Posts

Financial Planning is about much more than retirement

/in , /by

retirement-3Many people may think financial planning is all about retirement. It’s not. Financial planning is about making the most of what you have – at every stage in life. Whether it’s investing, superannuation or minimising tax; whatever your stage in life, financial planning can make a difference.

 

If you are interested in investing, there are several things you need to consider. For example, how long do you have to invest and how comfortable are you with fluctuations in the value of your investments? We can help you determine your time horizon and risk profile and then recommend the most suitable type of investments to help you realise your goals.

 

What about your super? Is it working as hard as you are? Your risk profile can also be applied to your superannuation investments. It’s a long-term investment, but it’s important to make sure it’s invested in the right way.

 

Limits to the amount of super you can contribute each year ($25,000 in concessional contributions for people under 60 and $35,000 for those aged 60 and over) means the earlier you start, the better. Contributing more to super will not only boost your super balance, it could even reduce the amount of tax you pay!

 

Everybody’s different – different needs, different goals and different circumstances, however, professional financial advice can help you at every stage of your life.

 

We can provide guidance on:

 

  •           Investments, shares, gearing and insurance
  •          Tax-effective superannuation strategies
  •           Centrelink and aged care strategies
  •          Estate planning strategies, and
  •          Portfolio administration.

 

To start planning for a successful financial future, call us today to make an appointment.

 

Source I IOOF

Pre-retirement catch-up strategies

/in /by

4-ways-to-catch-up-on-your-retirement-savingsMany people become concerned later in their working lives that their superannuation savings may not be enough to give them the retirement lifestyle they had hoped for. If you think you may have left your super run a little late, consider these catch-up strategies.

 

Salary sacrifice into super

Where your employer allows it, you should consider making additional contributions to your super fund directly from your pre-tax salary. You can contribute up to $25,000 per year and only pay the concessional rate of tax – up to just 15% compared to your marginal tax rate. However, because the Superannuation Guarantee contributions made by your employer on your behalf also count towards this limit, you need to make sure you don’t exceed this limit as you may incur penalty tax.

 Spouse contributions

By contributing to a superannuation fund for your spouse, you can boost your joint retirement savings, maximise your retirement income and pay significantly less tax. If your spouse or partner is on a low income you may also be able to claim a generous tax rebate. Most importantly, splitting your super gives you a more tax-effective joint income in retirement.

 Super investment strategy

If your super is invested in cash or other conservative investments, you may be able to increase your investment returns with a higher proportion of growth investments, for example shares. A difference of just 2% pa can make a vast difference to the sum you have at retirement.

 Check how your super is invested and with the advice of your financial planner consider an investment strategy that will build your super savings faster. 

Shares into super

Where you have invested in your own shares then you may be able to move them into your super fund. The primary benefit is the lower tax on investment earnings within the tax-effective super environment – a maximum of 15% instead of up to 46.5% outside super – which means your investment capital will grow much faster.  

Save sooner, save more

There are of course other ways in which you can build up assets for your retirement, although super is generally more tax-effective than most. Whichever way you save, don’t put it off or you will reduce the benefits of compounding investment returns (interest earned upon reinvested interest).

 Take a close look at your budget and assess how much you could put aside, then contact us to discuss re-retirement catch-up strategies.


Source | IOOF

Becoming Money Smart

/in /by

Smart-Money-300x300Results from a recent survey on financial literacy in Australia revealed that one in every three people find dealing with money stressful, even when things are going well.

If this sounds a little like you, you’re not alone. Financial matters can sometimes seem overwhelming and it may be difficult to know where to begin.

The key to overcoming this stress is to boost your financial IQ so you can make informed judgements and effective decisions regarding the use and management of your money.

A great place to start is by visiting the MoneySmart website (www.moneysmart.gov.au). Run by the Australian Securities and Investments Commission (ASIC), the MoneySmart website offers free, independent information to help everyday Australians make smart choices about their personal finances.

The website provides tips on managing and investing money, borrowing and saving, superannuation and retirement; plus the latest consumer finance news and scams to avoid. There are also handy calculators

to check your financial health status and forecast your financial position based on a variety of scenarios.

Taking control of your finances doesn’t mean you have to go at it alone though. As your financial adviser, we can provide you with guidance to help you set your financial goals and reach them sooner. This may involve providing advice on how to:

  • Manage debt
  • Create a savings plan
  • Invest for wealth
  • Achieve tax savings
  • Make the most of your super, and
  • Plan for your retirement.

Why not take the next step in your financial health by speaking to us so we can help you further.

Source | IOOF

Wealth Health Checklist

/in /by

Wealth-CheckAre you keeping your finances healthy by doing the right thing at the right time? Taking the best action at the optimum time can be crucial to your financial future.

 

 

Accumulators (aged 25–45)

Start a monthly investment plan

  • ‘Pay yourself first’ rather than create unrealistic budgets.
  • Salary sacrifice into super while other financial obligations are low and stop when current needs are more important.
  • Use any pay rises to fund your regular savings.
  • Be clear about what you’re saving for and the best structure and investment options for that.

