategy. Long-term investments need to be able to generate a real rate of return that provides growth in the investment value. The investments do not need to capture short-term inflation changes, but they need to offset the impact of inflation over time. Assets that are expected to do this are generally referred to as ‘growth’ assets. To demonstrate this, we can look at the historical performance of assets over the long run1. Looking at Australian investment returns between 1900 – 2023, equities provided a return higher than inflation in 81 years which was 73% of the time. The one-year success rate for bonds and bills (cash) were lower, constrained by historical limits on bond yields. Both bonds and bills provided a one-year real return only 62% of the time in the same period. The long run probabilities are shown in Figure 1. As the investment horizon extends out, up to 25 years, the probability of equities providing a real return increases. The higher returns on the investment eventually overcome any initial shortfall. Bond and bill investments show little improvement with a longer investment horizon2. At horizons of 20 years, the probability of delivering a positive real return from nominal bonds was only 60%. Historically, all investment horizons of 16 years (and longer) have provided a positive real return for Australian equities. While history does not provide a guarantee, the increase shown in Figure 1 should provide confidence that a long-term investment in equities will provide real capital growth. This analysis can be extended to diversified products such as a 70/30 growth fund (70% equities and 30% bonds) and a 50/50 balanced fund (50% equities and 50% bonds). These both show trend improvements over time, benefiting from the exposure to growth assets, but over longer periods. The 70/30 fund needed 20 years and the 50/50 fund 25 years historically to ensure the positive real return. The portfolio comparison in retirement is important in the generation of income over longer periods. If income is taken as a set percentage of the balance than changes in income will directly link to market movements. Also, there are market linked annuities available in Australia where the capital is consumed but the income, which is paid for life, will be directly linked to the performance of the specified market or underlying investments. This paper provides a historical basis to consider the inflation protection provided by these income streams. Historical investment performance is not a reliable indicator of future performance, but it is worth considering the timeframe for recovery from historical shocks. Figure 1: Historical probability of positive real returns, 1900-2023 Source: Calculations, based on data from Morningstar, S&P, Bloomberg and ABS Inflation risk in retirement Inflation is often called out as a risk in retirement that needs to be managed differently. Longevity and sequencing risks are also noted as being different, and these are not present in the accumulation phase. One of the challenges with managing inflation risk in retirement, is that inflation risk has a different impact on a portfolio in the retirement phase. Management of inflation risk in retirement needs a different approach. It is not just that capital needs to regain its real value, but every income payment needs to keep its value to maintain the target lifestyle of the retiree. We can examine this difference by considering the outcome for someone who started to draw an income at the start of 1973. This was one of the worst years in the historical comparison where the inflation spike meant that any investment linked income would be falling in real terms in the first year. If a retiree’s income was linked to an investment, the real value would have declined for any of the three assets: Bills by 3.5%; Bonds by 26% and Equities by 30.7%. What happens over time is the recovery in the level of income. Income linked to equity performance briefly exceeds the original value in 1980 but dips again before maintaining real gains from 1983. Bills provide higher real income from 1985 while bonds will take until 1992. The 19 year impact on bonds highlights the exposure that nominal bonds have to inflation risks. The pattern for income linked to the different markets from 1973 can be seen in Figure 2. Figure 2: Investment-linked income example Source: Calculations, based on data from Morningstar, S&P, Bloomberg and ABS There is more at stake for retirees. The impact is not just the length of time to recover the real capital value, but the income that is lost over that period. For the nine years that the real equity linked income is under the starting point, a retiree needs to reduce their lifestyle or run their capital down early. The shortfall is shown in Figure 3. It highlights the cumulative shortfall in income, relative to the initial lifestyle of the retiree. The starting point is where inflation risk creates an impact which might be after the start of retirement. The shortfall highlights the extent of the impact from an inflation shock. The worst performance is from bonds, where more than 7 years of income (lifestyle) were lost over a 17-year period before a modest recovery. For equity-linked income, nearly three years of lifestyle were lost over nine years. While there was a strong recovery after, this is an average of a third of total spending that needs to be cut for … Read more

