How Much Are Our Parents Going To Leave Us?

The wealthiest generation we have seen in history are the Baby Boomers (1946-1964) – approximately 25% of Australians. They are now ageing and preparing to pass down a record-breaking amount of assets to their children.

Or are they?

Today's Boomers are currently living in a “You Only Live Once” mindset, driven to try new experiences and stay active in their golden years. Not only are they pursuing expensive retirement activities, and spending more on consumer goods than today’s younger generations, but they are also taking risks with investments.

Their years of children’s school fees, down payments on homes and cars, caring for grandchildren financially and so on, are taking a back pocket to their own future enjoying their money while they still can. Boomers are still spending, taking care of themselves for a change, and not ready to hand over their hard earned and accumulated wealth.

To compound this dwindling wealth transfer, our Boomers just aren’t even thinking about how to deal with their money when they’re gone. And if they have had that back-of-the-mind thought, they’re certainly not talking about it.

The discussion between parents and their children about wealth transfer is still a taboo subject.

Why could that be? Many parents are hesitant to have that conversation in fear of realising their mortality, but also in fear of raising their children’s financial expectations.

Parents also tend not to discuss their wealth transference ahead of time because they don’t want to deal with the ramifications of a child that feels hard done by. They may not have to deal with it when they’re gone, but someone does, and it can break future generations apart. So best to deal with it now.

 “Money is the root of all evil”, a biblical passage based on a letter from Apostle Paul, was never truer when it comes to inheritance. Some stories you hear of family fights over “unfair” distribution of inheritances would make their parents turn in their grave. Of course, they would never think that their children would fight over money. But it does create family problems. Often.

Planning what happens to this wealth transfer is a very important subject that does need addressing, whether it is initiated by the parent, or by the child. There is only one way to plan this Estate Planning, and that is to establish a plan.  

This Boomer inter-generational wealth transfer is fast-approaching, and the discussion needs to be initiated now. This discussion also needs to include every concerned party – those that are doing the leaving, and those that are doing the receiving. Every concerned party needs to understand the process and how it may affect them, and the positive impact it will have. The best place to start, is to form a relationship with a financial adviser. They are dealing with Estate Planning most days of the year.

Our Boomers, and their children, need to understand how financial advice can help avoid tax burdens, manage existing investments, develop retirement plans, and avoid family infighting down the track.

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Karen Vickers is a Sydney based Financial Adviser, at Arc Wealth, with years of experience helping individuals, couples and families manage their finances and transference of wealth. www.ArcWealth.com.au

The Association of Financial Advisers (AFA) and TAL have announced the semi-finalists in the 2016 AFA Female Excellence in Advice Award.

Developed in 2011 as a joint initiative by the AFA and TAL, the Award recognises and showcases the talents and contributions of women in financial advice to their clients, community and profession. The Award criteria includes assessment of the candidates’ contributions to financial literacy in the community and/or campaigns targeted specifically at helping female clients take control of their financial lives.

AFA CEO, Brad Fox, said the Award is a reflection of the AFA’s commitment to continue to generate and encourage positive change in the financial advice sector, with women constantly being encouraged to enter the advice profession.

“The AFA is immensely proud of this Award, the calibre of entrants it attracts, and ultimately the finalists and in particular the winner. Our profession is going through significant change, and to see more women advisers coming through providing great advice to Australians is very important from a diversity perspective.”

When asked about her business and contribution to the financial services industry, Karen Vickers proudly explained, “My primary business is ARC Wealth, a financial advisory service to an established core of clients. From the strength and security of ARC Wealth I am building an online platform, Your Wealth Vault, which educates and guides people through a series of educational courses called Your Money Sense. These courses are aimed at guiding individuals to take ownership of their financial security, through courses of basic understanding of their money and then onto more sophisticated courses guiding them to their own financial management and wealth building.”

Your Wealth Vault courses are designed to help Australians understand how their money works and what they can put in place to manage their finances whether that is for day to day survival, or wealth creation.

The finalists for the AFA Female Excellence in Advice Award winner will be announced at the AFA National Adviser Conference in Canberra from 5-7 October.

What 5 things would you grab if your house was on fire?

Your home is on fire (God forbid) and you have time to safely grab 5 items (assume all people and animals are safe). What did you grab?

This is not a post about the tragic consequence of anyone’s property actually being on fire but one of personal conflict between what’s practical, valuable and sentimental and planning for ahead. What you would take from your burning house reflects your interests, background and priorities. Think of it as an interview about your life, condensed into one question: What would you save?

Maybe you’re now pondering this question: “What would I take from my burning house?” Would you go the practical route and snatch your computer or phone, or are you more sentimental, opting for old photos and toys? It’s a tough one.

Sometimes it takes a moment of crisis to realize what matters. Sometimes it takes a really difficult question to force you to think about what you value in life. A plan is critical even if it’s formulated over the course of a minute.

