Debt and retirement aren’t terms that we like to think about together, but this period of your life requires a detailed game plan in order to fully enjoy it.

In Australia, the average retirement age for people aged 45 years and over is 55.3 years – however, this is changing. When you narrow it down to people who’ve retired in the past five years, the average increases to 62.9 years of age.

It’s also worth noting that retirement isn’t necessarily a one-time event, with more than one in four Australians between the ages of 45 and 59 returning to employment each year. For some, it’s boredom, but for others – debt and retirement are simply not a good match, and working again is out of obligation. With that being said, many Aussies are enjoying a comfortable retirement that includes little to no financial restrictions surrounding healthcare, hobbies and even travel – so what’s the secret?

Planning Ahead For Debt And Retirement 

In August 2019, the Australian Housing and Urban Research Institute (AHURI) found that since the mid-1990’s, the proportion of Aussies carrying a mortgage into retirement had more than doubled to 45%. This is also compounded by high levels of personal debt, with the mortgage debt-to-income ratio tripled between 1987 and 2015 – from 71% to 211%.

While house prices tripled, wages certainly did not – meaning that those heading into the twilight years of their lives have to work even harder to ensure that they enter retirement with as little debt as possible. For some, this can feel like moving mountains, but the key to a smooth transition into the next phase of life is linked to smart financial planning well in advance.

Make A Plan – If you haven’t already enlisted the services of a financial adviser or planner, it’s worth doing so. Having a professional insight into your finances can help to provide an unobjective third party perspective and remove any sentimentality when it comes to getting you financially fit for retirement.

Home Loan Health Checks – Being straddled with a mortgage when you’re trying to “scale” back” is one of the biggest hurdles that many Australian retirees face, so it’s important to try to get on top of this decades in advance if you can. Don’t be complacent, and make sure that you’re matched with the right loan product with the most favourable interest rates and terms.

Consolidate Super – Superannuation is your designated retirement nest egg. Having it scattered across multiple funds will result in you paying unnecessary fees, so ensure that you do have these eggs in the one basket. Ensure that your fund of choice aligns with your appetite for risk, and offers insurance options that best fit your circumstances.

Extra Repayments – While you’re still working, try to make extra repayments on what stands out as the obvious link between debt and retirement. Whether it’s your mortgage, a personal loan, or even making voluntary contributions to your superannuation fund, it’s important to try to “get ahead” while you’re able to in order to have a stress free transition into retirement.

Invest In Your Future – Generally speaking, the closer you are to leaving the workforce, the less risk you should take when approaching investments. Many Aussies opt for an investment property or a holiday home in their younger years, while others prefer to dabble in the stock market or other stocks.

Downsize – Downsizing into a smaller and less expensive home could free up a decent amount of cash, which you can put towards paying off your mortgage or invest in your superannuation. Empty nesters have no real need for the large four bedroom home that they once did thirty years ago, so be practical about your needs and be proactive if they have changed.

Where To Seek Help With Debt And Retirement 

If you are ready to “level up” and get financially fit, then it’s never too early to seek professional financial advice. Whether your next goal is to retire early, take a gap year or purchase a home, George Samios and the team at Madd Life are ready and waiting.

With their entire business built on referrals, the team at Madd Loans have taken the mortgage broking industry by storm. Their overwhelmingly positive feedback has helped them to take out numerous industry awards, including the title of “Queensland’s Broker Of The Year” for four consecutive years. However, after working with a broad variety of clients in regards to their mortgage options, it made sense for the team at Madd to have the capacity to offer a full financial planning service.

If thinking about your financial future strikes a chord with you, then it might be time to speak to a professional. Whether you’re chasing mortgage solutions or a financial fairy godmother, the team at Madd work together as a collective to turn your goals into reality.

On Monday 22 March and effective immediately, the Commonwealth Bank of Australia announced its lowest fixed rate ever released for home loans. 

The key updates released by CBA include – 

• 20 bps reduction to 1.94% p.a. on new two year fixed rate home loans for owner occupiers paying principal and interest in the Wealth Package. This is CBA’s lowest fixed rate for home loans to ever be advertised; 
• 30 bps reduction to 2.39% p.a. on new three year Fixed Rate home loans for Investors paying Principal and Interest in the Wealth Package. This is CBA’s lowest fixed rate for investors to ever be advertised; 
• New digital splitting tool in NetBank and the CommBank app.

It would appear that Australia’s largest bank has bowed to pressure from rival lending institutions Westpac and NAB, by finally bringing its two-year fixed rate to under 2%. According to Michael Baumann, CBA’s Executive General Manager of Home Buying, it’s all in place for the benefit of consumers. 

“We know that customers are looking to lock in the certainty of fixed rates, with around 40 per cent of new customers fixing their loans to take advantage of the current record low rate environment. These changes allow homeowners and investors to take advantage of our lowest ever fixed rates, adding to our already market leading home lending solutions, including the recently announced CommBank Green Loan.”

Along with record low interest rates, yesterday’s announcement also comes as CommBank launches a new digital splitting tool for customers. The concept has been designed for customers looking to split their variable home loan, in order to best take advantage of the certainty of a fixed rate and the flexibility of a variable home loan.

Eligible customers can now split their home loan in NetBank and the CommBank app in a few easy steps,  by simply selecting the portion of their loan and the term they would like to fix. In real time, consumers are able to see how this split changes their repayments. 

“We have made it easier than ever for eligible customers to take advantage of the new fixed rates announced today, with the launch of this easy to use feature in the CommBank app and NetBank. There is a limited understanding from customers that they can split their loan, and this new tool gives customers even more control of their finances and the flexibility of redraw and offset,” Mr Baumann said.