The amount of super you need to support your retirement will depend on what kind of lifestyle you’re hoping to enjoy and how much income you’ll be earning in addition to your super savings. Income from the Age Pension, part-time work and other financial investments will affect the amount of super you need to retire comfortably. The Association of Superannuation Funds of Australia (ASFA) provides yearly total income recommendations based on the type of retirement you’re aiming for. Depending on how much income you expect to receive from other sources, you can then estimate how much super you’ll need to reach the “comfortable” or “modest” benchmarks. The table below gives you an idea of how much retirement income you might need to enjoy a comfortable, or modest retirement, and compares these benchmarks against how much you can receive on the Age Pension.   Comfortable lifestyle Modest lifestyle Maximum rate of Age Pension Single $52,383 $33,386 $29,874.00 Couple $73,875 $48,184 $22,518.60 (each) a year Budgets for various households and living standards for those aged 65-84 (March quarter 2025) Source: ASFA Retirement Standard The amount of super you need will also depend on what you’re earning from full or part-time work, the Age Pension and other investments. To enjoy a comfortable retirement, AFSA suggests that single people will need $595,000 in super savings at age 67, and couples will need $690,000. But your own individual goal will depend on your other income streams and personal situation. In addition to the total amount of super you have, the way you access it once you retire can also impact your retirement wealth. For example, your super earnings might be subject to more tax if you plan to withdraw lump sums, compared to setting up a super income stream like an account-based pension. What’s the difference between a comfortable and modest retirement in Australia? A comfortable retirement means you can look forward to a broad range of leisure and recreational activities, with a good standard of living. ASFA guidelines suggest you’ll be able to purchase things like private health insurance, a reasonable car, good clothes and a range of electronic equipment. You’ll enjoy domestic and occasionally international, holiday travel. According to ASFA, you can expect a modest retirement to be better than living on the government Age Pension. However, you’ll only be able to enjoy a fairly basic lifestyle. See the charts below to get a more detailed understanding of what sort of services and luxuries you might be able to enjoy, based on your retirement savings.       Comfortable lifestyle Modest lifestyle Age Pension Medical Top level private health insurance, doctor/specialist visits, pharmacy needs Basic private health insurance, limited gap payments No private health insurance. Technology Fast reliable internet/telco subscription, computer/android mobile/streaming services Basic mobile, modest internet data allowance Very basic mobile and limited internet connectivity Transport Own a reasonable car, car insurance and maintenance/upkeep Owning a cheaper, older, more basic car Limited budget to own, maintain or repair a car Lifestyle Regular leisure activities including club membership, cinema visits, exhibitions, dance/yoga classes Infrequent leisure activities, occasional trip to the cinema Rare trips to the cinema Home Home repairs, updates and maintenance to kitchen and bathroom appliances over 20 years Limited budget for home repairs, household appliances Struggle to pay for repairs, such as leaky roofs or major plumbing problem Haircuts Regular professional haircuts Budget haircuts Less frequent haircuts, or self haircuts Home cooling and heating Confidence to use air conditioning in the home, afford all utilities Need to keep a close watch on all utility costs and make sacrifices Limited budget for home heating in winter Eating out Occasional restaurant meals, home delivery meals, take away coffee Limited meals out at inexpensive restaurants, infrequent home delivery or take away Only local club special meals or inexpensive take away Clothing Replace worn out clothing and footwear items, modest wardrobe updates Limited budget to replace or update worn items   Very basic clothing and footwear budget   Travel Annual domestic trip to visit family, one overseas trip every seven years Annual domestic trip or a few short breaks   Occasional short break or day trip in your own city Annual budgets for households and living standards for those aged 65-84 (March quarter 2025) Source: ASFA Retirement Standard Do I need a second income stream in retirement? This will come down to your personal circumstances, and what kind of lifestyle you’re hoping to enjoy when you retire. Planning ahead is a great idea if you want to supplement your super with additional streams of income. For example, you could: build up your financial investments top up your super with salary sacrifice or a personal super contribution find part-time employment apply for the Age Pension. What government benefits could I receive? When you retire, you might be eligible for government benefits like the Age Pension or a concession card. This will depend on your age, your residency status, and your financial situation. As of 20 March 2025, the maximum Age Pension is: $1,149 per fortnight for singles ($29,874 a year). $866 each per fortnight for couples ($22,516 a year). If you’re eligible for the Age Pension, you may also be able to access additional government payments, such as: Carer allowance: If you provide daily care to an elderly person or someone with a disability or a serious illness. Rent assistance: To help cover your rent if you’re renting privately. If you’re receiving the Age Pension, the government will automatically send you a Pensioner Concession Card. Even if you’re not eligible for the Pensioner Concession Card, you might still be able to get a Commonwealth Seniors Health Card, subject to being eligible. Either of these cards will allow you to access: cheaper medicines on the Pharmaceutical Benefits Scheme (PBS) bulk billing for doctor’s appointments reduced out of hospital expenses through Medicare. Note that there may be additional concessions from state or territory governments, or from local councils and businesses. How can I set myself up for the retirement I want? Your first step will … Read more

