What to do when you come into money

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What to do when you come into money

Whether you’re faced with an inheritance, redundancy package or winning lottery ticket, it’s wise to consider your financial situation and future goals.

For most of us, a financial windfall isn’t something that comes around very often. And while the extra cash is welcome, money matters may be the last thing on your mind if you’re also dealing with the emotions of losing a loved one or being made redundant.

But it’s important to be prepared, so that if you do come into a large lump sum of money unexpectedly, you know what to do with it.

Sort out the tax

The first thing to do is work out if there are any tax implications.  A financial adviser can help you work through these and make the most of your money.

  • Inheritance—You may have to pay tax on your inheritance depending on where the money comes from. For example, you may need to pay tax on any super death benefit you receive, unless you’re a tax dependant of the deceased (eg a spouse, child aged under 18, a financial dependant or someone who the deceased had an interdependency with).
  • Redundancy payment—If your role is made redundant, the payments you receive on termination of your employment will generally be taxed concessionally (unless you’re aged over 65). Speak to your employer to confirm how your redundancy will be calculated.
  • Work bonus—You’ll need to decide in advance whether you want any bonus paid into your bank account and taxed at your usual marginal rate or salary sacrificed into your super and taxed at the concessional rate of 15%1. But make sure that you don’t go over your total yearly concessional cap for super of $25,000 —this includes your regular employer payments and any salary sacrifice payments you may be making. Certain conditions must also be met for you to be eligible to salary sacrifice your bonus – please speak to your financial adviser first.
  • Prize or gift—If you’re lucky enough to win lotto or another one-off prize see a financial adviser to discuss the best way to invest it. If you’re receiving a social security benefit, these amounts can impact your entitlements.

So now you’ve got your money, what to do with it?

While it’s tempting to rush down to the travel agent and book that Pacific cruise, you might like to consider other ways of spending your new-found wealth.

  • Pay off your home loan—If you’re like many Australians, you may have substantial debt in the form of a home loan. So you could use your windfall to pay it off.
  • Pay off your other debt—If you owe money on your credit card or have other loans with high interest rates, now could be a good time to pay them off. Check out how to pay off your debt effectively.
  • Boost your super— From 1 July 2017, you can make up to $100,000 a year (or $300,000 over three years if you’re under age 65) in after tax-contributions. After-tax contributions don’t attract the concessional tax rate but once in super, earnings are only taxed at 15% and withdrawals are tax-free once you’ve reached age 60 (and can access your super). You can also consider pre-tax super contributions.
  • Invest in property, managed funds, direct shares or term deposits – but check what’s right for your personal circumstances.

Want to know more?

Remember, what you do with your money can affect how any earnings or capital gain you make are taxed. So it’s important to plan properly to avoid any unwelcome surprises down the track. And don’t forget to make sure your will and other estate planning matters are up to date, so that your money goes to the people you want it to if anything happens to you.

Speak to us to help you make tax-effective decisions about how to use the money to your advantage.

1 Or 30% if you earn more than $250,000 per annum.

Important information

© AMP Life Limited. This provides general information and hasn’t taken your circumstances into account. It’s important to consider your particular circumstances before deciding what’s right for you. Although the information is from sources considered reliable, AMP does not guarantee that it is accurate or complete. You should not rely upon it and should seek qualified advice before making any investment decision. Except where liability under any statute cannot be excluded, AMP does not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person.

Your options in aged care explained

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Your options in aged care explained

With multiple avenues to explore, thinking about aged care earlier rather than later could provide you or your loved one with greater flexibility.

It’s possible that in the future you, or someone close to you, may need some form of care or daily living assistance.

With lots of information to sift through and the conversation sometimes a tricky one to approach, we’ve pulled together some information to make navigating aged care an easier process.

The current state of affairs

The Australian government has projected that in 40 years the number of people aged over 100 will be 300 times what it was in the mid-1970’s1, with an ageing population shining a light on aged care services.

