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Provision Newsletter

Money mistakes people in their 20s make

Posted On:Oct 09th, 2017     Posted In:Provision Newsletter Articles    Posted By:Provision Wealth

See how you can work around common money traps so you’ve got cash today, tomorrow and in the future.

In your 20s, you might be saving for an overseas trip, eyeing a new car, looking for your own pad, or simply trying to keep your wardrobe up-to-date, and have cash left over for Saturday night.

While you mull things over, it’s worth

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See how you can work around common money traps so you’ve got cash today, tomorrow and in the future.

In your 20s, you might be saving for an overseas trip, eyeing a new car, looking for your own pad, or simply trying to keep your wardrobe up-to-date, and have cash left over for Saturday night.

While you mull things over, it’s worth giving some thought to how what you spend today could also impact you later on—especially with one in four Aussie households experiencing financial stress.1

Misdemeanours worth avoiding

Going without a budget

Budgeting might sound too much like hard work, but knowing what you earn, owe and spend can give you control over your money, and let you quickly identify areas where you could be saving.

Using your credit card for everything

Credit cards can be convenient but they’re often more expensive than other forms of credit as they usually have higher interest rates2. Plus, people tend to spend more than if they’re just taking out cash.

Whenever you don’t pay your balance in full for the month, interest is also payable—and that includes when you only pay the minimum amount owing. For more info, check out our article – Are hefty interest charges costing you your social life?

Keeping up with the Joneses

The pressure to stay up-to-date with your peers and even celebrity icons can be a subconscious motivation behind a number of poor financial decisions.

Try to live within your means and stick to realistic goals.

Borrowing money from friends and family

When you’re in a bind, while you may be tempted to ask for a hand-out, it can put strain on relationships, particularly if it becomes a regular occurrence.

The person may need the money back quickly, begin judging your spending habits, or worse—end the friendship if they don’t get the money back.

Buying an expensive car

The average household in Australia is currently juggling car debt of $19,500.3 The purchase price of a new car is one thing, but the added costs are another.

ASIC’s new mobile phone app MoneySmart Cars can help you work out the overall costs.

Pursuing higher education without a plan

According to AMP.NATSEM research, estimated lifetime earnings for those with degrees are, on average, higher than those who don’t go beyond year 11.

However, if you’re considering further education, ask yourself whether the field you want to enter is the right one for you. The average debt for a tertiary student in Australia is about $19,100.4

Quitting your job on a whim

You may not like where you work but if you’re planning your exit march, it’s wise to have another gig lined up as it could be months before you find another opportunity and have cash coming in.

If it’s your current pay cheque that’s got you twisted, consider whether you’ve earned a pay rise and how you might go about asking for one.

Not prioritising your goals                                                                          

The benefits of thinking long term when it comes to your goals are pretty clear. For instance, buying a car, going on holiday and moving into a new apartment all within a six month period mightn’t be financially viable. Our online tool can help you prioritise and create your own goals timeline so you can map things out accordingly.

Foregoing an emergency fund

One in eight Australians don’t have enough money set aside to cover even a $100 emergency.5 And, you don’t want a busted phone or car tyre leaving you financially stranded.

An emergency fund can give you peace of mind and reduce the need to rely on high interest borrowing options. See our pointers on how to set one up.

Avoiding the money talk with your partner

It’s not nice to think about, but disagreements about money is a major cause of divorce in Australia.6

So, before you set up joint accounts or move in together, address how you’ll both contribute. If you are moving in together, it’s also worth knowing what happens to your finances if you split with a de facto.

Spending a fortune on the wedding

The average Australian wedding today costs around $36,200, and 35% blow their budget.7

To avoid a wedding budget blowout, start saving, talk to your partner—and parents if they’re involved—write down what you can afford, get quotes, and look at how many and who’ll be on your guest list early on.

Being blasé about insurance

It’s estimated that at least one in five Australian families will suffer from an insurable event.8

While you may choose to go without insurance to save money, for many Australians insurance is affordable and can be paid via monthly premiums or your super, which is where more than 70% of Australian life insurance policies are held.9

Choosing a property that’s not within your means

Whether you’re renting or buying it’s important to think about the upfront and ongoing costs involved, and the location you’re looking at as different suburbs come with different price tags.

If home ownership is on the cards, get a full run-down of the costs you’re likely to come across.

Not caring about your super

It might seem like a lifetime away but with many Australians looking at a retirement of 30 years or more—and the Age Pension alone unlikely to be enough10, putting money into super is worth thinking about while you still have time on your side.

