Retirement Goals!

For some, retirement is a long way off!  For others, it seems to be creeping up a lot more quickly than expected.  The years have flown by and it’s time to start taking stock.

Many who visit me in their late 40’s to mid 50’s sometimes realise that they’ve put retirement on the back burner for a little too long.  With taking care of the Mortgage and the kids… retirement saving was a long way down the list!

But for those ready to hang up the boots, whether at 65, 70 or beyond… what can you expect?

Many advise that a new kind of balance is required, one that takes a bit more planning than expected.

It’s good to start thinking about your vision for your retired life and the values you have that may drive those goals.  Have you been planning travel? volunteering? hanging out with the grand kids? visiting more with elderly parents? taking up a hobby?

Strange tho it may seem, retirement and pure leisure hours only, can impact your health.  Everything you’ve ever known has suddenly stopped.  Routine, income and your network is no more which can have a big impact on mental health especially.  Choosing to be optimistic about your future options is incredibly important.

Family relationships can also come under scrutiny.  Suddenly spending 24/7 with your life partner may not be what either of you expect.  Learning how to communicate what both of you need, while maintaining some sense of independence is vital!

Are you looking to replace the hours you spent working with something else?  Some enjoy volunteering, others enjoy researching the family history or writing that book that you always put off, even learning a new skill or going back to school can be considered.  Travel plans also need consideration – those who’ve traveled extensively during their work life may not wish to venture so far from home, others can’t wait to become intrepid explorers!

Often, what to do with the family home also needs consideration.  Some empty-nesters love keeping their family home and it’s memories, others like to move on and downsize for less maintenance and possibly availing themselves of additional funds.  Moving interstate to be near the family or a group of friends also needs consideration but taking on too many things at once can be a little overwhelming… it’s good to learn to pace yourself.

Managing the finances also requires careful consideration.  Some find that their immediate spend in the first few years following retirement is much higher than they’d previously thought it might be.  Funding travel or new gadgets may be fun, but if they haven’t been budgeted for, can impact the long term value of savings.  Longevity risk is gaining a lot of exposure now, with many living well into their 90’s and hoping they don’t outlive their savings.

Who knew that ‘hanging up the boots’ could be so complicated?

It’s a great idea to sit down with your adviser and talk through your options.  What works for one, won’t work for all, so setting and achieving what’s important to you is vital.

5 ways to keep business debt under control

Managing business debt can help you steer clear of financial trouble!

Piling up a lot of debt could leave your business in financial difficulty or, worse, bankrupt. Here’s five ways that may help you manage debt and avoid a financial mess.

1. Understand your business situation

It’s important to keep track of debt and money owed to you by having a record of your creditors and debtors and amounts involved. If tracking your business finances requires more than a simple spreadsheet, you may want to consider a bookkeeping system to make monitoring more efficient.

2. Prioritise debt payments

Once you have a good understanding of where your business stands financially, prioritise your debts.  Identify which debts you must repay now and which ones you can put off or put onto a payment plan. When prioritising, consider the urgency of the debt or the importance of the creditors to your business.

3. Negotiate with creditors

It may help to speak to creditors openly and honestly about your business situation. Ask if there are any hardship provisions or if you can have your due date extended. Talking to your creditors as early as possible can save you from paying more penalties and other charges. It may also be a good chance to negotiate for better terms and rates on your business loans.

4. Collect outstanding payments

You may want to collect payments from your own debtors to help improve business cash flow. If you have a long list of debtors, prioritise them by going after the biggest accounts first.

5. Protect what’s important

There are steps you can take to help protect your business from risks that can affect its ability to continue operating. Taking out a business insurance policy, for example, may help you by replacing lost income or maintaining cash flow.

A financial adviser may be able to help you determine if business insurance might work for you. I’m happy to chat further about any protection questions you may have.

Saving for retirement: Hacks for parents with dependents

You can build your retirement savings while supporting your dependants.

Providing for the kids doesn’t have to come at the expense of stashing funds for retirement. There are ways you can build a sufficient nest egg while supporting your children.  And chances are, you’ll be spending a lot longer in retirement than previous generations… who knew?

Saving for retirement

Forced saving can be your best ally in building your retirement fund. Making voluntary contributions to your super through salary sacrifice can seriously boost your nest egg.  You can make concessional super contributions of up to $25,000 each financial year (which includes your employer’s super guarantee contributions.) The government will tax your salary-sacrificed contributions at 15% which may be much lower than your marginal tax rate.

