Stay up to date with what’s happened in markets and the Australian economy over the past month.

Despite some signs of a weakening economy with stalling growth and a softening labour market, persistently high inflation is acting as a roadblock to the RBA’s possible rate cuts.

Markets have now priced in a risk that the RBA could hike rates as soon as the next meeting in August.

Australian shares finished the month close to where they started, with investor sentiment influenced by news of higher inflation and fears of another interest rate hike.

Click here for our July update video.

Please get in touch on 03 9723 0522 if you’d like assistance with your personal financial situation.

Suite 2, 1 Railway Crescent
Croydon, Victoria 3136

Email: integrityone@iplan.com.au

Telephone : 03 9723 0522

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This information is of a general nature and does not take into consideration anyone’s individual circumstances or objectives. Financial Planning activities only are provided by Integrity One Planning Services Pty Ltd as a Corporate Authorised Representative No. 315000 of Integrity Financial Planners Pty Ltd ABN 71 069 537 855 AFSL 225051. Integrity One Planning Services Pty Ltd and Integrity One Accounting and Business Advisory Services Pty Ltd are not liable for any financial loss resulting from decisions made based on this information. Please consult your adviser, finance specialist, broker, and/or accountant before making decisions using this information.

Managing your financial situation always involves tension between how you live your life now and preparing for your future – whatever that looks like.

The worry about not getting the balance right and making unnecessary sacrifices now – or not having enough money for the things you want to do in the future is a common and valid concern we hear when we talk to clients. You want to be living your best life now which means not living too frugally or worrying about your future. At the same time, you don’t want the choices you are making now in how you live your life to impact or make impossible the wonderful life you envision for yourself down the track.

Balance whatever your stage of life

We all have financial goals – whether you are saving for your children’s education, working towards that once in a lifetime round the world trip, freeing up finances for a gap year, or setting yourself up for a wonderful retirement. It’s important to balance your ‘now’ with your ‘future’ when it comes to spending, saving, and investing to make sure you can achieve those goals. You don’t want to regret your spending – or on the other hand live a frugal life and look back on opportunities you missed while you were squirrelling it away.

The tension between the ‘now’ and your ‘future’ with respect to your finances can be even more heightened when you have retired. It can be a strange adjustment suddenly not having a wage coming in and living off your savings, super and investments. It’s common, and quite understandable, to worry about not having enough to last the distance, particularly given that a 65-year-old today may live well into their 90’s and could spend up to three decades in retirement. No one wants to outlive their savings.

However, many retirees live unnecessarily frugal lives as evidenced by a 2020 Retirement Income Review which found that most people die with the bulk of their retirement wealth intact.Those that live frugally do so often not from necessity but because they don’t have an understanding of their financial needs, including how these will change over time, and how much they can afford to spend.

How the balance changes over time

That balance is hard to hit. It is different for different people, and your approach to saving and spending will change at various stages of your life.

If you are paying off a difficult to maintain level of debt or in the final stages of scraping together a deposit for a home, making sacrifices now in the way you live life your life might feel OK. Equally, if you have spent much of your life building wealth, letting loose the reins a little and going on that cruise might be something you are extremely comfortable with.

Certainty now and confidence in the future

Whatever your stage of life, achieving the right balance comes from having an in-depth understanding of your financial situation now, and establishing and maintaining a personalised plan that takes into account all aspects of your financials – your earning capacity, level of debt, assets and very importantly, the life you want to live today and your goals for the future.

The importance of receiving support with financial planning is reinforced in a recent report which indicated advised Australians are significantly more likely to say they feel confident in achieving their financial goals (71%) compared with those who are not receiving support (55%).

The same proportion said that they were living well now, stating their finances allow them to “do the things I want and enjoy in life.” And those receiving advice are also balancing the “now” with their future needs. Those accessing financial advice also indicated they were more likely to be financially prepared for retirement and have a higher savings balance.

This confidence that comes from receiving personalised advice also means being more prepared when people leave the workforce (and a wage) behind. Advised Australians are significantly more likely to feel very or reasonably prepared for retirement (76%), than those without advice (45).^iv

The key to achieving a balance between living your best life now and being financially secure in the future is knowledge. If we know that tomorrow is shaping up well for us, we may worry a little less today, feel a little less guilty when we spend today and be less likely to have regrets about spending – or about missing out – further down the track.

