WEBVTT - The common financial mistakes forcing people to work longer 0:00:11.720 --> 0:00:14.960 Welcome to the Money Puzzle. I'm your host Julianne Sprague, 0:00:15.040 --> 0:00:18.520 wealth editor at The Australian, filling in for James Kirby. 0:00:19.040 --> 0:00:22.120 He's on a well deserved break. He will return next week, 0:00:22.680 --> 0:00:24.959 but for now I get to sit in the chair 0:00:25.000 --> 0:00:28.080 and host this episode for you. Our guest today is 0:00:28.120 --> 0:00:32.400 a Melbourne based financial advisor, James Wrigley. He's from First Financial. 0:00:32.800 --> 0:00:35.599 You might know him more from social media. He has 0:00:35.640 --> 0:00:39.920 won plenty of fans for his plane speaking financial advice. 0:00:40.240 --> 0:00:43.120 He's got more than twenty years experience and he's seen 0:00:43.159 --> 0:00:47.440 the good, the bad and the ugly. And for his sins, 0:00:47.440 --> 0:00:49.559 he's decided to write down his top tips and his 0:00:49.640 --> 0:00:52.440 pen a new book. It is called Retire Life Ready. 0:00:52.600 --> 0:00:56.240 It will be available on October twenty nine. It's a 0:00:56.240 --> 0:00:58.480 bit of a framework to help you make better money 0:00:58.480 --> 0:01:01.080 decisions and map your job. I need to retire and 0:01:01.080 --> 0:01:03.320 now the book isn't out until October twenty nine. But 0:01:03.360 --> 0:01:05.520 we are very lucky here at the Money Puzzle. We've 0:01:05.520 --> 0:01:08.720 been able to grab James and get a first peek. 0:01:08.920 --> 0:01:10.760 I'll look inside the book and we're gonna have a 0:01:10.800 --> 0:01:14.120 chat to James about some of his top tips, James, really, 0:01:14.240 --> 0:01:15.720 thanks for joining us on the money puzzle. 0:01:16.040 --> 0:01:18.120 Julyanne, thank you for having me here, pleasure. 0:01:18.560 --> 0:01:22.080 Congratulations on the book. That's a bit of an epic 0:01:22.319 --> 0:01:22.840 thing to do. 0:01:23.800 --> 0:01:27.080 Yeah, it's like I think it was probably about a 0:01:27.160 --> 0:01:30.280 year ago now, would about October last year that I 0:01:30.280 --> 0:01:33.080 started having conversations with the publisher and I had never 0:01:33.080 --> 0:01:35.959 even considered writing a book, never even crossed my mind. 0:01:36.720 --> 0:01:38.640 And they reached out and said, hey, James, if you 0:01:38.640 --> 0:01:40.760 thought of writing a book. I said, no, is that 0:01:40.920 --> 0:01:42.759 we think you could write one? I said, all right, 0:01:42.840 --> 0:01:45.680 let's give it a go. And anyway, yeah, a year later, 0:01:45.720 --> 0:01:47.520 we're just about to be on shelves. 0:01:47.920 --> 0:01:49.720 It will be on shelves now. I've been able to 0:01:49.800 --> 0:01:51.680 have a little bit of a sneak peek inside this, 0:01:51.720 --> 0:01:54.920 and it is typical the plane speaking will get you 0:01:54.960 --> 0:01:59.960 on your way. But it's called retire life. Ready now, babe, 0:02:00.160 --> 0:02:02.240 you could explain to us why you've called it that, 0:02:03.040 --> 0:02:05.880 and perhaps maybe if you could. Obviously people could go 0:02:05.960 --> 0:02:07.680 read the book. But there was this lovely anecdote in 0:02:07.720 --> 0:02:11.000 there from your fortieth birthday were you told your family 0:02:11.040 --> 0:02:13.240 you were going to write this book and your aunt 0:02:13.480 --> 0:02:15.160 told you something I don't know if you can recall 0:02:15.160 --> 0:02:16.000 what that story was. 0:02:16.200 --> 0:02:18.919 Yeah, yeah, So I think it's like in the intro 0:02:19.080 --> 0:02:21.639 part to the book, she said to me, She's like, James, 0:02:21.639 --> 0:02:23.760 make sure you tell people that if they don't have 0:02:23.800 --> 0:02:25.840 any money in retirement or something to that effect, that 0:02:25.919 --> 0:02:28.560 retirement's really boring. Like if she was kind of trying 0:02:28.600 --> 0:02:30.720 to emphasize this point of if you're just stuck at 0:02:30.760 --> 