So you’ve got your 5 items together but what about the rest of the contents when it does burn to the ground? Oh well that’s easy right, insurance takes care of that. Sure it does, but what exactly was in there and what was everything valued at? Here’s a quick tip that you can do next time you have a spare hours, or when there’s nothing on TV: Create a mini movie, room-by-room, the playback being very valuable when making an insurance claim. Walk through each room and record your stuff. Be sure to shoot serial numbers and add commentary by reading out model numbers. Save it onto a hard drive or flash-drive, collect important receipts and documents and store it all together in a quick-to-go place.

So now you’ve got a plan for when your house burns down. What about a plan for the inevitable: Life? Yep you need a plan to be financially secure when you grow old – and anywhere in between. You need a financial plan. Again, you need to spend a bit of time putting it together, collecting your important financial information and then starting a budget so you know what’s coming in and what’s going out, money-wise. It’s not that hard. You can start here by downloading our Free Your Money Sense e-Book: “6-steps to Financial Security”.

So back to the burning house. We’ll assume the cat and dog were ok: What 5 things did you grab?

Are Your Financial Habits Normal?

Each day you get up and shower, get dressed, have breakfast, feed the pets and go to work: or something like that. That’s normal for you but it doesn’t mean it’s normal for the next person.

Did you know that when it comes to your money, there is a normal too? Your money normal encompasses your ability to pay your bills, educate your kids, buy a home or retire in comfort and security. That will change for everyone.

So how do you define your money-normal, as it can impact your life in huge ways?

Some people believe that you save regularly and stay out of debt. Others believe that the future is unknowable, so why worry about it. We ultimately define our actions based on our habits and what we believe is appropriate or in our best interest.

Meet Chandler who is a frugal spender, a good saver and even manages to invest here and there. He is happy with that lifestyle and always manages to have money available to do what he wants to do, when he wants to do it. He is organized, disciplined, a planner and a saver.

On the flip side Joey likes to spend as required, he likes to do and have what he wants and needs without consideration of next months finances, and as a result lives from day to day, not interested in, or maybe not knowledgeable of what he requires to save for the future. He thinks it will be there when it’s needed; somehow. (Of course there are many variations of those two examples.)

Both of these fictional people believe that their approach is normal. And it is because they live it. But the consequences can be very different. It’s not a matter of who is wrong or right – it’s simply, their normal.

You need to understand your normal, does it bring you closer to your happiness, satisfaction, comfort and a secure financial future?  If so, keep it going. If not, perhaps it’s time for a new normal…

A good start to being money-normal is to get a plan in place. Start by downloading our Free Your Money Sense e-Book: “6-steps to Financial Security”.

What is your “normal”?

Dream your Goals

If you don’t know where you are it’s often hard to know where you are going. Establish a budget; then revise and review. Your budget is a living document, it keeps changing so you need to keep assessing and adapting to these changes. Put some realistic goals in place and try to stick to them. You’ll benefit in the long run. www.YourWealthVault.com.au

A Husband is not a Retirement Plan

Unfortunately most women will face immense challenges as they reach retirement due to an imbalance in superannuation savings between men and women. The gap between men and women is said to be approximately 46% which leave many women reliant on their spouse and/or the age pension in retirement.

Why is there such a gap in savings for retirement between the genders? That is a broad answer but can be mainly attributed to these factors: career opportunity; more women in part-time work; women are working less hours than men; earlier retirement; and unfortunately the ever increasing reason:- Divorce. Most females will succumb to one or all of these factors in their work lifespan.

Women, often commonly referred to as mums, are generally the primary care-givers in the family so this cuts into their career opportunities, length of working life, and therefore their earnings potential and super contributions as a result. That’s fine if you have planned for this when you and your spouse retire. But what if your relationship doesn’t go the distance?

Whilst divorce rates have decreased ever so slightly over the past few years, the rate is still 1 in 3, meaning it is more likely for women to end up single prior to retirement, or not being able to retire at all. If you are one of the fortunate ones who stick it out, or even better truly love and trust your partner, then you will be in a situation of mutually funded retirement. Congratulations.

Not wanting to spread doom and gloom here to the female population but women tend to outlive men so your planning needs to take into account that alone time, personally and financially too.

There are so many variables as to why the female population may end up short-cashed in retirement, and it’s ok, really. You just need to plan ahead. Think about the what-ifs: What-if you don’t earn enough to generate enough Super, what-if your partner does leave this world prior to you, or what-if your relationship doesn’t make the distance?

Plan, plan and more planning. You need to establish your our financial retirement identity and plan. Here’s is where I can help: My name is Karen Vickers and I am a single mother who has faced many of the challenges above. I am also a financial adviser with many female clients and I am passionate about helping and educating women to take a hold of their own financial future. If you need any help with establishing a personally financial secure future, please do not hesitate to connect with me at ARC Wealth and we can discuss it confidentially.

If you want to start with some self-education then here’s a helpful downloadable guide: 6-steps to Financial Security, a Free e-book from Your Money Sense. It’s a good starting point to get you in the right mindset to manage your money and build your own retirement nest-egg.