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Top 3 ways you can save and invest for your kids' education

From saving to borrowing to invest, we discuss how to plan for the rising cost of education.


With private school fees reaching tens of thousands in the large capital cities, many families are keen to look at ways to provide for their kids' education. Here are some steps that may help get you started.


Begin early and make a plan

Find out the school fees and expenses you're likely to incur, the number of years you're likely to incur them (say, years 7 to 12) and consider your time frame - the difference between your child's current age and the age at which they start at your chosen school. This may be able to to help you work out how much you need to save, which you can then break down into annual, monthly or weekly increments.


Start a regular savings plan

Consider setting up a direct debit into a savings account you don't touch, such as an online savings account or a reward saver account paying a higher rate of interest. If your child was in childcare and is now attending a (public) primary school, you could start by putting away the amount you're now saving in childcare fees.


Set up an investment plan

If you have a time frame of five years or more and are comfortable taking a higher level of risk with your savings, you could consider putting regular savings into a managed fund, or buying diversified investments such as an exchange-traded fund (ETF). These investments are more volatile than cash but may generate higher returns over the long term, helping you reach your savings goal.


You financial adviser can help you assess the options available to you and find the solutions that will meet your needs - no matter what stage of life you're at.


Planning for a longer retirement

Australia has one of the highest life expediencies in the world. 1 65-yer-old man today will live, on average, nearly 20 years longer and a woman the same age can look forward to about 22 more years, according to Australian Bureau of Statistics Life Tables data. Furthermore, since life expectancy is increasing, today's younger generations are likely looking forward to an even longer retirement.


While this can be good news, it could also mean you need to take those extra years into account when you're planning your retirement. The challenge is to find a balance between overspending in the years straight after you retire so that you don't run into financial issues down the line, and having to live more frugally than you need to.


Even though there are lots of variables involved in how much you'll have in retirement, generally speaking there are some simple steps you can take to prepare for a longer post-working life.


Consider your retirement savings

Generally speaking, superannuation contributions, investment options and appropriate insurance will help to build a savings pool less likely to be eroded by your expenses in retirement.


Working longer

Planning to work a little longer (either full-time or part-time) means you may not need to start drawing on your retirement savings so soon.


Consider matching expenses to your income

Whether you receive an income stream from your super or another investment source, a possible way to minimise your risk of running out of money is to budget based on your actual income. Bear in mind that in early retirement, you may enjoy a more active lifestyle than later in life.


Consider your life stage

Ensure your investment mix is right for today's needs and your long-term objectives will help you preserve your capital for longer.


Remember your safety net

As your circumstances change over time, you may find yourself eligible for the Age Pension (full or part). As at May 2018 the basic rate of Age Pension is $826.20 per fortnight for a single person and $1,245.60 for couples (basic rate, combined). These payment rates are indexed twice per year. Be aware the Age Pension age is increasing to 67 years of age for those born in 1957 or later, this may be an important consideration for future planning.


Retirement can be a truly rewarding time, and with the right planning, you'll be able to protect your retirement savings wisely. If you need some help creating strategies that suit your individual circumstances, it may be worth seeking professional advice.


Finances in your 50's (and beyond)


Run the slide rule over your finances recently?

If you were born in the 1960s, you're now either in your 50s or fast approaching them. If you have children, it's possible they've reached adulthood and may be preparing to fly the coop. Your sixth decade is, generally speaking, a time to consolidate your position and ready yourself for retirement. It makes sense to check you're on track financially and, where necessary, seek advice that takes into account your personal circumstances.


Assessing your position

Your time to down tools may be drawing near, given the average age of retirees leaving the workforce is 62.9 years. Your 50s are likely to be your final decade of full-time work, unless you're planning to carry on working for longer than the norm. Understanding when and whether you'll be able to retire comfortably starts with assessing your position. This may involve quantifying the value of your assets - including your home, superannuation, investment properties and shares - adding up your debts.


Identifying the kind of lifestyle you'd like to enjoy in retirement can, generally speaking, help you determine whether you're on track or if you need to make changes to your current budget and lifestyle to achieve it.


If you're a single person hoping to have a comfortable time of it, with occasional overseas travel, meals out and other luxuries, the Association of Superannuation Funds of Australia's current Retirement Standard suggests you may need an income of about $43,000 a year. Couples aspiring to the same standard of living may been about $60,000. Singles happy to live more modestly will need about $27,000 a year and couples about $39,000.


Paying down debt

If you still have a mortgage on your home, or any other outstanding debts, you could consider setting yourself the goal of paying them off while you're still in the workforce. Having these goals may provide you with a greater level of certainly and comfort a few years down the track, depending on your personal circumstances of course.


Superannuation

Super can be a tax-effective way to prepare for your retirement. Perhaps consider boosting your balance with additional contributions, it that suits your situation.


Downsizing

Downsizing is an option many Australians in their 50s and 60s consider. If you're interested in the idea of shifting somewhere smaller and investing any surplus, you might want to investigate the federal government's downsizer measure. It enables Australians ages over 65 who meet eligibility requirements to use the proceeds from the sale of their home to top up their superannuation by up to $300,000.


Protecting what's important

While everyone hopes their 50s are a time of robust health, the reality is life can change very quickly. Appropriate insurance is the key to minimising the financial impact of adverse events such as injury, illness or job loss. If you don't have it, a long break or premature departure from the workforce could disrupt the best-laid retirement plans. It's worthwhile reviewing your policies to ensure they continue to meet your individual needs, particularly if it's been some time since you last did so.


If you're still in the workforce, income protection insurance can safeguard a percentage of your salary or wages - covering you if you're out of action for an extended period or forced to retire earlier than you'd planned. Total and permanent disability insurance can provide you with a lump sum payout if you're left unable to work in any capacity while trauma insurance can cover you with a lump sum if you're diagnosed with one of a specified set of serious conditions or illnesses.


Your 50s can be a decade of fun and renewed freedom as children reach adulthood and become independent. They're also vital years for considering your financial position before you exit the workforce. Taking time to evaluate how you're travelling and making changes if necessary can ensure you're well placed to enjoy your retirement, when you decide it's time to call it a day on your career.

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Licensee Disclosure:

Todd Burnell

Senior Financial Planner/Director

Silway Pty Ltd TA Silway Private Wealth

Authorised Representative of GWM Adviser Services

TA MLC Financial Planning

Australia Financial Services Licensee

Registered Office at 105 - 153 Miller Street

North Sydney NSW 2060 Australia