0:02:33.840 home watching the clock tick down, it's not a terribly 0:02:33.880 --> 0:02:36.920 great retirement. And I think she was kind of re 0:02:37.040 --> 0:02:39.120 very to her own retirement. But she's been on plenty 0:02:39.120 --> 0:02:41.359 of trips and she's done plenty of things. So from 0:02:41.360 --> 0:02:43.639 an outsider looking in on her own retirement, I would 0:02:43.880 --> 0:02:47.120 I wouldn't say it's anything likely like it's boring, but 0:02:47.280 --> 0:02:48.680 that's kind of what she was trying to get at. 0:02:49.320 --> 0:02:52.000 So with that in mind, then that idea of it 0:02:52.040 --> 0:02:54.160 would be good to have money in retirement. And I 0:02:54.200 --> 0:02:58.119 think also the retirement stage of life is lengthening. It's 0:02:58.120 --> 0:03:00.760 great that we all live longer where working out how 0:03:00.760 --> 0:03:04.400 to become healthier for longer, but that also extends retirement. 0:03:05.080 --> 0:03:07.160 When do you reckon most people get around to actually 0:03:07.200 --> 0:03:09.920 planning retirement to really sitting there and thinking about, Oh, 0:03:10.000 --> 0:03:11.680 I've got this other stage to think about. 0:03:12.560 --> 0:03:16.600 I think in the past it was probably fifty five plus, 0:03:16.680 --> 0:03:20.600 late fifties, early sixties, possibly because of the social media 0:03:20.639 --> 0:03:22.920 stuff that I do, and I interact with a lot 0:03:22.960 --> 0:03:24.800 of people and there's a lot of questions and comments 0:03:24.880 --> 0:03:28.239 and things. I tend to see that aging down. I know, 0:03:28.240 --> 0:03:32.440 if it's just a general increase in education levels around 0:03:32.639 --> 0:03:35.960 money and finances and retirement and super and so forth, 0:03:36.040 --> 0:03:38.880 because it's so easy to get access to some of 0:03:38.880 --> 0:03:40.840 these things now, like you can google things, you can 0:03:40.840 --> 0:03:43.040 go on Instagram and YouTube and all the rest of it. 0:03:43.120 --> 0:03:45.640 So if you have any interest in any of this stuff, 0:03:45.680 --> 0:03:48.880 there's plenty of information out there, whereas maybe ten or 0:03:48.880 --> 0:03:51.920 fifteen years ago it wasn't quite so readily available for you. 0:03:51.960 --> 0:03:54.160 There was plenty of books and things that you could read, 0:03:54.240 --> 0:03:56.440 but sitting down and committing to reading a finance book 0:03:56.520 --> 0:03:58.760 is a bit more of a bigger undertaking than watching 0:03:58.800 --> 0:04:01.840 a few videos on Instagram might be. So, look, we're 0:04:01.880 --> 0:04:06.280 seeing a lot of people around the age of forty something, 0:04:06.360 --> 0:04:09.200 probably mid forties, where they're starting to think about it 0:04:09.280 --> 0:04:11.960 really seriously. Whereas I reckon if I go back to 0:04:11.960 --> 0:04:12.720 my earlier. 0:04:12.480 --> 0:04:15.280 Days, maybe it's a point in the career where they're 0:04:15.280 --> 0:04:17.960 starting to think this working things have been getting a 0:04:17.960 --> 0:04:18.279 bit old. 0:04:19.000 --> 0:04:21.960 That's probably it, and they're likely to peak in their career, 0:04:22.160 --> 0:04:25.240 you know, demanding work schedule and a demanding home life 0:04:25.400 --> 0:04:27.240 is like how much longer does this go on for? 0:04:27.360 --> 0:04:29.240 And what can I do to get out of here sooner? 0:04:29.400 --> 0:04:30.640 Maybe that's what's driving it. 0:04:30.880 --> 0:04:33.120 If the boss is listening, very happy love the Australian. 0:04:33.200 --> 0:04:35.440 I love doing the money Puzzle podcast. Everything's great, but 0:04:35.480 --> 0:04:37.520 also wouldn't it be nice to be able to choose 0:04:37.560 --> 0:04:39.200 to do it rather than you have to do it 0:04:39.240 --> 0:04:44.200 to pay the mortgage. So with that in mind, if 0:04:44.440 --> 0:04:46.960 that age is coming down, starting to think about retirement, 0:04:47.760 --> 0:04:49.720 where do people then need to start? So, say you 0:04:49.760 --> 0:04:52.359 are in your forties, or perhaps people listening to this 0:04:52.440 --> 0:04:54.320 might be in their fifties, or if they're in the sixties, 0:04:54.320 --> 0:04:57.640 but at some point you're thinking to yourself, I want 0:04:57.640 --> 0:04:59.840 to plan for my retirement. Where do you need to 0:04:59.880 --> 0:05:00.359 sa start? 