Control debt

  • Reduce unnecessary spending.
  • Pay off the credit card, it’s probably costing you more than 15% pa interest.
  • Consider consolidating credit card debt into a personal loan and potentially paying less interest. If you do this, resist the temptation to accumulate more debt into your credit card.

Check out the government co-contribution

  • If eligible you could get up to $500 added to your super for free every year.

Consider using a mortgage offset account

  • This could reduce your loan interest while giving you access to the cash if you need it.
  • Make sure you have sufficient death, disability and income protection insurance.

 Builders/Pre-retirees (aged 45–65)

Stay cash flow positive

  • Live within your means.
  • Reduce the mortgage and other non-deductible debt such as credit cards and personal loans. This may free up cash flow for other investment opportunities.
  • Consider part-time work for a non-working spouse.

Increase contributions to super

  • At age 50, the concessional (pre-tax) contribution cap is $25,000.
  • Consider transferring non-super assets to super. You’ll need to take into account any capital gains tax on the transfer and the super rules covering what assets you can transfer.

Split income where possible to save tax

  • Consider investing money in the name of the spouse who pays the lowest tax.
  • Consider splitting super contributions between spouses. Up to 85% of concessional contributions within the contribution cap, including Super Guarantee and salary sacrifice contributions, can be split.

Look into a pre-retirement pension if you’re aged 55 or more

  • Consider salary sacrificing, and drawing down regular income from your super to replace the lost income – this saves tax and builds your super without affecting your cash flow.
  • Make sure you have sufficient death, disability and income protection insurance. Also consider taking out trauma insurance.

Retirees (aged 65+)

Ensure you don’t run out of money

  • Understand your plan for spending in retirement – set a budget for essential expenses and additional lifestyle expenses and how you’ll fund each.
  • Ask yourself if you’ve invested your assets too conservatively – maintaining and growing your capital today can help you provide the income you’ll need in the future.
  • Consider whether you need to downsize your home.
  • Investigate how your income and assets affect your Centrelink benefits. Simple changes can help ensure that you maximise your total income.
  • Consider setting up investments to help grandchildren with education costs, a deposit on their first home or an investment nest egg. You’ll need to include this in your retirement spending or estate plan.
  • Think about aged care now. When the time comes, decisions often have to be made very quickly, so plan ahead for which care options you’d like to use and how they’ll be paid for.

Review your estate plan

  • Consider a Non-Lapsing Death Benefit Nomination for your super or a reversionary beneficiary for your pension.

Ensure your Wills and enduring power are in order.

Making the most of your Retirement Income

/0 Comments/in , /by

Making the most of your retirement income
retirementexitAfter you stop working, you can find yourself with time to do the things you may not have been able to do before, like travelling, volunteering or spending more time with loved ones. As you adjust to this new lifestyle, you will need to think differently about your finances. In retirement, your priority typically changes from saving in preparation for when you leave the workforce, to carefully spending those hard-earned savings. 

Age Pension

The Age Pension is an income support payment offered by the Government to older Australians who meet the relevant eligibility criteria.

With maximum payments of $21,018 p.a. for a single pensioner and $31,688 p.a. for pensioner couples (current for the period 20 March 2013 – 19 September 2013), the Age Pension probably won’t be enough to afford most people a modest post-work lifestyle of basic activities, let alone a comfortable lifestyle.

To afford even a modest lifestyle in retirement, many people will need to supplement the Age Pension with other income. This could come from an annuity, an account-based pension or other investments.

An annuity [from within or outside super]

An annuity is a simple, secure financial product that guarantees a series of payments for a fixed term or for life, in return for an upfront investment. The earnings rate is fixed at the outset and this applies for the length of the annuity, regardless of share market movements or interest rate fluctuations. Capital can be returned at the end of the agreed term or gradually during the term of the annuity as part of the regular payments.

An account-based pension [from super]

This is an investment account which gives you the ability to choose from a range of investments and can vary the level of income you wish to draw subject to the minimum annual withdrawal amounts set by the Government. These are usually market linked, meaning that the capital value is linked to the performance of the underlying investments, which can impact the level and duration of your savings and the income produced. Account-based pension providers, which may include your super fund, charge management and administration fees for these products.

Other investments

These are just some of the types of investments that can sit within your super fund or outside superannuation.

  • Term deposits: A term deposit is a fixed term, fixed interest savings account. Terms generally range from one month to five years.
  • Shares: Shares pay income in the form of dividends. You can invest in shares directly or via managed funds (or account- based pensions).
  • Property: An investment property is real estate which has been purchased with the intention of earning a return on the investment, either through rent, the future resale of the property, or both. Another type of property investment is a property trust, which is a managed fund that enables investors to pool their money to purchase an interest in a portfolio of real estate assets.

Income from various sources can be ‘layered’ to meet your income requirements. This can be set up so that more secure income, such as from the Age Pension or an annuity, can cover your essential costs of living, while your income from other sources can fund your discretionary spending.

More than one investment strategy and product may be required, so it’s important to receive professional help from a financial adviser – it can make all the difference to your financial success in retirement.