Christmas is fast approaching, and with it the annual challenge of finding a gift that will be of lasting value to the recipient. As usual, I've done the rounds and found some book that would be welcome in any Christmas stocking, as well as adding value to the recipient's life.
My new book, Retirement Made Simple, is the perfect gift for anyone aged 45 and over. Retirement is often touted as a worry-free time - but right now it's not easy. People are living longer, government budgets are stretched, financial markets are volatile, and interest rates are at historic lows.
The problem is that there are so many things to think about both in the run-up to retirement and during retirement. These include the best assets to invest in, how long your money will last, effective estate planning, understanding the complicated rules about superannuation, Centrelink and aged care, finding the right advice, and keeping abreast of rule changes and new products.
Everything keeps changing. On top of that, there are the constants: understanding investor psychology and avoiding scams. All these issues are important, and a major facet of a fulfilling retirement is preparation - the sooner you start to plan, the better your retirement is likely to be.
Another vital element of retirement is happiness and health. I read over a dozen books on these subjects when I was researching for my new book. The common theme in most of them is that it's about exercise, diet and social networks. The book that stood out was Lifespan: Why We Age - and Why We Don't Have To, by Dr David Sinclair, Professor of Genetics at Harvard Medical School. In 2014, Time magazine named him one of the 100 most influential people in the world.
In this ground-breaking book, Sinclair, a leading world authority on genetics and longevity, reveals a bold new theory for why we age.
He writes that it's a fallacy to believe that aging is a disease, and needs to be treated as such. He discusses the ageing process in depth, explains what realistic expectations we can have for life expectancy in the future, and includes some simple tips that may delay the ageing process.
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Think and Grow Rich has sold 130 million copies since it was first published in 1937, and has changed the lives of millions of people, including myself. It's based on the timeless success principles as told by Andrew Carnegie to Napoleon Hill.
When I first read the book, I made a vow to promulgate those principles for the rest of my life. I am extremely proud that my son James Whittaker has taken up the torch and has been appointed by the Napoleon Hill Foundation as their ambassador.
Recently he was given access to the previously unpublished diaries of the conversations between Carnegie and Hill that became the basis of Think and Grow Rich.
James has turned these documents into a new book: Andrew Carnegie's Mental Dynamite - How to Unlock the Awesome Power of You. It reminds us that there are solutions to today's most troubling problems - everything from relationships and education to homelessness and even democracy - based on simple principles.
What is so special about this book is that the conversations between Hill and Carnegie are verbatim.
I keep it next to my bed, and every night choose a page at random to read Andrew Carnegie's own words on a range of issues. He was a man who started poor, and became the wealthiest person in the world in the 19th century. This is the perfect gift for anybody who is keen to succeed in life.
There you have it - just three books I'm recommending this Christmas. Each one can change a person's life for good. Remember, we can't change the beginning, but we sure can change the ending.
Noel answers your money questions
I will be 66 early next year. I am in a long-term de facto relationship with my partner who is 66. We have been and remain financially independent of each other apart from a shared mortgage on our home, which is now paid off. I am not working now as I assist my elderly mother in an age care facility. My partner works as a sole trader and hopes to keep working till he is 70. He earns $25,000 a year.
I have $300,000 in super which I'm accessing on a fortnightly basis and $10,000 in savings. My partner has $400,000 in shares. Our home is valued at $1.3 million.
My question relates to an application for the aged pension. I can apply on my own but I wonder about the assumption by the government that my partner supports me when he does not. Should we apply as a couple?
We understand that we may not receive the full pension amount which is fine with us, however, a part pension would assist in our day to day expenses, and access to the health care card would be of benefit. Could you kindly advise which would be the better option for us? Should I apply on my own?
You are a couple, so you don't have the option of applying for a pension as a single person. The assets and income of both of you will be combined, and your eligibility will be based on that. Your total financial assets are $710,000, and I would assume your personal effects would be $30,000 at most. Your home is an exempt asset. If those assumptions are correct you should receive a pension of $204 a fortnight plus all the benefits when you reach pensionable age, and your partner would receive a similar amount. As your partner is 66 now he should have reached pensionable age and be eligible for a similar amount immediately.
If you go to the deeming calculator on my website www.noelwhittaker.com.au you will find that financial assets of $710,000 will be deemed to be earning $547 a fortnight. Your partner's income would be $961 a fortnight, giving you a combined income for income test purposes of $1509 a fortnight. The income test would allow you to get a pension of $413 a fortnight each.
You will both be asset tested, because Centrelink use the test that provides the least pension. Consequently, your partner's income will not be taken into account for pension purposes. Once you are asset tested any income you receive is irrelevant unless you exceed the income test thresholds.
Can you shed light on the "deemed value for CSHC purposes" of former Australian military personnel who are in the DFRDB and are TPI veterans?
I am unsure how to proceed with calculating joint income. I am medical discharged NSWPF and Defence TPI.
Services Australia General Manager Hank Jongen says that to qualify for a Commonwealth Seniors Health Card (CSHC), you must meet the income test. They will look at both your adjusted taxable income (ATI) and a deemed amount from account based income streams.
A Defence Force Retirement and Death Benefits (DFRDB) scheme is a defined benefit pension, therefore is not a deemed account based pension. The taxable income you received from your defined benefit pension is considered assessable income under the ATI.
For CSHC purposes, they need to know the taxable component of your income, as shown in your tax notice of assessment.
I am almost 60 and in full time employment. My total superannuation balance at June 30, 2020 was $1,575,566. I am in accumulation phase. Am I entitled to make as a non-concessional contribution this financial year? If so, is it $100,000, or the difference between $1,600,000 and my balance? That would be approximately $24,000.
The restriction on non-concessional contributions is calculated on the balance at June 30 last. As that was under $1.6 million then you may contribute the whole $100,000 as a non-concessional contribution. Bear in mind your superannuation balance does not restrict you from making a total of $25,000 a year in concessional contributions.
- Noel Whittaker is the author of Making Money Made Simple and numerous other books on personal finance. firstname.lastname@example.org