0:05:01.200 --> 0:05:03.400 You reference the title of the book Retire Life Ready 0:05:03.440 --> 0:05:05.840 and the reason why we've kind of called it that 0:05:05.880 --> 0:05:07.520 and a lot of the financial advice that we do 0:05:07.600 --> 0:05:10.160 is centered around this idea, at least in the very 0:05:10.200 --> 0:05:12.719 beginning of the engagement that we might have with new clients. 0:05:13.360 --> 0:05:15.479 Is because it's all about trying to design the lifestyle 0:05:15.480 --> 0:05:18.760 that you're aspiring to in retirement. Let's park the numbers 0:05:18.920 --> 0:05:21.880 for a moment that they're obviously completely relevant and will 0:05:22.200 --> 0:05:24.560 be the ones that support that retirement. But what is 0:05:24.600 --> 0:05:25.760 it that you want to do? Where do you want 0:05:25.760 --> 0:05:27.279 to live, who do you want to surround yourself with? 0:05:27.440 --> 0:05:29.600 What are you going to do with your time? And 0:05:29.640 --> 0:05:32.000 I comment on in the book and it's an odd 0:05:32.000 --> 0:05:34.760 colleague of minding financial advice, he used to talk about 0:05:34.839 --> 0:05:37.919 this idea of what do you do with your time 0:05:38.040 --> 0:05:40.599 in retirement when all of your time is leisure time? 0:05:40.640 --> 0:05:44.039 Whereas at the moment, leisure time is a break from work, 0:05:44.080 --> 0:05:45.839 a break from the routine. But what do you do 0:05:45.920 --> 0:05:47.600 when all of your time is leisure time? What do 0:05:47.640 --> 0:05:50.600 you do for a break from the leisure time? And 0:05:50.640 --> 0:05:53.000 so trying to design this lifestyle that you want And 0:05:53.080 --> 0:05:54.280 as I said, where do you want to live, who 0:05:54.279 --> 0:05:56.359 do you want to surround yourself with? How are you 0:05:56.360 --> 0:05:58.200 going to occupy your time? Do you want to work 0:05:58.240 --> 0:05:59.760 part time? Do you want to work casually or do 0:05:59.800 --> 0:06:02.440 you want to just stop completely and spend thirty years 0:06:02.480 --> 0:06:05.279 sitting on a beach. That's up to you, and then 0:06:05.320 --> 0:06:07.000 we can start to look at the numbers that you 0:06:07.080 --> 0:06:08.800 need to support that life that you want. 0:06:09.000 --> 0:06:10.880 So, if you're looking at a break in the leisure time, 0:06:11.360 --> 0:06:13.560 is that indicating that you might want to do some 0:06:13.600 --> 0:06:15.520 part time work or casual work or what are the 0:06:15.560 --> 0:06:17.440 other strategy? What are the other strategies? 0:06:17.880 --> 0:06:20.120 That's it? So it's part time work, it's casual work, 0:06:20.120 --> 0:06:23.640 it's volunteering work. I had a conversation with a new 0:06:23.640 --> 0:06:26.200 client just earlier this morning, and she'd had quite a 0:06:26.200 --> 0:06:31.200 demanding career in the particular field that she's in. Fortunately 0:06:31.240 --> 0:06:34.880 for her, that particular industry has quite a big casual workforce, 0:06:34.920 --> 0:06:37.479 and so she's given up the big kind of corporate leading, 0:06:37.560 --> 0:06:39.719 a big team type job that she had for a 0:06:39.760 --> 0:06:41.480 large part of her working life. And she's in her 0:06:41.480 --> 0:06:44.599 mid sixties now and she just picks up casual shifts 0:06:44.600 --> 0:06:48.039 in the particular industry that she's in, and they'll plan 0:06:48.160 --> 0:06:50.040 a holiday and they'll go away for three weeks or 0:06:50.040 --> 0:06:52.839 four weeks or six weeks, and obviously doesn't work and 0:06:52.839 --> 0:06:54.480 then she'll come back and she'll pick up a couple 0:06:54.520 --> 0:06:56.200 of shifts here and there, And she says she really 0:06:56.240 --> 0:06:59.000 loves kind of not having the responsibility of all of 0:06:59.040 --> 0:07:02.160 the other stuff that with that big career, as she 0:07:02.279 --> 0:07:04.120 can show up to the workplace, do her job, and 0:07:04.120 --> 0:07:06.000 then go home and doesn't have to worry about it. 0:07:06.800 --> 0:07:09.720 But that then keeps her mind occupied and keeps it stimulated. 