Are 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.
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
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