Suite 2, 1 Railway Crescent
Croydon, Victoria 3136

Email: integrityone@iplan.com.au

Telephone : 03 9723 0522

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This information is of a general nature and does not take into consideration anyone’s individual circumstances or objectives. Financial Planning activities only are provided by Integrity One Planning Services Pty Ltd as a Corporate Authorised Representative No. 315000 of Integrity Financial Planners Pty Ltd ABN 71 069 537 855 AFSL 225051. Integrity One Planning Services Pty Ltd and Integrity One Accounting and Business Advisory Services Pty Ltd are not liable for any financial loss resulting from decisions made based on this information. Please consult your adviser, finance specialist, broker, and/or accountant before making decisions using this information.

Confused about aged care fees and what it all means? You are not alone. In this article we simplify the basics of aged care fees for you.

If you, or someone you love, need to make a move into residential aged care, understanding the fees and getting a clear picture of what it will cost is not easy. There are all sorts of fees and you will come across a myriad of acronyms such as RADs, DAPs, MPIRs, MTAs and MTFs.

So where do you start and how do you navigate through this maze? And what might change in the future, following the recent release of the Aged Care Taskforce report on aged care funding?

Why so many fees?

A move into residential care is essentially a move into a new home – just a home with built-in care and support. Just like living in your home, the fees for residential care can be divided into three categories:

• Paying for accommodation
• Paying for daily living expenses
• Paying for care services.

The way these fees are calculated is different to the spending choices you have while you live in your own home. The government sets some of the rules and fees. Other fees may be set by the care provider.

Paying for accommodation

Paying for your room is probably the most complicated part.

The cost of a room can be anywhere up to around $2.5m with the average around $400,000-$500,000. While you are not buying property,  you still need to either find a lump sum of money to buy the right to live there or generate cashflow to rent your room.

This is a cost you need to fully fund, so it is important to make affordable choices. But if you are assessed to have low financial capacity, the government sets a different pricing structure and might help by paying some (or all) of the room cost.

Some of the discussion on reforms in this space may see the phasing out over time of the lump sum purchase option, with everyone just paying a daily rent. It is also possible, that until that point, new lump sums paid may not be fully refundable.

Paying for daily living expenses

Once you move into care, many of the daily bills you receive for things like food, electricity, gas and cleaning will no longer come to you. Instead these are paid by the care provider and you will be asked to pay a flat daily fee to help cover the shared costs of these expenses.

Potential reforms in this area may see residents paying higher fees for these services. Currently the government sets a flat fee for all residents in all residential care services, but potential changes may see this being set individually by care providers based on the level and quality of services provided.

Paying for your care

 On average, the government currently funds around 75% of care costs, with the remaining 25% paid by residents according to a means-test which determines financial capacity.

The decisions you make around how to structure your assets are important as they may impact how much you will be asked to pay. To help with planning there is an annual cap and a lifetime cap on the fees payable.

It is generally agreed that these costs are high and need to be subsidised by government but there is not a clear direction yet on where reform will go in this area. Some proposals consider that means-testing should be abolished with the government paying the full cost. Other proposals consider that means-testing should be increased so that wealthier residents pay more of the cost. We need to wait to see what the Government decides to do.

If you need to make decisions

Making aged care decisions on your own is hard. There are so many moving parts with family preferences, taxation, age pension, estate planning and fee implications. That’s why we are here to help.

As an experienced financial planner who specialises in aged care advice we have the experience, knowledge and tools to help you review your options and make good decisions. If you need help, or want to start planning ahead, call our office on 03 9723 0522 to make an appointment to discuss.

Suite 2, 1 Railway Crescent
Croydon, Victoria 3136

Email: integrityone@iplan.com.au

Telephone : 03 9723 0522

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This information is of a general nature and does not take into consideration anyone’s individual circumstances or objectives. Financial Planning activities only are provided by Integrity One Planning Services Pty Ltd as a Corporate Authorised Representative No. 315000 of Integrity Financial Planners Pty Ltd ABN 71 069 537 855 AFSL 225051. Integrity One Planning Services Pty Ltd and Integrity One Accounting and Business Advisory Services Pty Ltd are not liable for any financial loss resulting from decisions made based on this information. Please consult your adviser, finance specialist, broker, and/or accountant before making decisions using this information.

Refinancing your home loan has the potential to save you thousands, reduce your monthly repayments and free up your finances to achieve your goals.

However, mastering the art of refinancing requires strategic planning, an understanding of the process and taking numerous considerations into account. Whether you plan on external or internal refinancing, here’s what to keep in mind.

Understand the different types of refinancing

While many people think of refinancing as switching lenders, you can also choose a better deal but stay with your original lender. Refinancing through your original lender but opting for a different deal is referred to as an internal refinance; external refinance is where you find a different lender.

