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By Lyndsey Douglas
Financial Planning isn't just setting up a monthly budget - it's preparing yourself for the long term.
Most Australians who seek financial advice are still only doing so in their fifties as they prepare for retirement, Yellow Brick Road’s financial planning survey revealed.
In a national survey of 1,000 people, only 22% of respondents said they have used a financial adviser and many of those were 55 years of age and over (40%).
The reasons people gave for not using a financial adviser earlier included the belief they don’t need one (63%), cost (34%), reputational worries (15%), perception that advisers are only for the wealthy (14%) and embarrassment in the state of their finances (12%)1.
Yellow Brick Road says that waiting so long to get a financial plan is a huge mistake.
ABS data shows that almost two-thirds of Australian retirees are relying on government welfare as their main source of personal income. While half of Australians were independently funded when they first retired, this drops significantly as time passes and their funds dry up.2
Furthermore, women make up 70% of pensioners and are at a much higher risk than men of running out of money due to longer life spans.
Yellow Brick Road spokesperson Lyndsey Douglas said: “Too many Australians are relying on government welfare because their superannuation, annuity, dividends, interest or rental property income isn’t lasting the distance in retirement. If you’re only just getting financial advice when you’re close to retirement, there’s significantly less that can be done to make your savings stretch further. The real advantages in having a planner come if you start earlier in life.”
Yellow Brick Road’s research showed that younger age groups (18-24 and 25-34) don’t believe they needed a planner (65%) and many didn’t know what planners actually do (25%).
“We are on the verge of a national epidemic of ‘pensioner poverty’ thanks to a large percentage of people having too little to sustain lengthening life spans. The younger generations don’t grasp the benefits of building wealth early on and that time and compound interest are a powerful pair when it comes to creating a comfortable retirement. Providing opportunities for young people to get financial advice and make smart financial decisions in their early years can set them up for success the rest of their lives,” Ms Douglas said.