--- title: Sometimes it is more than just the money description: When you're considering how to structure your finances in your retirement, there's more to consider then just the bottom line impact to your finances. image: https://blog.centrepointalliance.com.au/hubfs/Realise%20your%20Dream%20Images/happy-smiling-asian-old-couple-making-purchase-and-mature-woman-with-picture-id1212563268.jpg --- [![Realise-Your-Dream-Logo](https://blog.centrepointalliance.com.au/hs-fs/hubfs/Realise-Your-Dream-Logo.png?width=175&name=Realise-Your-Dream-Logo.png "Realise-Your-Dream-Logo")](https://blog.centrepointalliance.com.au/realiseyourdream) # Realise Your Dream ![](https://blog.centrepointalliance.com.au/hubfs/Realise%20your%20Dream%20Images/happy-smiling-asian-old-couple-making-purchase-and-mature-woman-with-picture-id1212563268.jpg) # Sometimes it is more than just the money By Peter Kelly on 3 February 2021 This week I was asked about a person in their early 60s who has retired from the work force. Briefly, they have roughly $500,000 in super and still have an outstanding mortgage of just over $300,000 on their home. The question was – should they use their super to pay off their outstanding home loan or should they retain their home loan, with its modest interest rate so as to have the potential to earn a higher return on their super? From a purely financial perspective, if the return on the invested funds is greater, after tax and charges, than the interest they are paying on their mortgage, then it’s better to retain the mortgage and use the money to generate investment returns, which can be used to service the debt. And, provided the return on the investment over the longer term is greater than the interest on the loan, they will be ahead. This is a typical situation in the current environment, particularly as home loan interest rates are at historically low levels. However, what if the person mentioned is stressed by the outstanding debt on their home, particularly as they have retired? After all, they still need to find the money to make their home loan repayments each month, and there is no guarantee that interest rates will remain where they are, or the return on their super will continue at its current rate. If the debt is causing stress or anxiety, there is a strong argument to pay off the loan, even though they will no longer have the funds available for investment. In this situation, it is not so much a financial question, but rather, one that addresses the individual’s mental and physical health and well-being. Having said that you would think I could close this case off. After all, I have answered the question that was asked. But it is not quite so simple. To fully provide appropriate advice that is truly in the best interests of the person asking the question, we need to go further. In this case we need to gain a clear understanding of a few things including, but not limited to: 1. What are the person’s assets and liabilities? What do they own? What is it worth? How much do they owe others – in addition to their home loan do they have car loans, personal loans, and credit cards? 1. How much income do they need? Do they have an up-to-date budget that identifies their current expenditure? 1. Where is their current income coming from? Are they drawing down on their super, receiving government income support benefits such as Jobseeker or a disability support pension? Will they qualify for the age pension in the future, or do they have income from other sources such as trusts and other investments? Is their income likely to change in the future? 1. As this person lives in a major capital city their home is likely to be quite valuable. Are they willing to consider accessing some of the equity in their home to generate additional income? While they have the option of a reverse mortgage or other form of equity release product, a simpler approach may be to sell their home and downsize. However, people are often emotionally attached to their home and what may seem to be a reasonable and rational decision may not be all that easy to get across the line. 1. What are their longer-term goals? What do they see a typical day in their retirement looking like? Where will they live? How will they spend their time? What type of car will they drive? Where will they dine, and travel to? Once a retirement lifestyle has been designed, it can be costed, and its affordability assessed. 1. How is their health? Are they in good health or do they have ongoing health concerns that may impact on their longevity? Amongst other things, this can help determine how long their money needs to last. 1. Do they plan to leave a legacy? Are they happy to run down their savings over their retirement years or do they plan to preserve their capital so they can pass it on to future generations? Over the years I have seen many cases of people living in abject poverty in retirement just so they can leave money to their kids who are far wealthier than their parents ever were. As they say *“if you don’t fly first class – your kids certainly will.”* While leaving a legacy to future generations is noble, it has to be balanced with living a comfortable lifestyle. When planning for retirement, the financial aspects will play a key role. However, it is not just about the money. Retirement planning is about living a life that is fulfilling and rewarding from a physical, mental, spiritual, and financial perspective. Remember however, making financial decisions and planning for key life events such as retirement require time and careful consideration. With that in mind, seeking advice from an appropriately qualified financial planner is highly recommended. 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Copyright © 2021 Realise Your Dream ---   This is a publication of Alliance Wealth Pty Limited (AFSL 449221) and Professional Investment Services Pty Ltd (AFSL 234951), wholly owned subsidiaries of Centrepoint Alliance Ltd. **General Advice Warning** The information contained in this article is of a generally nature and does not take into account your particular objectives, financial situation or needs. You should therefore consider the appropriateness of the advice for your situation before acting on it. You should obtain and consider the relevant Product Disclosure Statement (PDS) and seek the assistance of an authorised financial adviser before making any decisions regarding any products or strategies mentioned in this publication. **Disclaimer** While all care has been taken in the preparation of this blog, to the maximum extent permitted by law, no warranty is given in respect of the information provided and accordingly, neither Centrepoint Alliance Limited nor its related bodies corporate, employees or agents shall be liable for any loss suffered arising from reliance on this information. ![](https://www.facebook.com/tr?id=194802264386661&ev=PageView&noscript=1)