Global Financial markets rallied in July after the US struck trade deals with Japan and the EU, which involved a reduction in the tariff rate in exchange for over $1 trillion in combined investment and purchased commitments, supporting both equities and broader risk sentiment. While gold has been supported year to date (YTD) by safe-haven demand and exchange traded fund (ETF) inflows, momentum softened after the trade deal announcements and prices accordingly consolidated into month end. Gold spot finished July 40 basis points (bps) lower than it started. COMEX futures and London Metal Exchange (LME) benchmarks rallied at the beginning of July after US President Trump flagged the possibility of a 50% tariff on copper imports. However, later in the month, the price action reversed sharply after the administration clarified that the tariff would only apply to semi finished copper and derivative products (not refined metal). Global equities performed well in July, with the Morgan Stanley Capital International (MSCI) World Index closing at a record high and up +1.2% on the month. The S&P500 and Nasdaq also created several fresh highs, boosted by solid earnings releases and easing tariff concerns. The global manufacturing Purchasing Managers’ Index (PMI) increased to 50.3 in June and global services PMI declined slightly to 51.9. US US Federal Reserve (The Fed) kept interest rates unchanged. Fed Chair, Jerome Powell did not give any signal regarding next steps for policy rates, consistent with previous guidance from the committee to watch data “over the summer”. At the beginning of the month, the US Senate passed Trump’s “Big Beautiful Bill” after a 27-hour session. With the Senate tied 50-50, Vice President JD Vance cast the tie breaking vote and took the final count to 51-50. President Trump signed the Bill into law during the White House’s Fourth of July ceremony. The Nasdaq and S&P500 closed at record highs multiple times throughout the month. Nvidia boosted the index and became the first public company to reach US $4tn market cap. On the last trading day of the month, Microsoft briefly surpassed the US $4tn market cap threshold, becoming the second publicly traded company to ever do so. The S&P500 and Nasdaq closed July up +2.2% and +3.7% respectively. Q2 GDP rebounded to +3.0% quarter on quarter seasonally adjusted annual rate (SAAR). The statistic was boosted by net exports, with underlying growth slowing. Core Consumer Price Index (CPI) printed at +0.23% month on month (MOM), slightly softer than consensus expectations of +0.3%. Core Personal Consumption Expenditures (PCE) matched expectations, printing at +0.26% MOM, with the year on year (YOY) reading stronger than expected due to upward revisions of the May and April numbers. The unemployment rate fell unexpectedly to 4.11% in June, with the US economy adding 147k jobs. Industrial production increased +0.3% MOM in June, while manufacturing production increased by +0.1%. Australia The Reserve Bank of Australia (RBA) elected to keep rates on hold during its July meeting in a 6-3 vote. This surprised the market, which had almost fully priced in a 25bp cut. The majority of Board members decided to wait until the Q2 CPI data was published before voting in favour of an additional rate reduction. The ASX200 advanced +2.4% in July and notably surpassed 8,700 for the first time in its history on Friday 18 July. The unemployment rate in June ticked up to 4.3%. The economy added over 2,000 jobs, below consensus estimates of adding 20k jobs. Q2 CPI printed slightly softer than expected, with headline CPI increasing by +0.71% in Q2, below consensus +0.8%. Consequently, yearly headline CPI eased from +2.4% to +2.1%. Trimmed mean CPI increased by +0.59%, below +0.7% expectations. This confirmed market expectations for a 25bp rate cut in August. This policy rate change is nearly fully priced in by fixed income markets. May and June retail sales were released during July. May sales came in at +0.2%, weaker than the +0.5% consensus pencilled in and April’s -0.1% figure was revised to flat. On the other hand, June retail sales were stronger than expected, increasing by +1.2% (vs consensus expectations for a +0.4% rise). Notably, this was the last retail sales print, with the Australia Bureau of Statistics (ABS) moving to a broader household spending indicator. New Zealand The Reserve Bank of New Zealand (RBNZ) opted to leave interest rates unchanged at 3.25% when it met in July, with the expectation that annual CPI would likely increase towards the top of the Monetary Policy Committee’s 1-3% target band over mid 2025. Later in the month, Q2 CPI printed softer than expected, increasing by +0.5%, vs consensus expectations of +0.6%. The headline miss was largely due to lower than expected home ownership costs and health. Europe US President Trump proposed a 30% tariff on all goods from the European Union if a separate trade deal could not be negotiated before August 1. Later in the month, an agreement was reached which imposed a 15% tariff on European exports to the US. The European Central Bank (ECB) kept interest rates unchanged in July as expected. The Eurozone unemployment rate inched up to 6.3% in May, from 6.2% in April. The STOXX600 gained +0.9% during July. The market moved mostly sideways during the month as investors awaited further clarity on the tariff situation. Eurozone Harmonised Index of Consumer Prices (HICP) rose to 2.0% in June, slightly higher than the 1.9% May print. Euro area industrial production rebounded strongly in May, up +1.7% MOM, vs -2.2% MOM decline in April. China China’s economy expanded by +5.2% YOY in Q2, slightly ahead of consensus expectations but exceeding Beijing’s full year target of 5%. On July 28, China announced that it would be implementing nationwide childcare subsidies to support the birth rate. The program will see families provided with 3,600 yuan per year for each child up until the age of three. The subsidies will have retroactive coverage, applying in full to children born on or after 1 January 2025 and in part to children … Read more