More information

There’s a lot to think about when it comes to the short and long term, but the good thing is doing a little bit now can make a big difference down the track. 

For further assistance please contact us on |PHONE| to discuss .

 Source : AMP 6 October 2017

This article 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, we do 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, we do not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person.

AMP.NATSEM – Buy now, pay later: Household debt in Australia
MoneySmart – Credit cards 
ASIC – Consumer watchdog launches new mobile app to highlight the real cost of buying a car
Australian Government – Higher Education Loan Program and other student loans: a quick guide
Finder – How a $500 emergency could spell financial ruin for millions of cash-strapped Aussies
Relationships Australia – Impact of financial problems on relationships 
MoneySmart – How much can a wedding cost 
Finder – The impact of underinsurance in Australia 
Rice Warner – Insurance through superannuation
10 ASFA – Retirement Standard

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6 tips for managing money and memory loss

Posted On:Oct 09th, 2017     Posted In:Provision Newsletter Articles    Posted By:Provision Wealth

The potential for memory loss later in life mightn’t be a subject you want to broach, but having a contingency plan could go a long way.

Memory loss in your later years can be difficult, emotionally as well as financially. That’s why having a conversation with your loved ones, or devising a plan early on, could broaden your options and at

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The potential for memory loss later in life mightn’t be a subject you want to broach, but having a contingency plan could go a long way.

Memory loss in your later years can be difficult, emotionally as well as financially. That’s why having a conversation with your loved ones, or devising a plan early on, could broaden your options and at the same time, help ensure your wishes are met should things take an unexpected turn.

While you may be thinking—she’ll be right—taking steps toward simplifying your finances while you have your wits about you could benefit you, as well as those that care for you most.

Some statistics

While forgetfulness can be common among older adults, it’s not always cause for concern.

In saying that, the number of Australians living with dementia—something that typically involves progressive memory loss and the inability to perform everyday tasks—is on the rise1. Figures show2:

  • Three in 10 Australians over age 85 and almost one in 10 over age 65 have dementia

  • Around 1.2 million people nationwide are involved in the care of a person with dementia.

Tips for covering your bases

If it’s something you’ve been thinking about, here are some tips to make sure your bases are covered, and to help eliminate personal and financial risks.

1. Simplify your finances

  • Consider consolidating accounts, credit cards and super funds so you have less to manage

  • Diarise the regular bills that come in and when they’re due so that they’re accounted for

  • Think about whether setting up direct debits could take a load off.

2. Sort out your important documents

To make things easier for the person who’ll make decisions if you’re unable to, you may want to set up a file of your personal and financial information, and keep a copy in a safe location, such as with your solicitor. These documents may include3:

  • Personal records—birth certificate, marriage certificate, will

  • Tax file number, Centrelink and Medicare details

  • Bank and super fund information

  • Insurance policies

  • A list of your assets and debts

  • Investment-related information

  • Details of your funeral wishes.

3. Make sure your will is up to date and nominate an executor

It’s important you keep your will updated, as it’s a legal document that covers what you’d like to happen with your assets, and potentially your funeral later on. The contents of a will could raise controversy among family members, so it’s good to iron out any issues early on.

If you have nominated an executor to carry out the wishes in your will, let your family know and make sure this person agrees, knows their duties and where your will and other important documents are kept.

4. Appoint an enduring power of attorney

This person will make legal and financial decisions for you, if you can’t. It’s very important to choose someone you trust, as they’ll be responsible for looking after your bank accounts, ongoing bills, and even selling your house if you need to move into a care facility.

5. Confirm your super beneficiaries are current

Some people assume that how and in what proportions you want your super distributed can be included in your will. This isn’t necessarily the case, unless you’ve specified the necessary arrangements with your super fund beforehand, so you’ll need to make sure your beneficiaries are up to date and in order.

6. Determine your wishes around aged care

You may not require aged care, but in case you do, expressing your wishes may help those around you in determining the best course of action. The My Aged Care website provides more information.

Finding support

If you’re looking for further assistance, check out ASIC’s elder care and seniors support page.

You may also want to discuss further please contact us on |PHONE|

In the meantime, while these things may be hard to talk about, it’s good to let loved ones know of your plans well in advance. It’ll ensure your wishes are known—and give them peace of mind.

