Transcript # 146. How much do I need for a comfortable retirement? With Kristi Badgery.

Click here to see the episode show notes. 

We've been talking a lot about overall wellbeing. with the purpose of career, this, the social family. physical fitness. So many people in retirement need the energy need to make sure they keep the energy up to be able to do those things and engagement in the community.

But then the finances really is the glue that holds all together According to our episode, guest Kristi Badgery the key to a successful retirement is careful planning, good investment choices, and a disciplined approach. Making smart decisions about your money and investments while still working in earning an income is a critical success factor. Kristi is the co-founder of Breakwater financial planning, and has years of experience helping pre-retirees prepare for and eventually enjoy their retirements.

Kristi provides financial advice on retirement planning, superannuation, investment advice, portfolio management, insurance, and accessing government support in Australia. It's called central link as well as aged. I invited her for a chat to guide you and me to plan ahead for our retirement servicing my older clients, 50 and above.

I have noticed that for some retirement is high up in their priorities and very much part of our planning and discussions for their careers, for others. However, it doesn't even cross their minds to stop working or start thinking. Retirement, even if they're older, which type of person are you, I'm very curious.

I bet, you know, people that fall on either end of those spectrums and are good examples of those sort of professionals that I've just described to you. I am now 50 years old and my husband Andrea's 56 in retirement is not part of our 10 year. Still, we should be making decisions about it now, rather than later, I know this from experience from both observing, results from my families and friends that have retired already and also from seeing some of the tough and difficult situations that some of my clients that I have serviced have gone through as well.

I hope that you enjoy listening to this episode and that it helps you think and start educating yourself about the plans that you will need to do to access and have the best possible retirement for you and your family. I know this episode will be very popular and I hope that listening to Kristi, you will be able to drop some conclusions for yourself and, listen to the end and you will have some conclusions from me as well.

I'll reflect about it at the end of this conversation. Here we go.

Kristi, let's start talking, about you and retirement. I can't wait to, start discussing things with you, but I know you have a disclaimer to make, so you might as well do it now, right?

Yeah. 

Now before we start, the information contained in, this podcast is of general nature only doesn't constitute financial advice or taxation advice, and it doesn't take into account your objectives needs and circumstances. We recommend that you obtain investment and taxation advice specific to your investment objectives, financial situations, and particular needs before making any investment decisions or acting on the information contained.

Fair enough. I think that that's important that we have that. And then we can talk, casually and informally about retirement and things that are frankly, of interest to me personally, , I'm very selfishly booking this so that we can talk about it, but also because I cater for a wide range of, Ages, you know, my clients range from 35 to up to 70.

I have a client that is in his seventies and all of them are very, of course, interested in. Their careers. That's why they hire a coach. Right. So that's, very important to them. But part of the planning, when you're working with a client on making career plans, job hunting plans, and so on, we often discuss.

Retirement. And it's very interesting. Kristi. A lot of people are retirement is very much part of their priorities and for others, it's not at all. They can't see themselves stop working. They don't wanna even think about it yet. even if they're older. so I was really keen. I reached out to you and I was really keen to embrace this topic.

Once again, in this podcast, we have one episode. Very very old. So I think it was time for us to refresh and renew our thinking about retirement, especially post pandemic. But before we go there, tell us about your career. tell us how you decided to become a financial 

advisor. So, look, my, career in the financial services started in 2001.

When I moved to Melbourne. So I grew up in Perth and, I completed, a degree in Perth, which is a postgraduate, graduate, bachelor in social science. So moving from social science into the financial industry is, maybe a bit of a jump, but I, needed to work full time and had a job an accounting firm, and then started to study to fill in the gaps. So I've been, working in the accounting firm and then I side stepped into finance and I found that that fit in better with my social, to. Yeah, that's dealing with people and what they're doing their lives. So as opposed to, their taxation, so it all fit in nicely and I've filled in all the gaps.

So I've completed a graduate certificate in accounting. I've completed diploma and advanced diploma in the financial planning and, the. other bits of, gaps that I had. So now I'm fully accredited. and of course is certified financial planning. Yes. 

Kristi. what is your strength that you bring to your profession?

So a financial planner, what our job is, to find out. And help our clients work out what it is that they want to achieve, and, and then build in strategies to help to get to that. So I think, being able to talk to people, and taking the time to work out what's important to them. Yeah.

