Sometimes financial planning is funny, sometimes it’s irritating, and sometimes just plain sad.
This week some long standing clients, Barry and Murphy, had to sell their dream home.
About seven years ago, Barry was diagnosed with Alzheimer’s disease.
Barry was a bright guy; he had held down very senior positions in a life company so he understood what the outcome would be. He and Murphy wanted to have the best time for as long as possible.
They decided on a ‘sea change’, so we organised their pensions and powers of attorney and generally set them up so they would get Centrelink benefits with a mix of complying and allocated pensions.
With all that in place, we took them to lunch to celebrate their imminent move to the seaside. I will never forget Barry raising his glass for a toast — “to the best lunch I will ever forget”.
Now they have to move back to the ‘burbs’, so their children can help until Barry has to be placed in full-time supported dementia care, because Murphy finds it very difficult to look after Barry by herself.
Another client, Eric, has come in to discuss how to deal with an inheritance from his mother, Sheila, who passed away a few months ago. He could do with a super top up, so that is pretty straightforward. His main concern is that there were bequests to all four of his kids.
Three of the children are minors, so we will set the strategy for the testamentary trusts; it is the eldest one he is worried about.
We met Tania months ago when she came to see her grandmother before she died.
Sadly, she’s not having much luck getting a job, and is living with another Centrelink recipient in a bedsit.
Sheila had told us she was worried about her grandaughter Tania, saying the relationship between Tania and her mother Marnie was “not what it should be between a mother and her daughter”.
So Eric has asked us to draft a Statement of Advice (SOA) for Tania taking into account her Centrelink position.
We told him we will meet her when she comes to visit, then see if she wants us to help her.
Meanwhile, Eric is divorced and still needs to finalise his property settlement.
We have not acted for him since the divorce a couple of years ago, as ex-wife Marnie got to us first and we would not act for both.
Marnie later remarried and moved to the USA, and was no longer bothered if we acted for Eric — in fact, her parting comment was, “You are the only woman he ever listened to other than his mother”.
We know his mum Sheila would not be happy with Eric’s new girlfriend — 29-year-old blonde Kylie. Eric is 50 at Christmas, and has listed facials as a must-have expenditure. He is also a car freak, and the temptation for him to lash out on a new ‘you beaut’ goer of the expensive European variety is great.
Turning to the complying pension changes and the implications for clients close to retirement. These are a major source of irritation in our business. People decide when they want to retire and resent being pushed around.
One client, Wes, has his own super fund and an accountant, so he is better informed than most.
He wanted to continue working for a while because he had not saved the super as he had planned.
A few years ago he stopped work for nearly three years to care for his wife in the last stages of multiple sclerosis.
They had no children, and although he had help from siblings, he devoted his life to caring for her and was absolutely heartbroken when she died.
His own health was neglected and he is now diabetic but is keen to keep working to build his super. He knows he will need Centrelink benefits some time in the future.
Part of our plan for him was to set up a complying pension in four years when he expects to retire.
Now, as he puts it, “Either I quit now with less than I want or quit later with the same result”.
I wonder if those people in Canberra understand that most people plan for their future lifestyle when thinking about retirement.
Dropping significant changes onto an unsuspecting population, effective immediately, causes people to lose faith in superannuation.
Now many clients prefer not to save more than the minimum super, despite the tax advantages, because they do not believe they will have control of their own affairs at retirement.
A sad indictment of the ‘lucky country’.
Jennifer Moss is director of Moss Financial Services and an authorised representative of Meritum Financial Group.