In 2023, it was reported that Australia had the largest boom in mortgage refinances in history over the past three years. And according to Finder’s Housing Market Report 2023, while in 2019 just over half of refinancers were external refinancers, by mid-2023, this had jumped to 72%.

Know the market and interest rate movements

As the stats show, in recent times more mortgage holders than ever, are swapping lenders in order to chase a better deal. Often this is the main goal – to refinance to get a lower interest rate.

Given the fluctuations in the market and the rise and fall of interest rates, it’s smart to keep informed as to what’s happening. It’s also a good idea to touch base with a financial expert to get their take on whether now is a good time to refinance.

Assess your financial health

It’s then time to look at your financial situation, so you have a clear understanding of your credit score, current financial position and equity, income, and debt-to-income ratio.

It may have been some time ago that you last did this and it’s likely that some things have shifted, especially given the higher cost of living at the moment.

Understand your loan

Whatever your reasons for wanting to refinance are, you need to understand what your current commitment is and what changes you want to make.

Read through your current loan’s terms and conditions, as it may have been a while since you’ve checked them. You can chat to your current lender to see if there are any benefits you haven’t been utilising or costs you are unaware of.

Understand refinancing costs

A follow-up from knowing your loan is ensuring you have a clear understanding of refinancing costs. While the lure of a better deal can be hard to resist, you may find that it may cost you more than you had thought.

Calculate your break-even point to determining if refinancing is beneficial – this includes taking any valuation fees and payout costs (such as exit fees) into consideration. If you are on a fixed rate home loan, you may need to pay a break free if you refinance.

Consider the impact on your credit score and LVR

Another thing to be aware of is how refinancing can impact your credit score. Aspects that come along with refinancing, such as ending a loan and needing another credit check, can cause your credit score to dip. And if there is the possibility that you skip out on a mortgage payment (should the refinancing process take longer than expected, for example), this will further damage your credit score.

Loan to Value Ratio (LVR) is the difference between the amount you’re borrowing to the value of the property. If your LVR is over 80%, you need to pay Lender’s Mortgage Insurance (LMI). When refinancing, it’s likely that your LVR has shifted due to your mortgage repayments, so your LVR tends to be lower as a result. However, if your property has fallen in value and your LVR has risen, then you may need to pay LMI when refinancing.

We can assist with refinancing to ensure it’s not only beneficial for you, but that it also frees up your finances. Get in touch today so we can discuss your options.

If you have any questions or need any information please give us a call on 039723 0522.

Many people think they can’t afford to get aged care advice, but the reality is you probably can’t afford not to get advice.

RADs, DAPs, MPIRs, MTAs and ACATs !! These are just a few of the acronyms you will face when navigating aged care decisions. It might even feel like you’ve landed in a foreign country where you don’t understand the language or the rules.

Navigating your way through aged care and the jargon is not easy. Frustration, confusion and anxiety are feelings you are likely to experience, especially if you have arrived at this point with little preparation.

Some tasks are just too complex and too important to do on your own.

That’s where we can help. You don’t have to make these decisions or interpret the language on your own. We have the experience and expertise to help you make well-informed aged care decisions. We can show you how you can afford the care you need and understand how it all works – saving you time, stress and money.

Avoiding mistakes is a good reason to seek advice. Four key mistakes we often see people make when they don’t get advice include:

• Selling the home without understanding the consequences
• Being afraid to pay a lump sum (refundable accommodation deposit – RAD)
• Not generating enough cashflow
• Providing the wrong information to Services Australia and paying too much in fees.

Financial advice is important, but not all advice is good advice. Sometimes things can go wrong. To ensure you are protected, is important to get advice from someone who has experience and education, is licensed under an Australian Financial Advice Licence (AFSL) and is listed on the ASIC Financial Adviser Register. If something does go wrong, you then have access to dispute resolution processes and professional indemnity insurance.

Advice should focus on more than just the costs on date of entry into care. You want the advice to also forecast how your finances will be affected over time, to make sure you don’t run out of money or make bad decisions. Examples of advice gone bad, include:

• If keeping the home, not understanding how the age pension changes after two years.
• Structuring finances to qualify as a low-means resident, without realising this may make it harder to find a place with some aged care providers.
• A person may gain comfort that the home is exempt if an eligible carer continues to live there, but what seems like an affordable option could soon be a financial disaster if the carer loses income support and this was not anticipated.
• One child in a family uses their own money to help a parent pay the lump sum Refundable Accommodation Deposit/Contribution, and only too late realises that this resulted in higher aged care fees and an estate dispute when they want to recover the money.