Source : AMP 6 October 2017 

 This article 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, we do 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, we do not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person.


https://www.fightdementia.org.au/about-dementia/what-is-dementia
https://www.fightdementia.org.au/about-dementia/statistics
https://www.moneysmart.gov.au/life-events-and-you/over-55s/memory-loss-dementia-and-your-money

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More Aussies retiring later in life

Posted On:Sep 20th, 2017     Posted In:Provision Newsletter Articles    Posted By:Provision Wealth

Australians have one of the highest life expectancies in the world and forecasts show that’s only going to increase over the next four decades1.

To put it into perspective, around 40 years ago, the number of Australians over age 85 was 80,000 and in about another 40 years that number is projected to reach around two million2.

While longer life may be

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Australians have one of the highest life expectancies in the world and forecasts show that’s only going to increase over the next four decades1.

To put it into perspective, around 40 years ago, the number of Australians over age 85 was 80,000 and in about another 40 years that number is projected to reach around two million2.

While longer life may be welcome news to many, it does raise questions about how people will fund a longer retirement, particularly one that could potentially span 25 years or more.

Longer retirements come at a cost

Increased life expectancy does mean more time to pursue things you’re passionate about, but the catch is, more years in retirement will come with a price tag.

On top of that, research indicates numerous Australians will not have the funds to live comfortably in the years after they’ve finished working3, which is why you may need to consider working for longer to boost your retirement savings.

Meanwhile, if you’re pinning your hopes on living off the Age Pension—that’s if you’re eligible for it—keep in mind the government has proposed increasing the eligibility age to 70 by 20354. And, the money you’ll receive from it will reportedly cover less than a modest lifestyle5.

Considering your health in your later years

Another factor to consider isn’t just working for longer, it’s whether you’ll be healthy enough to keep working for as long as you want or need to.

Health is a key factor when it comes to workforce participation for mature-aged workers, and subsequently in your ability to accumulate super and private savings to fund your retirement.

Research shows the key issue for Australians is that between 60 and 70 years of age, the proportion of people reporting fair or poor health increases, with predictions that by 2035, one in four men and one in five women in their 60s will have poor or at best, fair health6.

More people remain in the workforce

Figures released this year revealed fewer people were retired in comparison to years gone by and that retirement was not necessarily a one-time event, with many people returning to the workforce7.

Statistics showed8:

  • 28% of men and 48% of women aged 60 to 64 were retired, in comparison to 49% of men and 68% of women a little over 15 years ago

  • A significant number of retired people were also returning to the workforce, particularly in the 45 to 54 and 55 to 59 age groups, with as many as 26.7% returning to employment annually

  • On top of that, at least 8% of men and 6.9% of women in the 60 to 64 age group were also returning to the workforce each year.

Given Australians across the board are likely to enjoy greater life expectancy into the future, it’s worth giving some thought to your retirement plans ahead of exiting the workforce so that you’re prepared.

The type of retirement lifestyle you’d like to lead, whether you’ll have the funds to pay for it, how healthy you are, and how long you could live, are all considerations.

If you’d like further assistance or information please contact us on |PHONE| 

Source : AMP 18 September 2017

This article 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, we do 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, we do not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person.

 

1, 3, 4, 6 AMP.NATSEM 2015 report, Going the distance: Working longer, living healthier pages 2, 27
2015 Intergenerational Report page viii 
The Association of Superannuation Funds of Australia – Retirement Standard paragraph four
7, 8 The Household, Income and Labour Dynamics in Australia (HILDA) Survey 2017 pages 65, 67

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Salary sacrificing super

Posted On:Sep 20th, 2017     Posted In:Provision Newsletter Articles    Posted By:Provision Wealth

If you make voluntary super contributions through a salary sacrifice agreement you should be aware of how your contributions will affect your super balance. You can agree with your employer for your voluntary contribution to be in addition to your employer’s compulsory super contribution.

If you are deciding whether you should salary sacrifice some of your income into your super or

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If you make voluntary super contributions through a salary sacrifice agreement you should be aware of how your contributions will affect your super balance. You can agree with your employer for your voluntary contribution to be in addition to your employer’s compulsory super contribution.

If you are deciding whether you should salary sacrifice some of your income into your super or you are already salary sacrificing, you may want to find more information or check your entitlements under the Fair Work Act 2009.

One example of a salary sacrifice arrangement is to have some of your salary or wages paid into your super fund instead of to you.

Salary sacrificed super contributions are classified as employer super contributions, rather than employee contributions. This reduces the amount of super guarantee contributions that your employer is required to make for you, unless the terms of the agreement between you and your employer specify that they continue to pay the minimum super guarantee amount. If you make super contributions through a salary sacrifice agreement, these contributions are taxed in the super fund at a maximum rate of 15%. Generally, this tax rate is less than your marginal tax rate.

