Financial Planning – Why Bother
I was asked the other day by a reasonably successful Gold Coast business man why I thought he needed financial planning advice. After all, he owned his own business, was drawing a good income and had a nice house, even drove a very nice BMW.
Sadly for him I had to point out that he had a debt on his beautiful waterfront property approaching nearly $700,000, about 15 years to retirement, very little in super (hey, he said cash flow is tight and I will start contributing next year – as if) and no other assets to indicate to me that life (once the pay cheques stopped coming in) was going to be anything other than a very serious struggle and a very miserable existence.
You see one thing that concerns me is the number of people that are entering retirement with a mortgage given that very few Australians have accumulated enough assets to live on anywhere close to their pre-retirement incomes, I really don’t know how these people expect to survive.
Many will be forced to sell the family home. While this may sound like a reasonable option and for some it is the only option, think hard about the following.
Downsizing could mean moving to an area you do not like, to a house you do not like and away from friends who unlike yourself may have made the necessary plans to enter retirement debt free. How will you feel deep down inside if you are forced to admit to yourself that the house you have worked so hard for has to be sold just so that you can have a place to live, a place nowhere near as nice as that to which you have become accustomed?
There is a solution. You need to work out how you are going to pay that mortgage off, and accumulate assets so that you are not the one having the fire sale when you turn 65. When I asked this person what he was doing to ensure that he was not selling the family house in order to meet his grocery costs, he looked rather blankly at me and said, “When are you free next?”
That’s why you need to talk to your financial planner to ensure that you will be debt free in retirement and soaking up the sun on the Gold Coast. After all, very few people are able to make mortgage repayments on Centrelink benefits.