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.

Source: Colonial First State.

For more information Contact Us

Richard Brown CPA CFP

Clinton Smith CFP

Financial Planning Ascot Vale | Financial Planning Melbourne

Are you a Financial Advisor needing Paraplanning support? If so we invite you to come and visit us over at Abound Paraplanning Services

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 increases from $25,000 to $50,000.1
• 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.

Next Blog Post: Part 3 - Retirees (aged 65+)

Source: Colonial First State.

For more information Contact Us

Richard Brown CPA CFP

Clinton Smith CFP

Financial Planning Ascot Vale | Financial Planning Melbourne

Are you a Financial Advisor needing Paraplanning support? If so we invite you to come and visit us over at Abound Paraplanning Services

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 $1,000 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.

Next Blog Post: Part 2 - Builders/Pre-retirees (aged 45–65)

Source: Colonial First State.

For more information Contact Us

Richard Brown CPA CFP

Clinton Smith CFP

Financial Planning Ascot Vale | Financial Planning Melbourne

Are you a Financial Advisor needing Paraplanning support? If so we invite you to come and visit us over at Abound Paraplanning Services

The process of financial planning can actually be rather exciting and give you a sense of accomplishment when you visibly see your wealth accumulating.  This then enables you to increase your wealth at a more rapid rate, due to the effects of compounding interest where collective wealth earns more and more for you without having to exert any additional effort.

Financial planning will be different for everyone and is largely dependent upon your age, current situation, risk profile, goals and whether or not you may need the assistance of a qualified financial planner. For example, financial planning for a twenty year old who is fresh out of university or trade school with little savings will be completely different compared to a forty year old couple with two children and a mortgage.

A twenty year old with aspirations of owning their own home would have the primary aim of increasing their wealth in order to save a deposit for the home.  He or she has the benefit of time in their favour.  At this stage, most 20-somethings are still learning about financial planning and how to build a budget.  Their concerns are often about meeting day-to-day obligations and living expenses.  A financial planner will help them look beyond today and set themselves up with a sound budgetary process that will help them build up savings and prepare for the future.

On the other hand, the forty year old couple with two children has a completely different approach to finance. They need to balance their current living expenses with the demands of their children’s education and lifestyle.  This couple will be juggling a mortgage along with their regular expenses but by now they will be looking towards the future.  As their children grow, the family might need to buy a larger property or save towards the costs of education.   Their focus of their financial plan is likely to be towards diversifying their investments so they have a balance of short and long term investments.

When nearing retirement, the shift towards income generation is highly desirable. People in their 50’s will be thinking about how to maintain their standard of living once they retire.  Their financial strategy will be geared towards maximising their return on investment.   They might think about home downsizing now that the family has left home. A financial planner will help them decide how to get the best use out of their assets so they achieve an investment return that is appropriate for their needs.

There is no “one-size-fits-all” way of planning for your future. Financial planning needs to be tailored towards the needs of the individual and take into account their stage in life.  Financial planning should support you at every stage of life.  The motivations of a twenty year old are far different to those of a couple at retirement age.  Luckily, with a little advice, everyone can make their money work for them now and in the future.

For more information Contact Us

Richard Brown CPA CFP

Clinton Smith CFP

Financial Planning Ascot Vale | Financial Planning Melbourne

Are you a Financial Advisor needing Paraplanning support? If so we invite you to come and visit us over at Abound Paraplanning Services

Nobody ever wants to think about unfortunate events in life, but sometimes things just happen.  When the word “insurance” is mentioned, many people start thinking about the big one – life insurance.  But life insurance is not the only form of insurance that exists in order to protect us and our assets and in that lays a problem.

The vast array of insurance products on offer leaves many people baffled as to what insurance products best meet their needs: life insurance, total and permanent disability (TPD) insurance, trauma insurance, house and contents insurance, income protection insurance, health insurance, car insurance, funeral insurance, landlord insurance, pet insurance … the list goes on.

With so many products available, how do you know what you personally need?  Do you need them all?

What often happens is the people put insurance in the too-hard basket.  They might take out home and contents insurance along with car insurance and think they’ve done well, but have they taken care of the things that are really important?

If I ask you what is most important to you, you’d probably say your family and their welfare.  If I then ask you how home or car insurance will protect your family if something happens to you, how would you answer?   Home and car insurance are great things to have but we need to look beyond them and delve into the too-hard basket.

Life, income protection and TPD insurances are your guarantee that your family will be able to survive financially, should something happen to you.   The type and amount of insurance you need will depend on your stage in life.

A young person should consider taking out a good quality term-life insurance product whilst they are healthy in order to secure a low premium to pay. This will ensure that any accumulated wealth, investments and liabilities are covered in the event of their death, particularly if they leave dependants behind.  The same can be said for good quality TPD insurance, income protection insurance and health insurance policies that can protect against any unforeseen losses in earning capacity that would otherwise leave a huge hole in the household budget.

