Living a legacy
March 2009

Spend the kids’ inheritance! In recent years, research has suggested that baby boomers are not as concerned with setting up their families for the future, but are spending every last cent in retirement.

Most baby boomers and generations before them have worked hard and struggled for everything they’ve earned, and their later years is their turn to enjoy life—with travel, a new home, hobbies and community groups.

But according to U.C.I.S Financial Planner Cliff Cole, this “trend” is actually not the case for a lot of people.

“There are only a few people we come across that don’t want to leave something behind for families, the church or a favourite charity,” said Mr Cole.

“Most people like to think that there will be lasting evidence of their life once they’ve passed on; in some cases that’s a gift to family to give them a head start, or a gift back to a church or charity that has had a significant impact on their life.”

But Mr Cole says the question of what to spend, what to save and how to live in the later years of life is one that will vary depending on the individual and how they plan for the future.

“Whether a person spends more time and money with their family or travelling overseas usually depends on the lifestyle they lived prior to retirement,” Mr Cole said.

“Those who have always had minimal resources and lived a basic lifestyle are more content with a basic lifestyle in retirement.

“But those with significant assets who have spent more over their lifetime can be worried about not being able to afford to continue their lifestyle and keep pace with their current social circles.”

The issue of being able to make your money last as you get older is one that Mr Cole says causes stress and anxiety for a lot of people.

“For most people, a pension alone will not be enough to live on as the age pension has not kept pace with inflation,” Mr Cole said.

“The current financial crisis will affect both retirees and those planning to retire in the near future.

“For retirees, their superannuation will have been reduced and may not last as long; pre-retirees may decide to work longer to wait for their superannuation to recover.

“There is only a limited amount of money to go around, and for many, food, rent and utilities will take priority—it’s often giving to churches and charities that is sacrificed to make ends meet.”

For Mr Cole, the current financial stresses many people are facing reinforces the importance of balanced planning for the future so that people can have more options available, rather than being totally reliant on external factors out of their control.

“Investments across all asset classes are being affected by the current turbulent market conditions,” said Mr Cole.

“But a well balanced portfolio is still the best strategy to provide well rounded income over the long term.

“Being equipped with information is also important to reduce stress associated with your financial future.

“A financial planner, for example, will talk through a variety of strategies to meet your goals for retirement—but not every idea is going to suit every person.

“The best financial strategies will allow you to make choices that reflect your values and your plans for the future.

“Then it’s up to you—you can choose whether to spend all your money on a holiday, or as is more common, support and enjoy the things that are important to you—faith, family and friendships.”