Meanwhile, industry figures show2:

  • More than 50% of people over age 45 have previously, or are currently, dealing with aged care services for themselves, or on someone else’s behalf
  • The likelihood a woman over age 65 will require residential care in her lifetime is 54%. For men, that figure is slightly lower at 37%
  • The total cost of aged care in Australia is projected to reach around $290 billion by 2055.

Aged care services available

There are several types of aged care services available. Each has an eligibility criteria and an assessment process which can be organised through the government’s My Aged Care initiative.

Options include:

  • Help in your own home – if you are generally able to manage, but require assistance with daily tasks, there are various home-care packages available. You can search for providers online or phone My Aged Care on 1800 200 422 to discuss options.
  • After-hospital (transition) care – if you’ve been in hospital, but need assistance while you recover and additional time to think about the best place to live long-term, this type of service can be provided in your own home or ‘live-in’ setting for 12 to 18 weeks.
  • Respite care – this service provides support for you and your primary carer when your carer has other duties to attend to, or when they’re on holiday.
  • Residential aged care – this is where you live in full service residences and receive ongoing care and support. If it’s the best option for you, it’s a good idea to research and visit several residences to find the right place in terms of location, services and activities. The Aged Care Home Finder can help with this process.
  • Short-term restorative care – this provides a range of services over eight weeks to help prevent or slow down difficulties with completing everyday tasks. It aims to improve wellbeing and independence, and delay or reverse the need to enter long-term care.

The costs

The costs for after-hospital, respite and short-term restorative care depend on the level of care and how long it’s required.

The fees for an at-home-care package or residential aged care can also vary and will depend on income and assets, as assessed by the Department of Human Services or the Department of Veterans’ Affairs.

With a residential aged care facility there may be one-off payments (or deposits), as well as ongoing fees for care, accommodation and daily living expenses.

If you’re a self-funded retiree, it’s a good idea to seek an income assessment before commencing an at-home-care package or entering residential aged care to avoid paying maximum fees and charges.

The government’s Home Care fee estimator and Residential Care fee estimator can help.

Having the discussion

Deciding to have a discussion is the first step. So, if you’re in a situation where you need to approach the topic of aged care, whether it’s for yourself or a loved one, it’s better to do it sooner rather than later.

Remember, it may not be easy and it’s fairly normal for people to resist this type of conversation. For this reason, it’s a good idea to approach the topic as a series of conversations so that you (or your loved one) are in a better position to articulate what you want to happen.

Things worth considering when approaching the topic include:

  • Being deliberate about the time and place for these conversations
  • Thinking about whether other family members should be included
  • Whether relevant paperwork is accessible and in order
  • Whether third parties, like the family doctor, could help by offering their perspective.

More information

As there are complexities and tax implications to work through when it comes to aged care, including for example whether to sell the family home, it’s a good idea to get financial advice.

Other useful resources include:

1 http://www.treasury.gov.au/PublicationsAndMedia/Publications/2015/2015-Intergenerational-Report 2 https://www.superannuation.asn.au/media/media-releases/2015/media-release-26-november-2015

Important information

© AMP Life Limited. This provides general information and hasn’t taken your circumstances into account. It’s important to consider your particular circumstances before deciding what’s right for you. Although the information is from sources considered reliable, AMP does not guarantee that it is accurate or complete. You should not rely upon it and should seek qualified advice before making any investment decision. Except where liability under any statute cannot be excluded, AMP does not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person.

One in three young people rely on their parents

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One in three young people rely on their parents

Nearly one in three young people that don’t own a home are relying on assistance from parents to help them make the leap, Galaxy Research has revealed.

The research, conducted for non-bank lender State Custodians Home Loans and released on Wednesday (6 September), found that 29 per cent of Australians aged 18–34 who don’t own a home would need a loan or grant from parents to get a foot on the property ladder.