0:07:10.240 --> 0:07:13.280 You commented before about retirement lasting a very long time, 0:07:13.360 --> 0:07:15.240 like a lot of people will live into their nineties 0:07:15.280 --> 0:07:18.560 and beyond. Now, if you're retiring at sixty something, you 0:07:18.600 --> 0:07:21.560 know that's thirty forty years of your life. That there's 0:07:21.560 --> 0:07:22.880 a lot of books that you're going to read or 0:07:22.880 --> 0:07:24.680 that other sitting on a beach, and so you need 0:07:24.760 --> 0:07:27.600 something to keep your mind going. And so whether it's volunteering, 0:07:27.760 --> 0:07:30.720 getting involved with the sporting club or the church, or 0:07:30.760 --> 0:07:33.440 the kids' school or the grandkids school, or in the 0:07:33.480 --> 0:07:35.360 case that I was talking about, and doing some actual 0:07:35.440 --> 0:07:40.840 paid casual work. We see those people that involve themselves 0:07:40.840 --> 0:07:44.160 in something more than just sitting at home that actually 0:07:44.160 --> 0:07:46.120 have the most enjoyment through their retirement. 0:07:46.720 --> 0:07:49.120 So how do I sit down and think from mapping 0:07:49.120 --> 0:07:53.360 it out The difficulty is trying to work out how 0:07:53.480 --> 0:07:57.679 much I might need to sustain that lifestyle. I could 0:07:57.720 --> 0:08:00.960 write you a fantastic list. I want first class travel, 0:08:01.000 --> 0:08:03.000 I want to go around Europe every year and do 0:08:03.040 --> 0:08:04.400 all these sorts of things. Is it a matter of 0:08:04.480 --> 0:08:07.120 having there's your ultimate goal, there's a mid rank of that, 0:08:07.240 --> 0:08:09.040 and then there's the if you don't do something now, 0:08:09.080 --> 0:08:12.560 this is how bleak it's just going to be you, yeah, 0:08:13.720 --> 0:08:14.720 watching Free to Wear TV. 0:08:15.880 --> 0:08:18.600 But look, there are different levels to it, absolutely, but 0:08:18.720 --> 0:08:23.200 by and large, we see people generally wanting to continue 0:08:23.240 --> 0:08:25.720 to live the current life that they're living now. So 0:08:26.000 --> 0:08:27.960 people will be earning a certain amount of money, maybe 0:08:27.960 --> 0:08:29.440 it's a lot of money, maybe it's not a lot 0:08:29.440 --> 0:08:31.600 of money, or somewhere in between, and they're earning whatever 0:08:31.600 --> 0:08:35.600 they're earning now, and they're living a particular life now. 0:08:35.720 --> 0:08:38.040 Very rarely do we come across people that are really 0:08:38.160 --> 0:08:42.080 unhappy with the life that they're leading now. Whatever they're doing, 0:08:42.240 --> 0:08:44.960 wherever they're living, whatever they're doing with their time, they're 0:08:45.000 --> 0:08:47.480 generally reasonably happy with that, and kind of the starting 0:08:47.520 --> 0:08:50.000 point tends to be we'd really love to be able 0:08:50.040 --> 0:08:53.040 to continue doing what we're doing today through our retirement. 0:08:53.760 --> 0:08:56.080 So there's some exercises in the book where I talk 0:08:56.160 --> 0:08:58.560 to and you can kind of get into the nitty 0:08:58.559 --> 0:09:01.480 gritty of try and work get what you're spending today 0:09:01.840 --> 0:09:05.280 on all of the things that your life costs. Your mortgage, 0:09:05.320 --> 0:09:08.599 you know, school fees if you're having to deal with that, holidays, 0:09:08.679 --> 0:09:11.360 grow throes, all of these kind of things, and then 0:09:11.360 --> 0:09:13.880 you can cross off the bits and pieces that will 0:09:13.880 --> 0:09:17.040 stop by the time you're retired. So hopefully you've paid 0:09:17.040 --> 0:09:19.640 off your mortgage. For example, by the time you're retired. 