And then the strategies flow from there and the investment choices flow from there. Yeah. So I think, my background and interest in the social side, is very, very useful. Yeah. 

When people come to you with questions, what are the most common questions that they have for you about retirement?

So often people come to me with retirement. They might be starting to think about retirement, and they all, well, maybe not all, but I, generally get people ask how much do I need Uhhuh? So that would be the most common question, not knowing what they might need in retirement. and then that's where I come in.

Yes. And how much do we need right. Is it for you not knowing the person? I bet you have to ask a lot of 

question. Well, that's right. So to know how much you need that's individual. So, it won't be the same for you or for me, and that's where we can work through and start working through the process.

So we look at how much you're actually going to need on. Things like food and those necessary. And then from there we need to work out well, what are you going to do in retirement? What does retirement look like for you and all those other important areas of someone's wellbeing? Yeah. So, finances obviously are a key for, wellbeing, but then you've got the social, and you've got the.

community and your fitness and all those things. So we see how it all works together. And then of course what that's going to cost. Yeah. 

When. People start planning for their retirements Kristi, like I'm 50 now, is it too late for me? Or is, is it 

the right time? Well, I think that's the right time.

The right time is as soon as you can. okay. So basically when you start thinking about retirement, that's the right time To start getting advice. and a financial planner will be able to sit with you and work out what your goals are. what timing around those goals so that you can live your life now mm-hmm and have the finances to cover that.

But then also with the, with the view to what you might need in the, when you retire in the next 10, 15 years, and then 30 years through, right through to your life expectancy. Yeah. 

What do you think about the trend that, you know, younger generations have of, trying to retire as early as possible? Is that doable?

Is it safe to do 

it? Well, it depends on what you are retiring to. So when you retire, you retiring from something so often that might be from your career. and the career gives people purpose. your job is your purpose. So you need to replace that with something in retirement.

So what are you retiring to? Often people don't stop work and retire to nothing. So, you might be retiring to a, new job transition. there might be something that you've always wanted to do. Or, or you might be retiring to travel. I think that might be the dream for a lot of people. but if you're retiring to something and often what you are retiring to can, generate income also.

So, which means you'd not so much pressure on your own finances to cover all of your costs. 

Kristi the age of retirement, I think, is very interesting in preparation for this, interview with you. I was reading some articles about it and the difference that it makes for somebody to retire at the age of 50 or 60 or 65 or even 70 and what it does to their lump sum at the end.

you know, having my, family, People that have retired in their early fifties. And then one of my grandfathers retired at 85 and that was definitely not because he needed it financially. It's because he really loved his work, but I am sure that it helped, you know, his financial situation and he was able to also help his kids much 

more.

And. 

 do you see a lot of mistakes in terms of people retiring too early and then running out of money? I think that's probably one of the biggest nightmares out there when I think about my 

own retirement. Yeah. The fear. if someone comes to see a financial planner, often we will work through those issues.

I run projections for my clients, based on. Different scenarios. generally with the projections that I run, I know that we can't predict everything we're looking into the future, but if you've thought about these issues and, and we can identify them, then we can either work out strategies to, change what you're looking to retire to.

So maybe, not have the lifestyle that the clients had originally wanted or work longer. but yes, that's a, big problem. And often it also will result in people not spending what they maybe can afford as well. Yeah. So if, um, people get advice. And run, look at these projections, look into the future,then, that's not such a fear 

and Kristi is there like a safer age to retire?

I mean, government has stipulated some. Sort of ages where you can start accessing in Australia, for example, your superannuation after I think what for women, is it 63 or 

65? So, the superannuation laws, dependent on your work situation up until, 65 Uhhuh so being able to access your super is one thing to think about.

The other thing is many people as part of their strategy, age pension, government benefits might be part of a strategy that might not come in in the first year of retirement, but it might happen 10 years out. So it could, could become part of a strategy. Even if it's not, immediately doesn't mean you won't be able to access those benefits later.

Can you 

explain a little bit about how the pension works here in Australia? I mean, this podcast goes around the world, but I'm very interested cause we do have quite a lot of listeners in Australia and I, for one I'm 50, I have no idea. Like if I to access the pension, I wouldn't know. Yeah. 

So, there's age limit.

