Bruce and Lauren Battler, aged 52 and 48 respectively for some advice in regards to their retirement

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Question:

Bruce and Lauren Battler, aged 52 and 48 respectively for some advice in regards to their retirement plans in 13 years time. They have two adult daughters, Jessica and Francis. Jessica is age 24 and divorced with a young son and she is struggling to save a deposit for a house. Francis is age 20, single and has a successful online clothing company. Both of their daughters still live at home with them. Bruce and Lauren’s current annual living expenses are $70,000 but are planning on an annual retirement income stream of $60,000. The family home is jointly owned and valued at $1.5m with a mortgage balance of $167,000. Their monthly repayments are $1,350 (in addition to the living expenses above) and this debt should be cleared in 13 years time when they are ready to retire. They want to move out of the city and to a smaller home in a regional area when they retire. They estimate downsizing will leave them with net proceeds of $300,000. Bruce has an accumulation superannuation account with AustralianSuper, current balance is $170,000 of which $20,000 is a non-concessional contribution in 2019 from an inheritance while the rest consists entirely of employer contributions and earnings growth. It is invested in the Conservative managed investment option; 80% cash and fixed interest and 20% in shares and property. Bruce’s service date is 1st July 2013.
Bruce currently earns a gross salary of $90,000 as a car salesman and received a bonus of $10,000 this year because he reached his sales targets. He does not salary sacrifice any amounts for superannuation. Lauren is working part time two days a week at a child-care centre close to home and is paid a gross salary of $1,120 every fortnight. Lauren has an accumulation superannuation account with AustralianSuper, current balance is $100,000 which consists entirely of employer contributions andearnings growth. It is invested in the Balanced managed investment option; 65% shares and property and 35% cash and fixed interest. Lauren’s
service date is 1st July 2001. They hold $25,000 in an offset account but have no other significant investments.

Investor profile:
You have determined that both Bruce and Lauren have basic financial literacy but have a high tolerance for risk after learning about market risk and returns at local investment seminars for pre- retirees. They are worried that they have ‘missed the boat’ by not accumulating significant superannuation sooner and wish to aggressively catch up. They appear to understand the implications of life expectancy and are concerned about the risks of outliving their retirement capital and having to rely solely on the modest income from the Age Pension.
Reasons for meeting with a financial adviser:
Bruce and Lauren want to :
 Retire in 13 years time debt-free with a retirement net income stream of $65,000pa.
 Buy a caravan and upgrade their cars at retirement spending $150,000
 Know how to best contribute/invest any cashflow surplus to build their capital for retirement
 Compare their superannuation fund to at least one other retail fund to ensure AustralianSuper is comparable and competitive.