Further, 26 per cent of respondents were looking to some form of parental inheritance for assistance.

“While everyone would agree [that] it’s a good idea for adult children to be as financially independent as possible, the reality is more and more young people are simply not able to get ahead in property without some kind of financial assistance from their parents,” said State Custodians general manager Joanna Pretty.

“Being able to salary sacrifice for a deposit from pre-tax pay and use voluntary superannuation contributions up to $30,000 towards a deposit on a home [as part of the new housing affordability package] will provide some benefit for some buyers. However, across-the-board first home buyer (FHB) grants would be far more helpful as far as a lump sum goes.”

Thirty-seven per cent of young people that do not own property have said that they would need to move back in with parents to save enough for a deposit, while 20 per cent said they would need to postpone plans to have children in order to save a deposit.

However, it’s not just young Australians who look to their parents for financial help, the survey reported. Nearly a quarter (23 per cent) of respondents aged 35–49 would consider moving back in with their parents to save for a deposit, and more than 1 in 5 would “have no hesitation” asking their parents for financial help.

State Custodians said that it’s a “tough challenge” for FHBs to save using wages as Australian wage growth is stagnating. Accumulating savings from their current job was the main way 39 per cent of all respondents aimed to gather a deposit. Twenty-eight per cent of respondents were eyeing a better-paying job to help them save up a deposit.

“It is definitely tough to buy in metro areas these days, especially if you’re struggling to make ends meet on your current wage,” Ms Pretty said.

“The deposit requirements are significant, even if you’re an expert saver. Unfortunately, buying your ‘forever home’ right off the bat is not always a feasible or quick option like it has been in the past.”

Factoring in an average Australian salary of $78,832 and an average FHB loan of $335,000, State Custodians said that FHBs would need to put aside $1,116 of a $4,434 monthly pay packet every month for five years to save a 20 per cent deposit.

State Custodians noted that FHBs often also need to pay rent and living expenses while living in cities where larger loans are a necessity.

The parents’ bill? $65.3 billion

The Galaxy Research report echoes research released by Mozo on 5 September which found that Australian parents have spent $65.3 billion in helping young buyers enter the market.

According to the Mozo research, the “Bank of Mum and Dad” is the fifth-largest lender in the country and has lent more than ING ($42 billion), Suncorp Bank ($40 billion) and Bendigo Bank ($34 billion).

Mozo director Kirsty Lamont said: “It’s getting harder and harder for new buyers to enter the market.

“This has led to the rise of mum and dad as a lender — parents who are helping their kids to purchase a property by contributing to the deposit, helping to meet home loan repayments, or in some cases, even buying the property on their children’s behalf.”

Mozo pointed to a growing divide between the average house price and the average income as an exacerbating factor. The average house price in 1986 of $76,278 was 4.4 times the average income of $17,321. Conversely, in 2016 the average house price had reached $547,714, 6.9 times the average income of $78,832.

Twenty-nine per cent of parents help children buy a home. While the lending averages more than $64,000 per family, 67 per cent of parents don’t expect to be repaid.

Parents in NSW lend the most, around $88,250 per family, and Victorian parents lend around $63,000

Original article: https://www.mortgagebusiness.com.au/breaking-news/11463-1-in-3-fhbs-need-leg-up-from-parents?utm_source=MortgageBusiness&utm_campaign=MBDaily%20bulletin08_09_17&utm_medium=email&utm_content=3

7 tips for getting ahead in the new financial year

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7 tips for getting ahead in the new financial year

 

Take control of your finances now for the new financial year.

If you set yourself money goals at the start of 2017, the upcoming new financial year is a great time to check if you’re on track.

And if you didn’t set any goals – or if you have strayed off track – this is the perfect time to get organised, write a checklist and stick with it!

Kick off now with these practical tips:

  1. Set some goals

Think about what you want to achieve this financial year. Is it to save for something special, to curb your spending or to reduce your debts? Once you know what you’re aiming for you can set and achieve your goals.

