It’s 2020 and the beginning of a new decade, the perfect time for a financial health check. Is your current financial plan still relevant? Here are some things to think about:

Are you putting all your eggs in one basket?

According to figures from the Australian Institute of Health and Welfare, if you were male and retired at 65 between 2011-2013, you could expect to live another 19.2 years (an expected age at death of 84.2 years) and the life expectancy of women aged 65 in 2011–2013 was 22.1 years (an expected age at death of 87.1 years). One of the implications of living longer is how do you fund a longer retirement? Retirement will probably be more expensive than you think. The cost of living is set to go up and the purchasing power of your savings will be affected by inflation. The other thing that people don’t think about when planning their financial future is that one half of a couple is likely to outlive the other by a substantial number of years. Joint life expectancy needs to be factored into your financial planning. Have you considered using the family home to assist with addressing some of these financial challenges? This could mean a reverse mortgage, downsizing, renting or building on a granny flat to your children’s properties.

As our life expectancy continues to grow, you need to have a diversified portfolio which both manages risk and spreads your investment over a variety of asset classes to generate the level of income you need to live comfortably. A financial adviser will regularly review your financial strategy, your life goals and your risk profile to create a tailored financial plan specific to you.

Are your insurances up to date?

An effective financial strategy is one that not only considers how to create wealth but also how to protect the wealth you already have and your ability to generate wealth in the future. Wealth protection is an essential part of every financial plan. It provides an agreed financial benefit on the happening of an insured event. Without the appropriate personal insurances, the wealth you've built can rapidly erode as a result of an accident, illness or death. Wealth protection is all about ensuring you have choices should the unexpected happen.

Regularly review your insurance policies to see whether you are adequately covered if you can’t work. Total and permanent disability (TPD) insurance covers the costs of rehabilitation, your future cost of living and debt repayments. Trauma cover can assist with specific illnesses or injuries and Income protection can help to replace some of the income if you can’t work because of an injury or illness.

Also don’t forget insurance for your ‘stuff’, namely home and contents insurance and vehicle insurance. You also need to think about your health. Do you have health insurance? The cost of healthcare keeps rising as we get older and while there might be government-funded support now, there is no guarantee that this won’t change down the track. It’s important to factor health care costs into your retirement plan, so you can choose how and when you get the treatment you need.

Are you protecting your nest egg?

Unforeseen events can not only happen in your life but in those of the people nearest and dearest to you – your ageing parents, your adult children or your own siblings.

How prepared are you for these emergencies? We are living increasingly longer and many older people will outlive their money. While adult children may assume the responsibility for paying for their parents’ care, this is often not something they have planned for and it can have a major impact on their own retirement plans.

Follow the airplane approach - put your own oxygen mask on first before attempting to help others. Have a game plan, so that you don’t land up paying large bills in an emergency. If your parents are getting older, it’s important to have a conversation with them to understand what assets and insurances they have and where there might be financial gaps. Set up an ‘emergency fund’ in advance; this can take away a lot of the stress in a crisis.

When it comes to adult children, your financial safety instruction should be to look after your retirement first. It will be more of a problem for your children if they have to support you financially in your old age than if you fail to help them with a deposit on their house or pay for their wedding.

Do you need to update your will?

Is your will up to date? If you have a current Will in place or are looking to prepare your first Will; it’s important to consider factors which may affect your bequeath that may result in your gift not reaching the desired beneficiary or even negatively affecting their life. Life happens and circumstances can change that affect the beneficiaries of your Will. For example, they may have been declared bankrupt or receive Centrelink benefits. Pre-planning could mean your assets still end up with whom you intended.

If you need help with your financial ‘health-check’ speak to the friendly team at ActonAdviceGroup.