Progression throughout life brings with it changing insurance needs.  As more wealth is accrued, some people may become self-sufficient with enough capital to see them through short-term crises. For some, it may also reduce the need for policies such as income protection insurance.   Before making any major decisions about your insurance requirements, be sure to talk to your financial planner.  After all, it might not be you who is left to cope with everything – it will be the people you want to protect.

Think of insurance as a “safety net” that springs into action when you need it, ready to help put the pieces back together when things fall apart.  The best time to assess what your insurance requirements are is now.  Talk to us and we will help you protect the things that really matter.

For more information Contact Us

Richard Brown CPA CFP

Clinton Smith CFP

Financial Planning Ascot Vale | Financial Planning Melbourne

Are you a Financial Advisor needing Paraplanning support? If so we invite you to come and visit us over at Abound Paraplanning Services

German demographer James Vaupel estimates that the average girl born now in Western societies will live to 100. Many of today’s boys, he says, will also make it to a century.

Our lives have been improved by technology, advances in health and the many measures at our disposal to prolong our productive years.

But quality of life is the real issue and the pressures of providing for a population pyramid that is inverting – the cost of healthcare, aged care and nursing homes, senility and other diseases and their impact on families – have made ageing a key social issue.

100 years ago, men could expect to live to about 55, and women 58. Today, the Australian Bureau of Statistics (ABS) estimates men can hope to hit 79 and women, about 83. The ABS estimates that there are currently almost three million Australians aged 65 and over, and close to four million baby boomers will join them in the next 15 years.

This is all great news for our nearest and dearest, but who will fund the retirement, healthcare, aged care facilities and infrastructure required for this new era of the aged?

In 2006, there were 14 million Australians aged 15 to 64, typically referred to as ‘of working age’, and 2.7 million over 65. The ratio of workers to retirees was roughly five to one. By 2056, on conservative assumptions, the bureau projects that those of working age will grow by half, to 21.5 million, but the number of us 65 and over will treble to 8.1 million. The ratio of workers to retirees would then be about three to one.

How can the kids and teens of today be expected to finance so many retirees? Especially when those aged 85 and over, with the most chronic needs for care, are projected to increase from 322,000 to 1.72 million?

Confronting ageism in the workplace, encouraging seniors to contribute later in life, rolling back the age at which people can take their super, and investing in aged care as well as in research into the causes of disease and disability in older age are some measures we can take to tackle the challenges ahead.

But of paramount importance is preparation. Each and every one of us should be mindful that we stand a chance of living much longer lives than our parents, and we need to ensure our lifestyles, ambitions, plans and dreams correspond with our financial wherewithal.

It’s never too early, or too late, to put the structures in place that will enable you and your family to enjoy the benefits of long, happy, healthy lives.

Contact your financial adviser to discuss the options and opportunities.

Source | Australian Bureau Statistics
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Richard Brown CPA CFP

Clinton Smith CFP

Financial Planning Ascot Vale

Thanks to better health and treatment for disease, we are all living longer and as a result will have many more years in retirement which means we need more savings and more superannuation.

Superannuation is a reliable means of accumulating savings for retirement, but are you making the most of the opportunities available? Are you on track to build up enough money in your super in time for your retirement?

While the cost of living continues to rise at a fast pace, taking the necessary steps to be financially prepared for your retirement is vital.

The national figures for the ASFA Retirement Standard (December 2010 quarter) show an alarming difference between a modest lifestyle ($21,218 for a single and $30,708 for a couple) and a comfortable lifestyle ($39,393 for a single and $53,879 for a couple) compared to the Age Pension (around $19,000 for a single and $28,600 for a couple).

Here are some ideas for starters.

Salary Sacrifice

A salary sacrifice strategy involves having part of your pre-tax salary paid into your superannuation fund by your employer rather than you receiving it as income. This strategy not only increases your pre-tax contributions to super, but reduces the amount of tax you pay as you benefit from only 15% contributions tax rather than your marginal rate of tax.

If your income is on the cusp of the tax thresholds, implementing a salary sacrifice strategy could also drop you down into the lower tax bracket, meaning you will pay even less in tax.

However, when choosing this strategy, you need to remember that there are limits; pre-tax contributions to super are limited to $25,000 per person per annum (or $50,000 for those 50 years old and over) and this includes your nine per cent Superannuation Guarantee contributions. Remember too that once contributed into your super, you won’t be able to access the money until you retire, on or after the age of 55.

Government’s Super Co-contribution

If you earn more than $37,000 a year, superannuation is the most tax-effective environment in which to grow your wealth. Although the government has reduced the amounts that can be contributed to superannuation, the limits are still generous.

By making personal (or after tax) contributions to your super you could qualify for the government’s super co-contribution. If your salary (assessable income, plus any fringe benefits and reportable employer superannuation contributions) is less than $61,920 and you contribute up to $1,000 the government’s super co-contribution could add up to an extra $1,000 to your super each year.

Consolidating your Super

If you have changed jobs over your working life, it’s likely that you have more than one super fund. If that’s the case, you are most likely paying more than one set of fees, eroding your super savings. Consolidating your funds will save you from paying multiple fees and charges. And, you’ll only have one super account to keep a track of! Before consolidating, check with your financial adviser.