Our advice follows a logical process to consider the financial situation when you first move into care, what will change after that move, what the situation will look like after two years and what to expect when the estate needs to be finalised. This helps to anticipate future changes and mitigate problems as much as possible.

When aged care decisions go badly, the mistakes can be costly both financially and emotionally.  Let us take away some of the stress – we are licensed financial advisers and have the experience and qualifications to help you make well-informed aged care decisions. Contact us on 03 9723 0522 to make an appointment to discuss your aged care needs.

Suite 2, 1 Railway Crescent
Croydon, Victoria 3136

Email: integrityone@iplan.com.au

Telephone : 03 9723 0522

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This information is of a general nature and does not take into consideration anyone’s individual circumstances or objectives. Financial Planning activities only are provided by Integrity One Planning Services Pty Ltd as a Corporate Authorised Representative No. 315000 of Integrity Financial Planners Pty Ltd ABN 71 069 537 855 AFSL 225051. Integrity One Planning Services Pty Ltd and Integrity One Accounting and Business Advisory Services Pty Ltd are not liable for any financial loss resulting from decisions made based on this information. Please consult your adviser, finance specialist, broker, and/or accountant before making decisions using this information.

If you’re nearing retirement age, it’s likely you’re wondering if you will have enough saved to give up work and take it easy, particularly as cost-of-living increases hit some of the basic expenses such as energy, insurance, food and health costs.

Fortunately, someone has already worked out what you might need.

The Association of Superannuation Funds in Australia (ASFA) updates its Retirement Standard every year, which provides a breakdown of expenses for two types of lifestyles: modest and comfortable.

Based on our average life expectancy – for women it is just over 85 years and men 81 – if you are about to retire at say age 67, you will have between 14 and 18 years in retirement, on average and depending on your gender.

ASFA finds that a couple needs $46,944 a year to live a modest lifestyle and $72,148 to live a comfortable lifestyle. That’s equal to $902 a week and $1387 respectively. The figure is of course lower for a single person – $32,666 for a modest lifestyle ($628 a week) or $51,278 ($986) for a comfortable lifestyle.

What does that add up to? ASFA estimates that, for a modest lifestyle, a single person or a couple would need savings of $100,000 at retirement age, while for a modest lifestyle, a couple would need at least $690,000.

A modest lifestyle means being able to afford everyday expenses such as basic health insurance, communication, clothing and household goods but not going overboard. The difference between a modest and a comfortable lifestyle can be significant. For example, there is no room in a modest budget to update a kitchen or a bathroom; similarly overseas holidays are not an option.

The rule of thumb for a comfortable retirement is an estimated 70 per cent of your current annual income. (The reason you need less is that you no longer need to commute to work and you don’t need to buy work clothes.)

Building your nest egg

So how can you build up a sufficient nest egg to provide for a good life in retirement? There are three main sources: superannuation, pension and investments/savings. Superannuation has the key advantage that the money in your pension is tax free in retirement.

Your superannuation pension can be augmented with the government’s Aged Pension either from the moment you retire or later when your original nest egg diminishes.

Your income and assets will be taken into account if you apply for the Age Pension but even if you receive a pension from your super fund, you may still be eligible for a part Age Pension. You may also be eligible for rent assistance and a Health Care Card, which provides concessions on medicines.

Money keeps growing

It’s also important to remember that the amount you accumulate up to retirement will still be generating an income, whether its rentals from investment properties or merely the growth in the value of your share investments and the accumulation of money from any dividends paid.

You can also continue to add to your superannuation by, for instance, selling your family home and downsizing, as long as you have lived in the home for more than 10 years.

If you are single, $300,000 can go into your super when you downsize and $600,000 if you are a couple. This figure is independent of any other superannuation caps.

Planning for a good life in retirement often require just that – planning. If you would like to discuss how retirement will work for you, then give us a call.

Suite 2, 1 Railway Crescent
Croydon, Victoria 3136

Email: integrityone@iplan.com.au

Telephone : 03 9723 0522

Integrity One Facebook

This information is of a general nature and does not take into consideration anyone’s individual circumstances or objectives. Financial Planning activities only are provided by Integrity One Planning Services Pty Ltd as a Corporate Authorised Representative No. 315000 of Integrity Financial Planners Pty Ltd ABN 71 069 537 855 AFSL 225051. Integrity One Planning Services Pty Ltd and Integrity One Accounting and Business Advisory Services Pty Ltd are not liable for any financial loss resulting from decisions made based on this information. Please consult your adviser, finance specialist, broker, and/or accountant before making decisions using this information.