0:09:19.559 --> 0:09:22.040 Very much looking forward to putting a line through that line, and. 0:09:21.960 --> 0:09:24.840 So you cross off. For a lot of people, there's 0:09:24.840 --> 0:09:27.280 some work to do in getting the mortgage done, but 0:09:27.559 --> 0:09:29.760 hopefully by the time you're retired, the mortgage is paid 0:09:29.760 --> 0:09:31.400 off in some way, shape or formance. So you can 0:09:31.480 --> 0:09:34.600 kind of cross a line through these different things and say, okay, well, 0:09:35.200 --> 0:09:37.000 today I go to work and I earn a particular 0:09:37.080 --> 0:09:39.679 amount it's being spent in these different areas, but by 0:09:39.679 --> 0:09:41.880 the time I retire one, two, three, and four, I 0:09:41.880 --> 0:09:44.120 won't need to pay for so I'm only left with 0:09:44.160 --> 0:09:46.440 whatever's left over. And then you can work on how 0:09:46.520 --> 0:09:47.840 much do you need to fund retirement. 0:09:48.520 --> 0:09:50.440 But also if I think about it, that my health 0:09:50.480 --> 0:09:53.840 costs I'm going to imagine will be higher. I'm doing 0:09:53.840 --> 0:09:56.000 my level best, James, So I'm trying to do weight 0:09:56.040 --> 0:09:58.320 training now three times a week. I don't care about 0:09:58.360 --> 0:09:59.920 needing to be slim. I just want to be strong 0:10:00.000 --> 0:10:01.679 so I can get up and downstairs and not need 0:10:01.720 --> 0:10:03.280 to be assisted. All that sort of stuff is in 0:10:03.280 --> 0:10:06.040 my mind now. But presumably my health costs are going 0:10:06.080 --> 0:10:08.280 to go up, or my private health and premiums will rise. 0:10:08.320 --> 0:10:09.880 Do you sort of is there sort of a way 0:10:09.920 --> 0:10:12.320 where you just have to sort of factor that in 0:10:12.400 --> 0:10:13.800 you just have a stab at it and say, okay, 0:10:13.840 --> 0:10:15.720 well let's just put twenty or thirty percent on that, 0:10:15.800 --> 0:10:17.880 Or how do you advise people to work out. 0:10:17.960 --> 0:10:19.560 You're going to have some ups and downs through the 0:10:19.640 --> 0:10:23.679 different elements that you're spending money on through retirement. So 0:10:24.480 --> 0:10:27.120 the common way that people address this all bit as 0:10:27.200 --> 0:10:30.800 changing as retirement lasts longer. You have an active period 0:10:30.840 --> 0:10:32.880 of your retirement in the earlier years where you may 0:10:32.880 --> 0:10:34.719 be traveling and you're getting out and about and you're 0:10:34.720 --> 0:10:37.000 doing things and you're taking off those bucket list items. 0:10:37.480 --> 0:10:39.199 Eventually you're going to get to a stage where you've 0:10:39.240 --> 0:10:40.920 seen and done all of the big things that you 0:10:41.000 --> 0:10:44.800 wanted to do, and that starts to slow down. Maybe 0:10:44.800 --> 0:10:47.040 it's because you've seen all done all the things. Maybe 0:10:47.080 --> 0:10:49.200 it's because your health starts to limit what you can do. 0:10:49.240 --> 0:10:51.480 But at a point in time that starts to slow down, 0:10:52.240 --> 0:10:54.360 and so you have this more active phase. You have 0:10:54.440 --> 0:10:56.680 this period of time where you've done all the big 0:10:56.679 --> 0:10:58.400 things that you want to do, you slow down a 0:10:58.400 --> 0:11:00.679 little bit, and then we tend to see the period 0:11:00.720 --> 0:11:04.000 where the health starts to rise. But you've got and 0:11:04.040 --> 0:11:06.000 it's horrible to think about it like this, but the 0:11:06.040 --> 0:11:08.720 activity start to slow down, but then the health costs 0:11:08.800 --> 0:11:11.720 start to go up. So you're spending less on one 0:11:11.760 --> 0:11:14.040 area but maybe more on another if you've got these 0:11:14.120 --> 0:11:16.439 rising health costs as you age. 0:11:16.440 --> 0:11:18.960 One seat, so you've got a sort of rough mudmap 0:11:19.000 --> 0:11:20.600 of what you think you would like to be spending 0:11:20.640 --> 0:11:23.920 to have an enjoyable retirement. So then you're sort of 0:11:23.920 --> 0:11:25.720 looking at that, what's the next step, What do I 0:11:25.720 --> 0:11:27.960 need to do if I suddenly go okay? That looks 0:11:27.960 --> 0:11:28.959 like a fairly large number. 