Asset Rich and Cash Poor

by Jodie | Jan 28, 2020 | Money

Is it time to break free from being Asset rich and cash poor?

Here are four ways to boost your income…

Are you asset rich but cash poor? Turns out, you’re not alone. Data from the ABS (Australian Bureau of Statistics) shows that almost one-third of older Australians in low-income households were asset rich but cash poor.[1] Most wealth is tied up in illiquid assets, in particular the family home.

But you need not scrape by on so little. There are ways to try and boost your income.

1. TAKE ADVANTAGE OF YOUR PROPERTY

Selling up and moving to a cheaper and/or smaller house may free up money to help fund your retirement. But keep in mind that it might affect your benefits if you’re receiving an age pension. Some of the proceeds from the sale might be counted as assessable under the age pension assets test, and this might lead to a drastic cut in your pension. On the flip side, it can also help supplement any loss of pension.

2. SUPPLEMENT YOUR INCOME

Getting a part-time job or monetising a hobby, could boost your cash flow if you are retired. But remember that working when you have become eligible for an age pension may reduce your pension amount. Discuss with your adviser how you might optimise your retirement benefits while working part time. You are able to earn up to a certain amount before your Age Pension is impacted. Do you enjoy knitting, teaching or tutoring, baby-sitting, crafts, cleaning, handyman work or mowing? All can add a few dollars a week extra to your income.

3. RENT OUT YOUR PROPERTY

If you have extra space in your home, you may consider renting it out. Even just one room to a student or occasionally to holiday makers can made a difference. Or if you have another property, like a holiday home, you may look into listing it as a short-term rental? This could impact the tax you pay when you sell your home so you should seek advice on these strategies.

4. REVISIT YOUR INVESTMENTS

Have you invested in securities like shares and ETF’s? This may be a good time to meet with our financial adviser to review your portfolio. Your financial adviser may recommend strategies and ways to reduce your exposure to risk and volatility and possibly increase your income via dividends.

UNDERSTAND THE RISKS

You don’t have to be trapped in a situation where you are asset rich but cash poor. There are ways to boost your income, but keep in mind that some involve taking big risks. So, always seek financial advice to help you weigh your options and make decisions based on your own personal situation.

If you’d like to discuss your options, contact the Advisers at Wealth Planning Partners Robina to see if we can assist with your situation.

Note

Australian Bureau of Statistics, March 2016, ‘Many older Australian households asset rich, income poor’, accessible at: https://www.abs.gov.au/ausstats/abs@.nsf/Lookup/by%20Subject/6523.0~2013-14~Media%20Release~Many%20older%20Australian%20households%20asset%20rich,%20income%20poor%20(Media%20Release)~40

More than one super account?

by Jodie | Jan 13, 2020 | Economy, Money, Retirement, Superannuation

Did you know there are over 12[1] million Australians with a single superannuation account? There is also $13.8[2] billion in ‘lost super’. Is some of that yours?

Find it

Moved house over the years? Changed jobs during your career? Don’t know where your teenage self stashed your super? Pretty sure you’ve lost track of some accounts along the way? It’s easy enough to track it down. If you have a MyGov account, log in and link to the ATO. Then, you’ll be able to find superannuation linked to your name and tax file number easily enough here.

Consider Combining it

So, you want to save on fees, reduce your paperwork, keep track of your hard earned money, and grow your retirement fund? But, ensure you seek professional financial advice first to make sure combining is beneficial for you. However, there may be some drawbacks to combining if your health has changed and you have insurances in your existing fund. Your Advisers at Wealth Planning Partners can assist with advice on combining superannuation funds.

Ask your financial adviser

Many websites offer to help find and combine your super, including MyGov. It is quick, easy and free. You can ask your financial adviser for help; check with your existing superannuation provider or the Australian Tax Office. If you want to do a bit of research yourself, check out the ASIC MoneySmart website too.

Grow it

A professional financial adviser can help you find an appropriate superannuation fund that will grow your hard-earned funds. We can work out whether you are invested in line with your preferred risk profile. This can help manage the ‘sleep at night’ test in times of market movements. Also, Advisers can review the fees you are paying and check historical returns. And, we can help to ensure you have enough income for retirement. The sooner you nail it, the better!

Contact your Gold Coast financial planners at Wealth Planning Partners to find out more.

Source:
[1] https://www.ato.gov.au/About-ATO/Research-and-statistics/In-detail/Super-statistics/Super-accounts-data/Multiple-super-accounts-data/
[2] https://www.ato.gov.au/About-ATO/Research-and-statistics/In-detail/Super-statistics/Super-accounts-data/Lost-and-unclaimed-super-by-postcode/