  1. Understand where your money goes

If you’re running out of money before payday, or you’d just like to get a better understanding of where your money goes, it’s probably a good idea to start tracking your spending.

There are lots of good tools and apps to do this.

  1. Set a budget

Get serious about managing your budget.

If you don’t already have a budget, now’s a good time to set one. Use our budget calculator to work out your expenditure and find out how much you could put aside each payday.

  1. Get your super sorted

Find out if you have any lost super and how you can consolidate it to avoid paying multiple fees.

Or read about how you can boost your super and possibly lower your tax bill.

  1. Consolidate your debt

Now might be the time to get rid of extra credit cards and opt for a single card with a lower interest rate and less fees. See Canstar for a comparison of credit cards.

If you have a home loan, consider increasing your loan amount and using the extra money to pay off your other debts. A home loan usually has a lower interest rate than debts such as credit cards, so this will help you to avoid paying higher interest rates.

If you don’t have a home loan, consider getting a personal loan at a lower interest rate to help you pay off your debts sooner.

Or learn about how to pay off your debts altogether so you can become debt-free.

  1. See where you can make savings on big ticket items

Take advantage of end of financial year sales to buy big ticket items, such as cars, whitegoods or furniture. And be sure to do your research on products and prices, shop around and don’t be afraid to bargain.

Make sure you get the best rates available on your frequent bills such as insurance and energy. Use comparison websites, such as comparethemarket.com.au to compare product benefits and costs and check Canstar to see how your interest rates and financial products stack up.

  1. Commit to better money habits

Resolve to curb any costly bad habits that can drain your finances, such as paying for things that you can do yourself. Do you really need to outsource house cleaning or washing the car?

And read about how to plug any money leaks in your budget and boost your bank balance.

Roasted Pumpkin Soup

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    You’ll be mopping up every last bit of this creamy pumpkin soup with crispy ciabatta.

          Ingredients

  • 1 1/2 tablespoon olive oil
  • 3 cloves garlic
  • 1.5kg butternut pumpkin, diced
  • 20g butter
  • 1 medium leek, trimmed, halved, washed, sliced
  • 2 medium cream delight potatoes, peeled, chopped
  • 1 litre chicken stock
  • 1 tablespoon pure cream
  • 1 tablespoon chopped fresh chives
  • toasted ciabatta slices, to serveMethod

    Step 1

  • Preheat oven to 200°C /180°C fan-forced. Line 2 large baking trays with baking paper. Place pumpkin and garlic in a bowl. Add oil. Season with salt and pepper. Toss to coat. Arrange pumpkin mixture, in a single layer, on prepared tray. Bake for 40 minutes or until pumpkin is golden and tender.

    Step 2

  • Squeeze garlic cloves from skin. Reserve. Discard skin. Melt butter in a large saucepan over medium-high heat. Add leek. Cook, stirring, for 3 minutes or until leek has softened. Add potato. Cook, stirring, for 5 minutes.

    Step 3

  • Add stock and 2 cups cold water. Season with pepper. Cover. Bring to the boil. Reduce heat to medium-low. Simmer for 15 minutes or until potato is tender. Stir in roasted pumpkin and garlic. Cook for 5 minutes or until heated through. Set aside for 5 minutes to cool slightly.

    Step 4

  • Blend pumpkin mixture, in batches, until smooth. Return to pan over low heat. Cook, stirring, for 2 to 3 minutes or until heated through. Ladle into serving bowls. Drizzle with cream and sprinkle with chives. Serve with toasted ciabatta slices.
    Secret
  • Keep some of the pumpkin seeds, coat them in some paprika and roast them with the garlic. They will add a nice crunchy element to your soup.

How can I safeguard my ability to pay off my home loan?

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How can I safeguard my ability to pay off my home loan?