So when, once you reach a certain age and residential, Criteria then our age pension in Australia's means tested. So we won't run an income test. Based on accessible income for cent link and that's different than your taxable income and different indeed than any than income that you're actually getting it.

The income that Centrelink assess mm-hmm and they'll run the test based on the income test and work out how much you would be entitled under that test. And then they run a test under the asset test. once you reach the limit, the amount that you might be able to receive tappers off, right.

Until Neil mm-hmm and whichever test you get the least amount. And that's what Centrelink will give you as an H pension. Yeah. Yeah. So they'll run the income test and the asset test and you'll receive the lower. 

Okay, but that means that you have superannuation accumulated, that doesn't mean you're not able to access

superannuation into the test. Assess that asset. Or, or the income. so you may not be able to receive age pension in the first year of retirement or five years, but, but you might be able to receive age pension later on in retirement journey. Right. And generally. I'll have a pretty good idea with my clients when that might be, and we keep an eye on it and then I'll just let them know when they can start to access their age pension, if that's going to be part of their plan.

Kristi, what are the key mistakes that people make that they should avoid? You know, when they're planning for retirement or lack of planning could be a mistake as well. Lack 

thing that really worries you. So basically when someone retires often, they are feeling burnt out with their work and they're not replacing that with something else.

So they will go into retirement and then a year down the track find that the golf course is not giving them what they need from life. So I think people who haven't planned for their finances, but also haven't planned for other areas, how they're going to get purpose or, you know, what they're going to do in the community.

because obviously the, communities also are being engaged is also important. you retire into a, a gap. I think your time is not filled anymore. You've got more agency over your time, but if you haven't planned for your finances and for these other areas, it might not be so successful.

And you might have to go back and do some homework then, and decide what you're going to do with your time and also how you might be able to fund those things. 

do you, find that it's common for your clients when they do decide to retire to make some big, bold changes to their lifestyle? Like move cities, you know, move to a regional town or do a sea change?

What's the outcome of that, cuz that's something that I think about personally, but I'm always worried that if I do decide to do it, I won't see my friends or, you know, nobody's gonna come and visit me and I might regret it in the future. And you know, because you're always working with people that are.

Thinking about those decisions. I wonder what you think about those big bold 

changes. Yeah. So those, big changes is a great time to make these changes, but then people, like you said, they might miss their friends. often when people retire, they might have grandchildren that they wanna have more to do with.

obviously not everyone has grandchildren, but people that do tend to, to want to spend time. With with family. so I think those types of moves are, are fantastic, but I generally find that if people do those moves younger, it works better because then they can become involved in their community, meet family or friends, work out how they're going to deal with family.

They can travel. and then have the finances planned to do that also. Yes. I think O often, if you've got a plan, then you can trial it too. You might rent somewhere where you're thinking about going, just to see how it works. Don't sell up. Right. 

that's a good idea.

Mm-hmm and in terms of, Staging it, you know, and transitioning slowly into retirement. We have a few other episodes of this podcast where we talk about how to stage it and transition. And I've noticed that some employers also have some interesting HR policies now that support people. cutting days, you know, as they move towards retirement.

Do you have any great tips about that in suggestions? 

Yeah, so transition to retirement's very popular. And in fact, a lot of people are doing that now, as you mentioned is actually a good way to stop those burnout feelings. You may. Longer then be able to deal with, whatever you are doing because you have that time off and of course you've got income coming in as well.

So it's a good way to test how much you're actually going to need in retirement. What you are actually spending, you can ease back in stages. And it's a great idea. and often people can start to access other investment income as well at that time. And we can work out together how much they might need to access.

Do they need to start drawing down on investments or that they might have a rental property and that they receive cash flow positive that they can start then to use. So is a, is a fantastic way to retire. Yes. To, to ease into it. And people are doing that more and more 

Kristi, what age was the youngest clients that you've had?

Sort of retirement planning. I'm curious to know, 

look, most people start to think about retirement in their forties. Like maybe, okay. Yeah. I, I think forties would be a common time, but more into fifties. People would be starting to think. obviously with setting goals, retirement goals, being time bound the closer you get to the actual end goal, the more specific your goal can.

Yeah. So, I mean, certainly as you're younger, it tends to be, you know, further, not top of mind. So I, I would, say forties is a good time to start thinking. All right. 