The sacrificed component of your total salary package is not counted as assessable income for tax purposes. This means that it is not subject to pay as you go (PAYG) withholding tax.

If salary sacrificed super contributions are made to a complying super fund, the sacrificed amount is not considered a fringe benefit.

The Fair Work Commission regulates employment agreements and conditions. To check your conditions contact Fair Work CommissionExternal Link.

The Fair Work Ombudsman has information on deducting pay & overpaymentsExternal Link. You can contact the Fair Work Ombudsman on 13 13 94.

See also:

Salary sacrifice limitations

If there are no limitations specified in the terms of your employment, there is no limit to the amount you can salary sacrifice. However, you should also consider whether the:

  • additional salary you wish to sacrifice will cause you to exceed your concessional (before-tax) contributions cap and attract additional tax – this cap limits the amounts that can be contributed to your super fund and still receive the concessional tax rate of 15%

  • salary amount you sacrifice will attract Division 293 tax – this occurs when you have an income and concessional super contributions of more than

    • $300,000 in one year, before 1 July 2017

    • $250,000 in one year, from 1 July 2017.

For further assistance or information please contact us on |PHONE| 

Source:

Reproduced with the permission of the Australian Tax Office. This article was originally published on https://www.ato.gov.au/Individuals/Super/Growing-your-super/Adding-to-my-super/Salary-sacrificing-super/

Important:
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, we do 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, we do not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person. 

Any information provided by Australian Tax Office detailed above is separate and external to us and our Licensee. Neither we nor our Licensee take any responsibility for their action or any service they provide.

Any links have been provided with permission for information purposes only and will take you to external websites, which are not connected to our company in any way. Note: Our company does not endorse and is not responsible for the accuracy of the contents/information contained within the linked site(s) accessible from this page.

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Looking after your finances when looking after others

Posted On:Sep 13th, 2017     Posted In:Provision Newsletter Articles    Posted By:Provision Wealth

There are millions of Australians providing care to an older person or someone with a disability or long term health condition. Looking after ageing parents or unwell family members and friends can be very emotional and stressful. Your day to day routine could change dramatically. It’s important to look after yourself and keep an eye on your finances.

Take care of

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There are millions of Australians providing care to an older person or someone with a disability or long term health condition. Looking after ageing parents or unwell family members and friends can be very emotional and stressful. Your day to day routine could change dramatically. It’s important to look after yourself and keep an eye on your finances.

Take care of yourself

Be kind to yourself and make sure you seek support from family and friends. Each state and territory has a carer’s association that provides advice and support:

Consider getting emotional support from a professional. Your local GP can recommend someone for you to talk to. If you are receiving Centrelink payments, find out about the Department of Human Services’ social work services – phone 13 17 94.

You can also contact:

You can also contact Kildonan Uniting Care who offer a financial counselling for families with children and young people living with cancer through their WeCare service.

Make sure you’re getting what you’re entitled to

Government assistance

If you’re unable to work because you are caring for someone, you may be entitled to a government payment. Check with the Department of Human Services by completing the payment finder to see what you are entitled to.

From your employer

Check with your employer to find out how much paid carer’s leave you are entitled to. To find out more about your rights at work see the Fair Work Ombudsman’s Sick and carers leave information.

Adjust to a change in income

Becoming a carer might mean you have to cut back your hours in paid work, or leave altogether. If this is the case you will need to adjust to a change in income. Once you know exactly how much money you are entitled to and your total income, work out how you will use this to cover your expenses. The best way to do this is by doing a budget so you can see how much is coming in and how much is going out.

Work out how working part-time or taking a break from paid work due to carer responsibilities affects your super in retirement.

Retirement planner

Ask for a hardship variation to your bills and debts

If you are finding it hard to pay bills, credit cards or loan repayments, the first step is to talk with your lender or finance provider and let them know you are experiencing financial hardship.

Many companies have hardship officers who can assess your situation and work out what help is available. Hardship officers can also help you work out an affordable payment plan such as paying bills in instalments or temporarily altering your loan repayments. See our information on financial hardship.

Seek help from a financial counsellor

Free, independent and confidential counselling services are available through Financial Counselling Australia. Financial counsellors can help you negotiate payments and apply for a hardship variation. Find a financial counsellor near you.

Keep an eye on your super

If you’re earning less money from paid work your super balance will be affected. If you can afford it, see if you can contribute to your super while you are not working.

Make sure your super is working well for you by consolidating any super accounts you aren’t using, checking your super fund is right for you and ensuring your super investment option suits you. For more information see if your super is on target.