It’s not unusual that life can be smooth sailing one minute and throw you a curveball the next.

You might be hit with an injury or illness, a reduction in income or redundancy, a separation from your partner, or even a death in the family—all of which can be difficult, emotionally as well as financially.

If you happen to owe money on your home loan, having a financial backup plan, should such a situation arise, could go a long way.

What you can do today

Set up an emergency fund

An emergency fund can give you peace of mind by creating a pool of rainy-day savings that can be used to pay unexpected bills in the event of a financial dilemma.

It also reduces the need to rely on high interest borrowing options, such as credit cards or applying for payday loans, which can often be an expensive form of finance and create unwanted debt.

A decent-sized emergency savings pot won’t be built overnight, but the good news is putting aside a little money on an ongoing basis could really come in handy down the track.

Check out our six steps on how to set up an emergency fund.

Maintain your insurance

Depending on what life throws at you, having personal insurance may help you to still meet your financial commitments, which could include making your home loan repayments.

After all, at least one in five Australians will be unable to work due to an unexpected accident, injury or illness at some point in their life.1

For this reason, checking you have the right type of cover and enough of it, particularly when your circumstances change, is important.

If you don’t have insurance, now might be a good time to learn about the types of cover available, and whether you take it out through super or via an insurance company, broker or adviser.

If things take a turn for the worse

Talk to your lender

If you run into tough times and you don’t have an emergency fund, renegotiating your home loan might allow you to reduce your repayments by switching to a different type of home loan or moving to interest-only payments.

You may also be able to seek assistance from your lender by claiming financial hardship.

All lenders must consider reasonable requests to alter the terms of a home loan in instances where someone suffers genuine financial hardship and feels a change would enable them to meet ongoing repayments.

If you’re not happy with your lender’s response you can also contact the Financial Ombudsman Service or Credit and Investments Ombudsman, both of which are free external dispute resolution schemes.

Sell your home and buy a cheaper property

It may not be ideal, but if you don’t have other options, selling your home might be worth exploring to avoid having your property repossessed and facing what could be an even bigger financial fallout.

It will take time to arrange things, whether selling your home outright or buying a property that’s cheaper to maintain. So, speak to your lender about how you can go about it and consider seeking advice as to whether this is the best path to take before making a decision.

Access your super to make your repayments

In some cases of severe hardship you may be granted early access to your retirement nest egg under strict conditions. However, this should be a last resort.

If you want to know more about how you can access your super in special circumstances check out the early release of superannuation section on the Centrelink website.

Being prepared

Life has its ups and downs so it’s best to be prepared. Remember, if you do run into tough times speak to your lender as soon as possible to see what your options are.

1 www.lifeinsurancefinder.com.au/post/compare-life-insurance-australia/the-impacts-of-underinsurance-in-australia/

Important information

© AMP Life Limited. It’s important to consider your particular circumstances and read the relevant product disclosure statement before deciding what’s right for you. This information hasn’t taken your circumstances into account.

This information is provided by AMP Life Limited. Read our Financial Services Guide for information about our services, including the fees and other benefits that AMP companies and their representatives may receive in relation to products and services provided to you. All information on this website is subject to change without notice.

Although the information in this article is from sources considered reliable, AMP does not guarantee that it is accurate or complete. You should not rely upon it and should seek qualified advice before making any investment decisions. Except where liability under any statute cannot be excluded, AMP does not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person.

What financial records do I need to keep?

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Ever feel like you’re drowning in a sea of paper? Tame the paperwork today and reap the rewards tomorrow.

Life can be complicated enough without all the administrative paperwork that often accompanies it. This is particularly true when it comes to your personal finances.

If stacks of old bank statements, utility bills, receipts, insurance and superannuation documents mean you can’t see the trees for the paper, de-clutter, simplify your finances and improve your quality of life today.

Why simplify?