However, the most significant change was the hike to the Commonwealth Bank’s four-year fixed rate. For owner occupiers, the four year fixed interest rate rose from 1.99% to 2.19%, making them the first of the big four banks to hike the four year rate since October 2019. Lending experts believe that this is a sign of things to come, and providing the economic recovery of Australia stays on track, consumers who fix their home loan rates today could very well see variable rates increase during that same period of time. 

A lock-in or rate lock on a mortgage loan means that your interest rate won’t change between the offer and closing, as long as you close within the specified time frame and there are no changes to your application. With the Australian real estate market picking up and gaining momentum, there’s never been a better time for consumers to seriously consider the benefits that rate lock has to offer. 

If thinking about your financial future strikes a chord with you, then it might be time to speak to a professional. With their entire business built on referrals, the team at Madd Loans have taken the mortgage broking industry by storm. Their overwhelmingly positive feedback has helped them to take out numerous industry awards, including the title of “Queensland’s Broker Of The Year” for four consecutive years. Get in touch with the team at Madd today to discuss your rate lock options and stay ahead of the market. 

In order to reach a destination, you need a map – which is why financial goal setting tips are essential if you want to bring your monetary dreams to life. 

The old saying goes that if you’ve failed to plan, you’re unwittingly planning to fail. When it comes to managing your money, it’s also not an exaggeration to state that if you aren’t working toward anything specific – you’re likely to be spending more than you should. Financial planning and setting targets for short, medium and long term goals can also help to ensure that you’re prepared for all of life’s ups and downs, but where do you start?

How To Determine Your Financial Goals 

Depending on your individual circumstances, desires, income and even general aspirations, defined financial goals will vary from one person to another. However, there are three primary pillars to consider that can apply to just about anyone when it comes to setting financial goals. 

Short Term Goals: Setting (and sticking) to a day to day budget, building an emergency fund, paying down smaller debts like credit cards. 

Medium Term Goals: Buying your first home, taking out the correct insurance policies, setting up a university fund for your children if applicable. 

Long Term Goals: Have a solid retirement plan surrounding your superannuation, collecting investment properties, high interest savings accounts, aiming to be debt free. 

The hardest part is often determining what these goals will look like to you, so write them down – think about all the many things that you would like to do, achieve or experience in your life. Include all areas such as relationships, career, leisure, personal growth and even health, as one way or another these usually link back to your financial situation anyway. 

Once you have a clear vision in mind, it’s time to both prioritize these goals – and to add time frames and task lists to them. Exactly what do you need to do in order to bring these goals to life, and how long are you going to need to do so? Some will require decades, and others just weeks. By breaking them down into tangible, realistic targets, suddenly your financial goals become less overwhelming, and are a lot easier to achieve than you may have initially thought. This also translates to motivation, which is often the hardest part when it comes to sticking to goals of any nature. While this all sounds great on paper, are there any shortcuts or goal setting tips that can help to keep you on track?

Seven Financial Goal Setting Tips To Keep You Motivated 

Most of us start any new year slightly more hopeful than we were in November, but the magic lies in keeping the momentum up, especially when it comes to managing your money – so are there any industry hacks when it comes to financial goal setting tips?

Be Accountable – Now that you’ve outlined some tangible financial goals to hit, how are you going to keep track of them? Check in with yourself regularly to keep track of timelines and targets – after all, you’re the one accountable for them. 

Know Your Income – Financial professionals talk a lot about monitoring your expenses, but what about your income? Knowing exactly how much is coming in is just as important as knowing what’s going out, as it can help you to identify ways to potentially lift your income. 

Use Technology – Since we now live in the digital age, there’s no need to spend hours mulling over an Excel spreadsheet to track your budget and outgoings. Use apps like Pocketbook or Money Brilliant to sort your daily spending, and others like Raiz to explore the stock market. 

Know Your Credit Score – Unfortunately many Aussies only tackle their credit file once it’s too late – meaning that they’ve been declined for a loan, and they’re trying to understand why. Check your credit file regularly to spot any potential red flags and avoid future pain. 

Needs vs Wants – Get into the habit of curbing excessive spending. Much like eating healthy, start addressing your “needs vs wants” with a regular spending routine instead of overdoing it with short term discipline. If you’re realistic, it’s more likely to stick. 

Direct Debits – Don’t let your bills pile up, as this is a surefire way to put a spanner in the works when it comes to hitting your financial goals. Instead, break them down into smaller weekly direct debits into a separate bank account to avoid the larger annual bills. 

Weekly To Do Lists – Long term financial goal setting can be daunting. While that five year plan looks good on paper, what do you need to do every week in order to get you there? It could be as simple as saving $50 in a term deposit, or even cutting down on takeout coffee. 

Further Financial Goal Setting Tips From The Professionals 

If you are ready to “level up” and get financially fit, then it’s never too early to seek professional financial advice. Whether your next goal is to retire early, take a gap year or purchase a home, George Samios and the team at Madd Life are ready and waiting. 

With their entire business built on referrals, the team at Madd Loans have taken the mortgage broking industry by storm. Their overwhelmingly positive feedback has helped them to take out numerous industry awards, including the title of “Queensland’s Broker Of The Year” for four consecutive years. However, after working with a broad variety of clients in regards to their mortgage options, it made sense for the team at Madd to have the capacity to offer a full financial planning service.

If thinking about your financial future strikes a chord with you, then it might be time to speak to a professional. Whether you’re chasing mortgage solutions or a financial fairy godmother, the team at Madd work together as a collective to turn your goals into reality.