 

Case study: Margaret seeks help

Margaret is 58 and recently divorced from her husband of 30 years. She works part-time at a local library. Her mother and father are in their 80s. Margaret’s mother has a degenerative brain disease which means she is unable to do much for herself anymore.

Because Margaret lives the closest of all of her siblings, the amount of time she spends cooking, cleaning and looking after her mother is increasing dramatically. Margaret has had to reduce her hours at the library to only fifteen hours per week.

On the advice of a friend, she met with a financial counsellor who is helping her work out the best way to make sure her income covers all her expenses.

Being a carer for a family member or friend who is unwell is a very courageous thing to do. It’s important you also think about your own wellbeing and make sure your finances are under control.

 

Source:
Reproduced with the permission of ASIC’s MoneySmart Team. This article was originally published at www.moneysmart.gov.au

Important note: 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, we do 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, we do not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person.  Past performance is not a reliable guide to future returns.

Important:
Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business, nor our Licensee take any responsibility for their action or any service they provide.

Any links have been provided with permission for information purposes only and will take you to external websites, which are not connected to our company in any way. Note: Our company does not endorse and is not responsible for the accuracy of the contents/information contained within the linked site(s) accessible from this page.

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Can I afford to have fun in retirement?

Posted On:Sep 11th, 2017     Posted In:Provision Newsletter Articles    Posted By:Provision Wealth

If you’re in or approaching retirement, you may be prioritising things such as living costs, utility bills, health care and even helping the kids out with their future financial goals.

With many Australians looking at a retirement of 30 years or more, another thing to give some thought to is keeping some money aside for your own pastimes and recreation.

It’s important to think

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If you’re in or approaching retirement, you may be prioritising things such as living costs, utility bills, health care and even helping the kids out with their future financial goals.

With many Australians looking at a retirement of 30 years or more, another thing to give some thought to is keeping some money aside for your own pastimes and recreation.

It’s important to think about, particularly as Australians are remaining active for a lot longer.1

What activities are on my to-do list?

The things you may want to do for fun in retirement could include a range of things, such as:

  • Sport—golf, cycling, yoga, pilates, dancing, water aerobics

  • Hobbies—fishing, sailing, photography, drawing, woodwork

  • Volunteering—hospitals, soup kitchens, animal shelters

  • Club associations—Rotary, Leagues, Surf Life Saving

  • Entertainment—cinemas, stage shows, concerts and events

  • Travel—road trips, caravanning, interstate breaks, overseas holidays

  • Dining out—restaurants, food fairs, beach barbecues, picnics

  • Friendly tournaments—bridge, chess, trivia.

How can I budget for the things I enjoy?

If you need a guide, each quarter the Association of Superannuation Funds of Australia (ASFA) benchmarks the annual budget needed to fund a comfortable and modest standard of living in retirement.

According to June 2017 figures, individuals and couples, around age 65, need an annual budget of $43,695 and $60,063 respectively to fund a comfortable lifestyle in the years post work—assuming they own their home outright and are in relatively good health.2

Broken down into a weekly budget, singles need on average $837.99 and couples around $1,151.90.3

How much am I likely to spend on recreation?

According to ASFA, singles and couples living a comfortable lifestyle in retirement would spend between $225.79 and $309.42 of their weekly budget respectively on leisure and recreation4.

This takes into account a broad range of recreational activities, including5:

  • Club memberships

  • Lunches and dinners out

  • Movies, plays, sports and day trips

  • Domestic and international holidays

  • Things like digital cameras, television and DVDs.

How can I make my money go further for the fun stuff?

  • Make use of your seniors card for transport concessions and other discounts

  • If going overseas isn’t in your budget, consider a stay-at-home vacation

  • Find two-for-one food and beverage deals via sites like TheHappiestHour

  • Pack a rug, food basket and esky, and head to the park for a picnic

  • Swap a visit to the day spa with a DIY manicure and candle-lit bubble bath

  • Have the troops over for a poker night and take turns hosting dinner parties

  • Find cheap accommodation on Airbnb or list your place to earn money while you’re away

  • Swap an interstate flight with a road trip. There are lots of routes across Australia.

For further information or assistance please contact us on |PHONE|

Source : AMP 4 September 2017 

This article 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, we do 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, we do not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person.

 


http://www.treasury.gov.au/PublicationsAndMedia/Publications/2015/2015-Intergenerational-Report
2, 3, 4, 5 http://www.superannuation.asn.au/resources/retirement-standard

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