There are many good reasons to pare back on your financial record-keeping, including:

  • Living in smaller dwellings means we have less space to store documents
  • Saves time by making it easier to find what you need
  • Helps your loved ones find relevant documents easily should something happen to you
  • In the event of a home emergency, you can quickly find important documents you may want to take
  • Makes your life easier at tax time.

What you need to keep

When it comes to identifying the documents you need to keep, considering your legal obligations is a good place to start.

The first of these is your annual tax return. In order to complete your tax return you’ll need documentary evidence of:

  • all payments you’ve received, such as wages, interest, dividends and rental income
  • any expenses related to income received, such as work-related expenses or rental repairs
  • the sale or purchase of assets, such as property or shares
  • donations, contributions or gifts to charities
  • private health insurance cover
  • medical expenses, both your own and those of any dependents.1

You need to keep these documents for five years after you lodge your tax return in case you’re asked to substantiate your claims2, and it’s also a good idea to keep your notice of tax assessments for five years. However, if you run a small business, the document requirements and timeframes differ3 – find out more at the Australian Tax Office (ATO).

The second category of documents are those related to property such as:

  • property deeds
  • home loan documents
  • renovation approvals
  • warranties relating to work undertaken.

Other documents to keep include4:

  • wills
  • tax file numbers
  • powers of attorney
  • birth certificates
  • death certificates
  • marriage certificates
  • immunisation records
  • passports
  • current insurance policies, such as your life, home and contents, and motor insurance
  • your most recent superannuation statement
  • any personal loan documents
  • vehicle registration
  • vehicle service history
  • business registrations
  • qualifications documents.

What you can throw away

There are some documents you can toss, and as a rule, once a document has been replaced by a newer version, it’s safe to dispose of the older copy.

There’s also no need to hang onto credit card receipts once you’ve reconciled them against your bank statements, unless they’re needed for warranties.

Credit card and bank statements should be retained for a year, while other household paperwork, such as utility bills, can be thrown away once paid, unless you need a copy for rental applications or you want to keep them to compare your usage over time.

The exception to these rules is if the documents are required for tax purposes.

1 https://www.finder.com.au/tax-returns/record-keeping

2 https://www.ato.gov.au/Individuals/Income-and-deductions/In-detail/Keeping-your-tax-records/

3 https://www.ato.gov.au/General/Other-languages/In-detail/Information-in-other-languages/Record-keeping-for-small-businesses/

4 http://www.lifehacker.com.au/2013/01/ask-lh-what-documents-should-i-shred-and-what-should-i-keep/

Important information

© AMP Life Limited. This provides general information and hasn’t taken your circumstances into account. It’s important to consider your particular circumstances before deciding what’s right for you. Although the information is from sources considered reliable, AMP does not guarantee that it is accurate or complete. You should not rely upon it and should seek qualified advice before making any investment decision. Except where liability under any statute cannot be excluded, AMP does not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person.

Give your career a health check

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Give your career a health check

Health… check. Finances… check. Career… check?

Are you happy at work? Do you jump out of bed excited about tackling your next project? Or are you counting down the days until your holidays or retirement?

If you answered ‘yes’ to the last question, it might be time to give your career a health check. We all know the benefits of having regular medical check-ups but, just like your body, your career needs a regular review to make sure you’re on track to meet your goals.

Do a career health check

The average time Aussies spend in a job is about 3 years and 4 months (as at June 2014)1 so if you’ve been in your job for more than three years, now might be a good time to give your career a quick health check.

But before you hit the search button on your favourite recruitment site, take time to work out what you really want to do – then you’ll have more chance of finding, or working towards, the job that will make you happy.