0:11:30.160 --> 0:11:33.240 The starting point and the whole kind of Australian retirement 0:11:33.280 --> 0:11:36.600 system and help from Center Lincon Services Australia and so forth, 0:11:36.720 --> 0:11:39.520 is all geared towards you owning your own home. So 0:11:40.080 --> 0:11:41.800 in order of priority, if we try and keep this 0:11:41.880 --> 0:11:43.720 as simple as possible, you want to own your own 0:11:43.720 --> 0:11:46.120 home or wherever that may be, and whatever that looks like, 0:11:46.280 --> 0:11:50.440 and different people will have different aspirations there owning your 0:11:50.440 --> 0:11:53.239 own home and then enough money to support that retirement. 0:11:54.240 --> 0:11:56.480 The target that we like to try and encourage people 0:11:56.520 --> 0:11:58.920 to get to as much as they possibly can. Now, 0:11:59.240 --> 0:12:00.880 not a whole lot of people will eventually end up 0:12:00.920 --> 0:12:04.440 getting there. Is you've got this income target, multiply that 0:12:04.480 --> 0:12:06.720 by twenty times, call it the rule of twenty times. 0:12:06.760 --> 0:12:08.680 So if you wanted to live off one hundred thousand 0:12:08.720 --> 0:12:12.040 dollars a year of spending money in retirement, multip apply 0:12:12.120 --> 0:12:14.559 that by twenty which is two million, and so you 0:12:14.600 --> 0:12:17.079 don't want to have your house paid off and two 0:12:17.160 --> 0:12:20.760 million dollars worth of other assets to support that retirement. 0:12:21.880 --> 0:12:24.400 At that level, now, not a whole lot of people 0:12:24.440 --> 0:12:26.200 get there. Certainly plenty of people do, but not a 0:12:26.280 --> 0:12:29.360 huge portion of the population. If you get to that level, 0:12:29.400 --> 0:12:33.720 you're at a level where it's highly unlikely you'll spend 0:12:33.800 --> 0:12:36.480 your money through retirement. You'll mostly be just living off 0:12:36.520 --> 0:12:40.920 the earnings of your money, and then it goes in inheritance. Now, 0:12:40.920 --> 0:12:44.240 if you're at fifteen times or less than twenty times, 0:12:44.240 --> 0:12:46.400 you get this kind of slowly, you get this curve 0:12:46.440 --> 0:12:49.280 of your slowly yeating into your capital, which is fine 0:12:49.320 --> 0:12:52.280 that that's the reality for most people in retirement, and 0:12:52.280 --> 0:12:54.559 then eventually laid it down the track you qualify for 0:12:54.760 --> 0:12:56.760 some age pension factor into the equation. 0:12:57.280 --> 0:13:00.520 It is tricky, though, isn't it? Because I understand the here, 0:13:00.520 --> 0:13:02.400 but there is an awful lot of people who are 0:13:03.000 --> 0:13:07.840 leaving money to future generations and every person's situation is different. 0:13:07.920 --> 0:13:09.640 But I sort of think, if you've done so much 0:13:09.720 --> 0:13:14.760 hard work, you've really sacrificed and made decisions in your 0:13:14.800 --> 0:13:16.559 life to build up this wealth, and then all of 0:13:16.600 --> 0:13:19.240 a sudden, maybe you're not spending the way that you 0:13:19.240 --> 0:13:22.200 thought you would in retirement, And I guess, I mean, look, 0:13:22.240 --> 0:13:24.319 I look at it. My mum didn't get to retire. 0:13:24.400 --> 0:13:27.520 She was diagnosed with terminal cancer three months out from 0:13:27.559 --> 0:13:32.320 her retirement, and that on it iyo yo, between let's 0:13:32.320 --> 0:13:33.920 do the good things that's paid down the mortgage and 0:13:33.960 --> 0:13:35.920 we're going to go on a family holiday this year, 0:13:35.960 --> 0:13:37.880 because you never know what's going to happen in retirement. 