by Jodie | Apr 18, 2017 | Budgeting, Debt Management, Finances, Insurance & Protection, Investments, Money, Retirement
From wills to long-term budgeting, there’s a lot to think about when making your retirement to-do list. Here’s some tips to make sure you’ve ticked all the boxes.
1. Check your will
Without a valid will, an administrator will be appointed to manage your estate, which may cause your family plenty of problems. To save them the stress, ask a solicitor to draw it up for you and make sure you and two witnesses sign it.
2. Plan your estate
Think of your estate plan as your family’s stress-free action plan that they can turn to for guidance when you pass away. It should cover all of your documents, contacts, debts, bills and assets so your family can easily figure out what to do with them.
3. Budget for the long haul
Australians are living longer than ever – which means your retirement savings also need to last longer. Create a long-term budget that will help you live the lifestyle you want – and don’t forget about healthcare costs. Then comes the most important part of a budget – sticking to it.
4. Invest in your future
From boosting your superannuation to investing in shares, understanding your investment options can make a huge difference to your retirement savings. When you start investing – and you should start early – make sure you have a mix of investments to spread your risk.
5. Be wary of scams
Investment scams are on the rise in Australia, with perpetrators directly targeting retirees to access their superannuation funds. Protect yourself by never giving out your financial details over the phone or by email. And be suspicious of anything that sounds too good to be true.
6. Start thinking about insurance
Many insurance policies expire at a certain age, leaving you without cover. And if yours comes from your superannuation fund, it could be eroding your savings. From age-based insurance policies to products that cover funeral expenses, you should seek professional financial advice to develop a plan that is appropriate for you as you enter retirement.
by Jodie | Apr 2, 2017 | Finances, Investments, Retirement, Savings, Superannuation, Wealth
The Government has legislated changes to the Age Pension rules from 1 January 2017, which it estimates will see 300,000 Australians lose all or part of their pension entitlements.1
If you are retired or about to retire, some careful planning now may put you in shape to access at least a part Age Pension. Here we outline some strategies to consider.
Building up the super of the younger member of a couple
If you are retired and have a spouse who has not reached Age Pension qualifying age, making contributions to your spouse’s super account may be beneficial. This is because super in the accumulation stage is not counted towards the Age Pension assets or income tests until the member reaches Age Pension qualifying age or begins an account-based pension.
Gifting
Gifting money (for example to a family member or charity) can help to reduce your assessable assets. The Government has set a limit of $10,000 per financial year for a single person or a couple, limited to a total of $30,000 over a five-year period. If you are planning to gift more than the allowable limits, check the rules here as penalties may apply.
Pre-paying a funeral plan
While it is not something that everyone would like to consider, pre-paying for a burial plot or funeral expenses can make good financial sense. As well as saving your family expense when you die, prepaid funeral plans and burial plots are not assessable assets for Age Pension purposes.
Using certain income streams
Certain annuities are assessed more leniently under the Age Pension rules than other investments, which may help you to achieve a higher level of Age Pension.
When purchasing a term annuity, you can select the proportion of capital (residual capital value) you would like returned to you at the end of the investment term. Annuities with a residual capital value of less than 100% are generally assessed favourably under the income and assets tests.
Speak to your adviser for more details as the rules differ depending on when an income stream was commenced, its term and your life expectancy.
Summary
If you are concerned about how the upcoming changes to the Age Pension rules will affect you, arrange a meeting with your financial planner who can help you to structure your income and assets to make the most of your entitlements.
Source:
1. http://www.superguide.com.au/how-super-works/300000-retired-australians-to-lose-some-or-all-age-pension-entitlements
by Jodie | Mar 16, 2017 | Advisers, Insurance & Protection, Retirement
You’re retired, the house is paid off and the children are self-sufficient, – it may be time to review your life insurance?
Policies expire
People take out life insurance while they are working to protect their dependants if they die prematurely.
Life insurance policies, including income protection, trauma, and total and permanent disability (TPD) insurance, generally expire when you reach a certain age, even if you are still working. So, let’s consider some of the insurance products you may have and see how long they generally last.
Insurance options
Term life insurance is a popular policy option. Beneficiaries receive a lump-sum payment if the policy holder dies or suffers a terminal illness and the usual expiry age is 99.
TPD insurance is paid in a lump sum if an accident or illness prevents the policyholder from earning an income. The usual expiry age for this type of insurance is 65.
Trauma insurance covers a major illness or injury, such as a stroke or car accident. It covers specific events and is paid out in a lump sum that can be used for any purpose, such as living or medical expenses. The usual expiry age for this type of insurance is 70.
Income protection insurance covers loss of income caused by accident or illness. Typically, these types of policies pay 75 per cent of the insured person’s income but there are many variations in their terms. The usual expiry age for this type of insurance is 70.
What about my super?
There are usually additional rules for policies held within a superannuation fund. Life insurance coverage through super usually ends at the age of 65.