Here are some tips for a career health check:

  1. Take your pulse. List your top three work achievements over the last year. If you’re struggling to come up with any, think about where you want to be in five or ten years’ time. Will your current job get you there?
  2. Check your vital signs. List the top five reasons (in priority order) you’re in your current job. If you’re ranking your bonus and long-service leave higher than your job satisfaction, then things might be a little out of balance. It might be time to ask yourself whether you’re at the right place in your career.
  3. Take your own medicine. Think about how you could improve your career prospects:
  • Refresh your personal brand – update your LinkedIn profile, write a blog or upload articles which are relevant to your career.
  • Update your resume with your recent achievements. Make sure they match the type of work you’re looking for.
  • Do you need to study, get some training or update your skills?
  • Attend professional development events, workshops, seminars and conferences.
  • Join professional associations to meet like-minded people in your industry.
  • Collaborate in online forums where you can show your expertise on a subject.

Should you stay or should you go?

It’s one of the hardest questions to answer. Can you achieve your career goals where you are or do you need to look for a fresh start somewhere else?

If you’ve built up a solid reputation at your current employer, consider applying for a different role at the same company to give you a new challenge.

Perhaps you want more life/work balance? If so, you could consider working part-time, as a consultant or doing freelance jobs.

But if you still feel as though you’re just going through the motions, it could be time to get on the front foot and take action. A career health check could help you to keep you on track, reignite your spark and help you get (and keep) the job you’ve always wanted.

  1. http://mccrindle.com.au/the-mccrindle-blog/job-mobility-in-australia

 Important information

© AMP Life Limited. This provides general information and hasn’t taken your circumstances into account. It’s important to consider your particular circumstances before deciding what’s right for you. Although the information is from sources considered reliable, AMP does not guarantee that it is accurate or complete. You should not rely upon it and should seek qualified advice before making any investment decision. Except where liability under any statute cannot be excluded, AMP does not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person.

What’s your debt age?

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What’s your debt age?

The types of debt we have largely depends on our age and stage in life.

For most of us, having debt in some form or another is an inescapable fact of life. And despite its reputation, debt is not necessarily a dirty word. If managed well, it can be a powerful tool to build wealth, and good debts, such as those used to invest in an asset which increases in value – like property or shares – can do just that.

Borrowing to fund a lifestyle you can’t really afford, for big ticket items such as new cars and holidays, is an example of bad debt. It’s not always possible to avoid bad debt, but you should try to minimise it.

Often the types of debt we have at 20 are very different to those we have at 50.

Read on to discover the most common types of debt held by your peers, from the AMP.NATSEM report – Buy Now, Pay Later: Household Debt in Australia, and see if your financial circumstances match your debt age.

Starting out – under 30s

Younger people have the highest proportion of student debt as a percentage of their total household debt – at 8.3%.

This is because many students defer the cost of uni fees by accessing the HECS-HELP or FEE-HELP loan schemes, which they only need to begin to repay when their earnings meet the minimum repayment threshold.

This age group also has the highest proportion of personal loan debt – representing 5.4% of their household debt – with these higher interest, short-term loans used to fund purchases such as cars, holidays and other consumer products.

Perhaps surprising is that home loan debt is the largest contributor to household debt in this age group, at 58.3%, signalling that many young people are making it onto the property ladder.

Accumulators – 30 to 50 year olds

Home loans dominate household debt amongst this group, accounting for 62.8%.

Investor debt also begins to increase among accumulators as a way to build wealth through taking out a loan to invest in shares or property, representing 31.7% of all household debt; while student loans, credit cards and personal loans barely rate, all at less than 3%.

Pre-retirees – 50 to 65 year olds

Investor debt (46.3%) overtakes home loan debt (45.9%) as the biggest contributor to household debt in the pre-retiree group, who are paying down their home loans and looking to grow their wealth as they approach retirement, through investments in property or in shares.

Retirees – over 65s

Many retirees own their own home outright, reflected in the fact that home loan debt comprises only 28.2% of total household debt for this age group.

Compared to the other age groups, retirees have had a longer time to pay off their home loans, while some may have also used their super to pay it off completely. But compared to the past, more retirees are carrying more home loan debt over into retirement, with this figure up from 19.6% in 2004.