0:13:38.679 --> 0:13:40.959 What is your advice to your clients when they're talking 0:13:40.960 --> 0:13:44.080 to you about they want to have these goals, but 0:13:44.120 --> 0:13:46.640 you need to sort of factor in lifestyle while you're 0:13:46.640 --> 0:13:47.160 a bit younger. 0:13:47.320 --> 0:13:49.640 You're absolutely right. So it's kind of one of the 0:13:49.720 --> 0:13:52.280 questions that we ask people in the earlier stages of 0:13:52.320 --> 0:13:54.960 getting to know them, is what is their view on 0:13:55.280 --> 0:13:58.520 leaving an inheritance to whoever it might be. Some people 0:13:58.600 --> 0:14:00.320 have this view that we want to try and maintain 0:14:00.440 --> 0:14:02.960 everything and leave as much as possible to the next generation, 0:14:03.840 --> 0:14:06.040 maybe because they want to, maybe because they need to. 0:14:06.080 --> 0:14:09.319 You know, certain kids might have some need some extra 0:14:09.360 --> 0:14:11.439 support for whatever reason, and so they need to leave 0:14:11.480 --> 0:14:14.160 a lot of money behind. Most of the time, though 0:14:14.200 --> 0:14:16.560 we actually see people saying, look, we're happy to just 0:14:16.960 --> 0:14:19.120 kind of live off the money over time, and if 0:14:19.120 --> 0:14:21.240 there's less than what we started with, fine, that was 0:14:21.280 --> 0:14:24.640 the whole intent of it. So people say that in 0:14:24.720 --> 0:14:27.560 the beginning, but the reality of working with a lot 0:14:27.560 --> 0:14:30.720 of retiree is over quite a length of time, rightly, 0:14:30.800 --> 0:14:34.320 so everyone's petrified of running out of money, And so 0:14:35.600 --> 0:14:38.240 we find some people are stricter on this than others. 0:14:38.400 --> 0:14:41.240 They try to only spend the earnings of what they've 0:14:41.240 --> 0:14:43.920 got rather than spending the capital because they're petrified of 0:14:44.000 --> 0:14:46.960 running out of money. And so we spend a lot 0:14:46.960 --> 0:14:48.960 of time with these people saying, look, if you continue 0:14:48.960 --> 0:14:52.000 on this particular trajectory, you're going to die with one 0:14:52.000 --> 0:14:54.160 and a half million dollars in your super fund plus 0:14:54.160 --> 0:14:56.040 the value of your house, Like, do your kids really 0:14:56.080 --> 0:14:59.080 need that much money? What are you forging now versus 0:14:59.560 --> 0:15:01.480 what extra would you like to do? And some people 0:15:01.480 --> 0:15:04.160 are doing all that they want to do, and that 0:15:04.280 --> 0:15:08.960 might mean that they're living on a relatively low retirement income. Fantastic. 0:15:08.960 --> 0:15:10.560 It's not up to me to tell them they need 0:15:10.600 --> 0:15:12.200 to spend a whole lot more money. If they're doing 0:15:12.240 --> 0:15:14.640 all the things, it's my job to help them try 0:15:14.680 --> 0:15:17.120 and identify are they holding back on things that they 0:15:17.120 --> 0:15:20.160 would really want to do. The other part to that 0:15:20.360 --> 0:15:23.800 is is then looking at for people that have the means. 0:15:24.640 --> 0:15:27.680 Would your children or whoever may inherit from you in time, 0:15:27.840 --> 0:15:30.720 would they be better off receiving some money from you now? 0:15:30.920 --> 0:15:33.160 And then, as a consequence, a whole lot less when 0:15:33.200 --> 0:15:36.720 you're gone, versus receiving this great big pile of money 0:15:36.720 --> 0:15:38.960 when they're maybe sixty years old and retired themselves and 0:15:39.000 --> 0:15:41.160 they don't really need it anymore. And so we kind 0:15:41.160 --> 0:15:43.880 of have that conversation around when is the appropriate time 0:15:43.920 --> 0:15:45.560 to actually start to leave this money. 