The Time to Act is Now!

The time to act is NOWWhen the cost of living goes up, most people on average incomes can handle the increases by adjusting their budgets, even if it means they have to forgo some discretionary spending to which they have become accustomed. People whose budgets are already tight may need to look at generating some extra income, which is fine, when you are still able to work.

However, what do you think will happen to you when you are living on the age pension, and are physically unable to work? I can tell you what’ll happen: you’ll have to tighten your belt, and gone are the days when you could afford to buy a gift for the grandchildren, or give them a treat when they come and stay. If you were fortunate enough to have some savings, you may need to dip into them to pay for emergent medical care to keep your quality of life.

If you don’t own your home, the rent and utility payments will just about exhaust your budget before you’ve even bought your groceries. You’ll struggle to make ends meet every time the cost of living increases, and you can forget about even the smallest luxuries. You’ll be dependent on the good will and support of family, friends or even charities to get you through some of the tougher months… and a well deserved holiday trip to crown your retirement is completely out of the question, even if it’s just travelling to a family reunion or visiting the grand kids, if they live further away.

Is this the kind of retirement lifestyle you would want when you grow old? I can guarantee you, that the answer to this question from most people is a resounding NO. But do you think people will actually do something about making sure they don’t end up in this kind of financial situation? Again, the answer is NO, as far as most people are concerned. And here are the depressing facts: The Age Pension is the main form of income support for seniors of pension age and the majority of seniors receive the payment. Source: Income and Welfare, Income and Community Support

It doesn’t matter how old you are, NOW is the time to make provisions for your retirement. Suppose you are 25 and you want to retire with at least $200,000 in cash at age 65. You could achieve this by investing as little as $40 per month at a rate of 10% each year. However, let’s see what happens if you start investing later in life. If you choose to start investing only at age 35, you’d need to save almost $110 per month to reach the same target. It’s crystal clear that the price of waiting can be costly, as demonstrated by the figures below.


Here’s what happens to only $40 per month invested at 10% per year (compounded annually) until age 65.*

Total at Age 65 Cost of Waiting
Age 25 $212,444
Age 26 $192,694 $19,750
Age 35 $78,957 $113,737

*Note: This example is calculated on an assumed rate of 10% interest. The current cash interest rate set by the Reserve Bank of Australia is 2.5%, as at June 2014. In March 2008 the rate was 7.25%. Source:


In addition to the price of waiting, it’s hard to predict the future and be certain that you’ll get a high-yield interest rate as market forces bow to the economic developments of global markets these days. That’s why it’s preferable to have a diversified wealth plan. If you’ve missed my recent blog article “Your wealth is in the Planning”, click here to read more about how our proven wealth planning formula works.

Most people don’t know what they don’t know, when it comes to finance. They are not aware that creating wealth requires understanding of 4 specific ingredients:

  • Cash – (savings & loan serviceability)
  • Capital – (equity) for deposits/purchases
  • Planning for wealth
  • Yourself (mindset, beliefs)

Which one do you think prevents wealth accumulation the most? I can state unequivocally, it’s the 4th ingredient closely followed by the 3rd ingredient. If you know that you lack understanding in any one of the above knowledge areas, then you ought to get started NOW to develop a road map for building your wealth, so that you don’t end up in one of the scenarios depicted above. There is no time to wait, unless you want to pay more to achieve your desired retirement budget. Start by getting yourself educated about how to get ahead using my free tools of the highly popular Financial Independence Kit. You can download them at

We also offer a “Free Financial Health Check” — an informal, no obligation chat about your finances. You need to start with the facts and build on that… and at Straight Money Talk we’ll always tell you the truth about your money, whether you like it or not. The next step in the Wealth Planning process is a Strategy Sessions for a small investment, and as a bonus you’ll receive a free copy of my book “Straight Money Talk – A Straightforward Plan for Financial Independence” to help you increase your understanding of your journey to financial independence. That’s a pretty good start for anyone who is serious about building their financial future. Click here to find out more about what else we do at Straight Money Talk.

You’ve really got no excuse – the time for action is NOW! If you don’t, you may be sorry in your old age.

Copyright © 2013 Robert Bauman

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