When deciding whether to take out or continue your life insurance, you may wish to consider such things as any outstanding debts, including any mortgage repayments, as well as the needs of those you leave behind.
Nevertheless, each person’s circumstances are different and if you are unsure of what you need, talk to your financial adviser.
![Safeguarding your retirement plan]()
by Jodie | Mar 3, 2017 | Budgeting, Finances, Insurance & Protection, Superannuation, Wealth
From wills to long-term budgeting, there’s a lot to think about when making your retirement to-do list. Here’s some top tips to make sure you’ve ticked all the boxes.
1. Check your Will and Power of Attorney documents
Without a valid will, an administrator will be appointed to manage your estate, which may cause your family plenty of problems. To save them stress, ask a solicitor to draw it up for you and make sure you and two witnesses sign it. Powers of Attorney protect you whilst you live, but can’t make your own decisions. Pick the person you trust most to make the big decisions in your life.
2. Plan your estate
Think of your estate plan as your family’s stress-free action plan that they can turn to for guidance when you pass away. It should cover all of your documents, contacts, debts, bills and assets so your family can easily figure out what to do with them. And don’t just put it all on paper, communicate with your family now, and let them know what you’d like so everyone is clear. It may save problems later!
3. Budget for the long haul
Australians are living longer than ever – which means your retirement savings also need to last longer. Create a long-term budget that will help you live the lifestyle you want – and don’t forget about healthcare costs. Then comes the most important part of a budget – sticking to it. Think of it as the plan you’ll follow for future spending.
4. Invest in your future
From boosting your superannuation to investing in shares and property, understanding your investment options can make a huge difference to your retirement savings. When you start investing – the earlier the better – make sure you have a mix of investments to spread your risk. And invest in yourself! Learn and partner with a professional to maximise your options.
5. Be wary of scams
Investment scams are on the rise in Australia, with perpetrators directly targeting retirees to access their superannuation funds. Protect yourself by never giving out your financial details over the phone or by email. And be suspicious of anything that sounds too good to be true. You know it probably is!
6. Start thinking about insurance
Many insurance policies expire at a certain age, leaving you without cover. And if yours comes from your superannuation fund, it could be eroding your savings. From age-based insurance policies to products that cover funeral expenses, you should seek professional financial advice to develop a plan that is appropriate for you as you enter retirement, so touch base with your planner sooner rather than later.
by Jodie | Feb 27, 2017 | Australian Economy, Budget, Economy, Superannuation
The changes to super and tax laws proposed in this year’s federal budget, then revised and adjusted by the government in September, have been passed through Parliament and are mostly due to take effect from July 1, 2017. That means that you have until July to consider if there is any action you should take to make the most of current super rules or to comply with the upcoming changes.
We take a look at some of the key changes in the table below.
Significant super reforms
| Now |
New* |
| No limit on funds moved into tax-free pension phase. |
$1.6 million transfer balance cap on super transferred to the tax-free retirement income phase. |
| You can contribute $180,000 of after-tax earnings to super each year (or $540,000 for those eligible to bring forward two years of contributions). |
Reduction in annual after-tax contributions cap to $100,000 (or $300,000 if bringing two years of contributions forward, if eligible). Clients with balances of $1.6 million or more, just before the start of the financial year, cannot make after-tax contributions. |
| Annual concessional (before-tax) contributions limit of $30,000 (or $35,000 if aged 50 or over by June 30, 2017). |
Reduction in the annual concessional (before–tax) contributions cap to $25,000. This applies regardless of age. |
| Unused concessional contributions caps are lost. |
Catch-up concessional contributions may be available for those with balances less than $500,000 just before the start of the financial year. |
| If income from employment is less than 10% of total income, you can claim a tax deduction for personal super contributions. |
Clients under age 65; or age 65-74 who satisfy the work test, can claim a tax deduction for personal super contributions. |
| Additional 15% tax on certain concessional contributions if your adjusted income exceeds $300,000. |
Additional 15% tax on certain concessional contributions, if your adjusted income exceeds $250,000. |
| Earnings on transition-to-retirement super pensions are tax free. |
No earnings tax exemption on transition-to-retirement super pensions. Earnings will be taxed at up to 15%. |
| Anti-detriment payments may apply on certain lump sum death benefits (generally a notional refund of contributions tax to be paid on death). |
No anti-detriment payments on lump sum super death benefits (no refund of contributions tax paid on death). |
| Offset for contributions to spouse’s super (if spouse earns under $13,800). |
Offset for contributions to spouse’s super (if spouse earns under $40,000). |
| The ‘low-income super contribution’ refunds tax (up to $500) on concessional contributions for those earning $37,000 or less. |
Introduction of the low-income super tax offset (effectively a continuation of the low income super contribution). |
*These measures start July 1, 2017, except for the catch-up concessional contribution measure which starts July 1, 2018.
If you are concerned about how you may be impacted, now is the time to talk to your financial adviser so you have time to review your superannuation and retirement plan, before the changes take effect.
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