Are you one of the many Australians with unclaimed dollars in super funds? Not sure how to find your funds? Your financial adviser can help you uncover your lost super and consolidate it into one maximised account. After all, it is yours.

Take the time to visit your financial planner to discuss a strategy to help make the most of the options available to you.

If you are Self-Employed

The co-contribution is also available to people who are self-employed. To be eligible, you must make a personal contribution without claiming a tax deduction for it. The tax office will work out your co-contribution from information on your tax return and details of contributions provided by your super fund.

You must earn at least ten per cent of your total income from employment, running a business or a combination of both.

For more information Contact Us

Richard Brown CPA CFP

Clinton Smith CFP

Financial Planning Ascot Vale

With recent losses in retirement funds and a drop in home values, many people in their 50s are concerned about the future. There are the threats of high debt levels, sudden illness, disability or layoffs, not to mention the phenomenon of “boomerang kids” returning to the nest. Experts agree if there’s ever a time to start saving for your retirement it’s now.

So if you haven’t already, you need to start your planning.

Up until now you may have been reactive in your lifestyle, with mortgage payments and work pressures being the biggest worries. Have you started thinking about how and where you want to live for the next 30 or more years? Do you want to stay where you are? Downsize? Do you have a life-long desire to move to the beach or bush, or travel the world?

Your financial adviser can help set you on the right path as you face these questions, by recommending a strategy that will meet your needs and fulfill your plans for your desired retirement.

A financial adviser can provide guidance in the following areas:

• Tax-effective superannuation strategies
• Investment advice, including shares, tailored for your needs
• The financial implications of changing jobs, redundancy and early retirement
• The most effective way to invest an inheritance
• Centrelink and retirement planning strategies
• Making sure you have adequate insurance to protect your family
• Daily finances (Are you spending on things you don’t even use, are there ways you could scale back?)
• Wills and estate planning.

You might find that you are not as close to your ideal retirement lifestyle as you would like. Don’t panic! This happens to a lot of people but it is never too late to make a change. You still have a chance to save more and make up for lost time.

Everyone’s financial needs and goals are different and it’s worthwhile to seek professional financial advice before you make important financial decisions. Your financial adviser can provide you with strategies to help make your ideal retirement lifestyle a reality.

Start making your ‘wish list’, then get in touch with your financial adviser.

For more information Contact Us

Richard Brown CPA CFP

Clinton Smith CFP

Financial Planning Ascot Vale

Cardiovascular disease affects one in every six Australians, or 67% of Australian families. By 2051, the Heart Foundation forecasts that will increase to one in four Australians. Diabetes is Australia’s fastest growing chronic disease, with 275 Australians developing the disease every day according to Diabetes Australia. Much of this is due to the fact that many Australians live with a combination of poor diet and a lack of physical activity.

The Heart Foundation says around 80% of cardiovascular disease is largely preventable. Likewise, Diabetes Australia estimates that up to 60% of cases of type 2 diabetes can be prevented.

The impact of these illnesses on people and their families is devastating. While in our industry, it’s rewarding to be able to help people recover financially from serious illness, it would be better to avoid them in the first place.

Lifestyle changes could save your life… and your wallet.

When a life insurance company calculates your premiums, they take into account a number of risk factors – some of these include your age, gender, blood pressure, smoking status, your Body Mass Index (BMI), cholesterol and blood glucose levels.

If you fall into a high-risk category for some of these risk factors, it can be reflected in how much you pay for your insurance each year. These additional costs are called ‘loadings’.

By making changes to improve your lifestyle, you could reduce your high risk factors for serious illness. You can also ask your life insurance company to re-assess your insurance premiums – potentially reducing or removing your loadings.

Not only are you giving yourself a better quality of life now and in the future, you could also save yourself money. More importantly, you’ll be starting some good habits that could stay with you for a long and happy lifetime.

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Richard Brown CPA CFP

Clinton Smith CFP

Financial Planning Ascot Vale

Australia’s economic performance drivers are:

1 Strong trading partners

The forecasted economic growth for our major trading partners in Asia over coming years is strong. Forecasts for China and India are around 9% for both, compared to the European area at just under 2%.

2 Robust economic management

Strong economic management by the Reserve Bank of Australia (RBA) and the Federal Government, along with strong banking regulation from the Australian Prudential and Regulation Authority (APRA), will continue to place Australia in a strong position.

3 Mining/gas sector growth

The mining and gas sector is expected to be the large growth driver over coming years with mining investment at a record share of GDP. This will create jobs, income, demand for materials and stimulate economic growth.

4 Population growth

Australia has strong population growth compared to other major developed economies, at around 1.5% versus 0.5%.

Source | Colonial First State, Australian Bureau of Statistics and The Organisation for Economic Co-operation and Development

For more information Contact Us

Richard Brown CPA CFP

Clinton Smith CFP

Financial Planning Ascot Vale