If you were somebody in your, let's say sixties, mm-hmm so, retirement age, but because of circumstances, let's say health or work, you haven't been able to work out your retirement plan and, you know, What do you do?

What would be your, your biggest step in advice for somebody going through that situation right now, which I think is very, difficult place to be in, but, you know, I want to offer those some hope, cuz I know sometimes, you know, life just gets in the way and, and you didn't plan or weren't able to do as much savings as you would want to.

What would you suggest that 

they. so most people in Australia are retiring around 62 to 65. Okay. so if you are reached 60 and starting to think about retirement, you can start to save then. Because every extra year that you've got income coming in, that you're not needing to, cover expenses and your saving puts you in a better position.

So I would say to start now. Yeah, because every extra day of income, extra day of savings is really going to mean that your retirement and retirement's really our last career phase. there's a lot of different phases in retirement and people can, move from doing different things.

But if we, consider it a last career phase, then moving into that well prepared. so even if you are 60 and you've got five years of saving, that's going to put you in a much better. 

Yes. All right. And do you have any other top retirement planning advice for those that need to do it, but they may need to DIY it.

They, you know, I'm not sure how much it would cost for somebody to, get the support of a financial advisor like yourself. So let's say somebody who is not able to afford it, or at least think that they can't afford it. What would you recommend that they. 

so I would recommend that you would sit down and work out what you actually need in retirement.

if you know how much you are spending and how much you actually need to spend and what those extras might cost, then you're in a much better position to be able to cover those costs. if you are looking at Centerlink, which is who, where, where our social security, the age pension is paid Centerlink can help.

Yeah. So go to your Centerlink office and ask for help. so there are places you can go. that might be able to provide some guidance. 

Kristi on the other end of the spectrum, somebody who has been able to have, you know, a very, successful, financial savings over the years.

And they're now keen to, work with the community and support organizations. How does that play out in terms of retirement planning? Do you also see clients that want to. Donate or give back to the community in some ways, how do people go about planning for that? 

Yeah. So in terms of giving back to the community, many of my clients are volunteering their time.

Mm-hmm they might have a particular interest and that also ties back into the engagement in their community, but also their. So volunteering your time is a great way to help in terms of financial. I think the best way to give is to find what interests you and what what's an area that's close to your heart and giving there because then you're more likely to continue with that type.

Philanthropy? Yes. 

Anything else you would like to share with the listeners since you've got 

their years? so I think, we've been talking a lot about overall wellbeing. with the purpose of career, um, this, the social family. physical fitness. So many people in retirement need the energy need to make sure they keep the energy up to be able to do those things and engagement in the community.

But then the finances really is the glue that holds all together yeah. to be able to, to do all of those things. so I think starting early on your finances, Is going to end up making your retirement look better? Mm. 

Yes. That's a great way of ending it. Kristi. Thank you so much for your help today and tackling this important topic.

And I hope that you become a friend of the podcast and maybe able to come back and answer more questions in the future. 

You're welcome. Thanks for having me. 

I hope that you've enjoyed listening to this conversation and that it has raised the awareness for you of how important it is for us to stop planning our retirement. I know people that have started planning their retire. Pretty early. One of them is my friend Paul burrows, who I've interviewed, for episode 63, there's a link to it in the episode, show notes.

If you're interested in listening to Paul's stake on his retirement and how he went about planning for it. we also have under topics, in our blog, a full list of retirement planning episodes that we've done in the past. I'll have a link to that list of episodes in the show notes as well. If you're a keen to look at individuals that are doing that stepping stone approach to retirement, that Kristi and I discussed in our accessing opportunities to slow down or step down from full-time work.

Building a portfolio career doing consultancy advisory and, board work well. If you are willing to invest in career coaching to support your career plans alongside your retirement plans, please consider having a chat with me. I have clients aged between 35 and 70 years old, and I have supported a number of clients in their sixties to feel reenergized and to reinvigorate their careers.

And it. Passion of mine. I really enjoy working with that bookending of their careers and help them plan to continue to have control over the outcomes of those careers. 

I'd be delighted to help you whatever age you are, so that we can access the best plans to achieve your preferred future. To learn more about my services or book complimentary chats with me about private coaching, please go to Renata Bon bernardi.com. That's RENATABERNADE.COM com if you couldn't get the spelling of that, there's a link to it in the episode, show notes, bye for now, and I'll see you next time.