Investor debt represents 59.7% of household debt for people aged over 65, while retirees are also among the biggest carriers of credit card and personal loan debt, at 5% and 5.1%, respectively, perhaps reflecting their propensity to travel – or a need for additional cash to fund their retirement.

Tools and resources to help you manage your debts

Regardless of what type of debt you have – or its size – managing it effectively is crucial. As a first step, it’s a good idea to have a budget to get a clear picture of your financial situation.

Once your budget is in place, you can consider your financial goals.

If reducing your debts is one of these, the AMP debt reduction calculator could help, or seek financial advice to devise a strategy to keep your repayments on track so you can be debt-free.

 Important information

© AMP Life Limited. This provides general information and hasn’t taken your circumstances into account. It’s important to consider your particular circumstances before deciding what’s right for you. Although the information is from sources considered reliable, AMP does not guarantee that it is accurate or complete. You should not rely upon it and should seek qualified advice before making any investment decision. Except where liability under any statute cannot be excluded, AMP does not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person.

ATO Scam

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Telephone calls alleging fake arrest warrants used to scam money.

Scammers have recently been calling Australians telling them that there is a warrant out for their arrest. Many people have reported to SCAMwatch that messages have been recorded on their answering machines asking them to call back later. One of the telephone numbers provided is 02 6100 3027, among many others, and they ask you to call during office hours to discuss the matter further. However, the telephone number has no connection with the Commonwealth Director of Public Prosecutions, Australian Taxation Office or any other state or commonwealth department.

The scammers may spin a range of stories about why an arrest warrant has been issued, including that you have failed to pay taxes.

Scammers typically ask for money to be sent via wire transfer as it’s nearly impossible to recover money sent this way. They may also ask for people’s financial and other personal details to access their money and use this information to commit other scams.

Be on guard, if you receive a phone call from someone saying you have an arrest warrant and asking you to pay a fee, hang up and do not respond. If in doubt, don’t use the contact details provided – look up the government department or organisation yourself in the phone book or online and phone or email them.

How these scams work

  • You receive a call out of the blue from someone claiming to be from the Commonwealth Director of Public Prosecutions or the Australian Taxation Office.
  • The call may sound like it is an automated message with an American accent.
  • The caller or sender will claim that you have an arrest warrant for some reason.
  • The scammer will ask you to telephone a number that appears to be Australian but is likely to be a VOIP number.
  • One of the numbers reported is 02 6100 3027. This is not the correct number for the CDPP.
  • The scammer will tell you that in order to resolve the matter you will need to pay a fee.
  • You may also be asked to provide your bank account details or other personal information so they can confirm they have the right person.
  • If you send any money via wire transfer, you will never see it again – it’s nearly impossible to recover money sent this way. You will also never receive the promised rebate or refund.
  • If you provide your bank account details or other personal information, the scammer may use it to commit identity theft or to steal your money.Protect yourself

     

  • If you receive a phone call or email out of the blue from someone claiming to be from the Commonwealth Department of Public Prosecutions or Australian Taxation Office telling you about an arrest warrant, hang up.
  • If you have any doubts about the identity of any caller who claims to represent a government department, contact the body directly. Don’t rely on numbers, email addresses or websites provided by the caller – find them through an independent source such as a phone book or online search.
  • The CDPP is advising people to be vigilant when receiving phone calls of this nature and if in doubt about the authenticity of a call that you receive from the CDPP, contact them on one of the publically listed phone numbers (link is external) or email inquiries@cdpp.gov.au (link sends e-mail).
  • Never send any money via wire transfer to anyone you do not know or trust.
  • Never give your personal, credit card or online account details over the phone unless you made the call and the phone number came from a trusted source. If you think you have provided your account details to a scammer, contact your bank or financial institution immediately.You can report scams to the ACCC via the SCAMwatch report a scam page or by calling 1300 795 995.
  • Report