0:15:45.880 --> 0:15:48.440 It is an interesting conversation. We might pick up some 0:15:48.520 --> 0:15:50.440 of that when we come back from this break. I 0:15:50.480 --> 0:15:52.960 also want to have a chat to you, James, about 0:15:53.360 --> 0:15:55.880 the common mistakes that you see. There must be a 0:15:55.920 --> 0:15:57.800 few of them over the journey in twenty years or 0:15:57.840 --> 0:16:00.680 so in financial advice, the common mistakes people are making 0:16:00.720 --> 0:16:03.000 and if you could just give people one little bit 0:16:03.000 --> 0:16:05.200 of advice on how to manage their money better. We'll 0:16:05.240 --> 0:16:06.840 have that chat when we come back from this break. 0:16:14.600 --> 0:16:17.640 Welcome back to the Money Puzzle. I'm your host, Julianne Sprague, 0:16:17.720 --> 0:16:21.160 wealth editor at The Australian, filling in for James Kirby 0:16:21.440 --> 0:16:25.240 and our guest today, Melbourne based financial advisor from First Financial, 0:16:25.400 --> 0:16:29.080 James Wrigley, a bit of a social media star at 0:16:29.080 --> 0:16:31.280 his pend to book it is out on October twenty nine, 0:16:31.320 --> 0:16:34.080 called Retire Life Ready. We've been having a chat about 0:16:34.080 --> 0:16:35.720 what you need to do to make sure you can 0:16:35.720 --> 0:16:38.640 have the retirement that you actually want, rather than being 0:16:38.680 --> 0:16:41.200 completely bored and wondering when it all ends. There is 0:16:41.240 --> 0:16:43.680 a better way to do it. James, thanks very much 0:16:43.720 --> 0:16:46.680 for the top tips. I would have thought that part 0:16:46.720 --> 0:16:48.960 of planning for a retirement is actually just getting your 0:16:48.960 --> 0:16:51.480 house in order and being better with your money from 0:16:51.560 --> 0:16:55.120 the get go. You've been a financial advisor for a 0:16:55.200 --> 0:16:57.480 while now, is there a common mistake you see and 0:16:57.520 --> 0:16:59.000 you just want to bash your head against the wall 0:16:59.040 --> 0:17:00.600 and just wish people would up doing it. 0:17:01.800 --> 0:17:05.119 You're probably the one that, yeah, that I'll finish meetings 0:17:05.119 --> 0:17:07.000 with people say oh I wish I just had done 0:17:07.000 --> 0:17:09.560 this and done that. Is is generally people trying to 0:17:09.560 --> 0:17:12.320 make things too complicated, Like it doesn't need to be 0:17:12.520 --> 0:17:15.960 that hard. There's paying off your house and trying to 0:17:15.960 --> 0:17:17.560 have as much money and other things to kind of 0:17:17.560 --> 0:17:20.840 pay off that retirement. But people come to us and say, oh, 0:17:20.840 --> 0:17:22.600 do I need this trust or this company, or do 0:17:22.640 --> 0:17:25.159 I buy a fourth investment property a fifth investment property 0:17:25.200 --> 0:17:27.800 and negative gearing, and like there's so many different things 0:17:27.840 --> 0:17:29.680 out there when we need to just take a step 0:17:29.720 --> 0:17:32.399 back and say, let's just look at where you're at it, 0:17:32.440 --> 0:17:33.919 What are the things that we need to do to 0:17:33.960 --> 0:17:37.760 help you to help you get there. On various occasions, 0:17:37.760 --> 0:17:40.440 we've had meetings with people that in the last couple 0:17:40.480 --> 0:17:42.560 of years of their working life they've decided to go 0:17:42.560 --> 0:17:44.959 and buy another investment property, and so, well, how are 0:17:44.960 --> 0:17:47.000 you ever going to pay off the debt associated with 0:17:47.040 --> 0:17:49.120 this property when you've only got another couple of years 0:17:49.119 --> 0:17:52.200 to work? How are you ever possibly going to afford 0:17:52.240 --> 0:17:54.280 to pay off this property? They've bought it just because 0:17:54.320 --> 0:17:56.639 of the negative gearing benefits to try and save some 0:17:56.760 --> 0:18:00.760 tax without actually thinking that step further to say, how 0:18:00.760 --> 0:18:02.520 can I retire when I have all of this debt 0:18:02.560 --> 0:18:05.600 associated with the property? It ends up needing to be sold, 0:18:05.680 --> 0:18:08.200