It may also be worth looking at how and where your super fund invests your money. Choosing a different investment option may help you earn better returns and grow your super.  Do you know what your Investor Risk Profile is?  Conservative?  Balanced?  Aggressive?

Super can be a difficult subject to get your head around. Have a chat with your adviser about how you can boost your super by making voluntary contributions or changing your investment options. Your adviser can also knows about retirement saving options beyond super.

Protecting your income

While you’re building your fund for retirement and still supporting those eating you out of house and home, it’s important to protect your current income in case you’re unable to work due to an illness or injury. Taking out income protection insurance is an incredibly wise precaution against any event that can prevent you from working. This policy may provide a monthly income to support you and your family during your recovery and help you stay on track with your financial commitments.  Premiums are tax deductible.  And if you think about it, why wouldn’t you insure your most important asset? – the ability to earn an income!

It’s also crucial to ensure your dependants are looked after if you die or became seriously ill or disabled. Having life insurance, total and permanent disability cover, and trauma insurance can help you protect what’s important to you.

Get advice

Balancing your need to prepare for retirement and your responsibility to your partner and kids can be tough, but keep in mind that help is always available. Speak to your adviser about how you can provide for your dependants while building a nest egg for a comfortable retirement.

Your future self will thank you for it!

What’s the deal with Financial Infidelity?

Cheating on your partner with money is a thing.  And for many, can be just as emotionally destructive as finding out about the sexual kind of infidelity.

Many admit to having lied to their partners about how much they earn, have spent, have borrowed or lent, especially to family members and friends.  It’s just a little lie right?

And although you may not feel the need to share every decision you make with your partner, little lies can lead to big ones.  Covering your tracks takes serious time and effort and if and when your partner discovers the extent of the cover-ups, things can get seriously out of hand.

Being upfront about your finances is about trust.  It’s much easier to achieve your joint financial goals when family funds are pooled and work together for the common good.

Others choose to keep their finances completely separate and private, but pool equal or set amounts into a joint fund to cover family expenses or goals such as combined holidays.  Either way, being upfront and honest about your financial commitments and obligations is paramount.

There’s plenty of reasons people don’t want to share, or won’t.  If you’ve been in a relationship before and have moved on, you may not want your new partner to know all the gory and intimate details of your financial life.  Others are just as happy to share.  It’s setting the expectations early and having regular money talks that can prevent massive issues down the track.

For those who’ve been in financially abusive relationships, there’s likely to be massive trust issues with sharing.  Financial abuse is rarely discussed, yet a widespread problem globally.  And I’m not talking about having a low budget for the groceries.  Financial abuse is about someone using money to exercise power and control in a relationship.

It covers everything from running up debts, defaulting on joint loans, putting a partner under inordinate amounts of pressure to reduce, limit or stop spending, even banning access to accounts.  No wonder those who’ve ‘been there before’ believe in maintaining some form of independence, including a completely hidden and private stash.

If you’d like to know more or think you may be experiencing financial abuse in your relationship, you can visit ASIC’s MoneySmart website to find out more.  Thankfully, there’s lots of options on where to turn if you think you’re a victim of financial abuse, or believe someone you know may be experiencing this kind of crisis.

Managing the cost of Insurance

You don’t have to cut corners on your insurance or sacrifice the adequacy of your cover to make your policy more affordable.

A necessary evil?  A must have?  Love it or hate it, you’re likely to need insurance in your life!  But how do you get the most bang for your buck?  This article deals with options available for personal insurances like Life and Total & Permanent Disability, Trauma Insurance and Income Protection cover.

Choosing a payment structure

Choosing stepped premiums in the first few years of your life insurance policy may help you keep the cost of cover low in the beginning. Stepped premiums allow you to start paying your insurance at a lower rate, which then rises as you grow older. Your insurer calculates your premiums on each policy anniversary based on your age, and sometimes with CPI too.

You may consider moving to level premiums as you become more capable of paying your insurance. Although they’re more expensive in the beginning than the stepped structure, level premiums generally offer a good long-term savings because premiums are calculated based on your age when you first take out level premiums.

Using your super

Taking out life insurance through your superannuation fund may lower the cost of insurance because premiums may be paid using concessionally taxed contributions paid from your employer or sacrifices into your super. Premiums can be cheaper because super funds bulk buy insurance policies and can negotiate discounts (group insurance.)  Individually, some offer a 15% discount or rebate off premiums due to the concessionally taxed structure of Superannuation.

But keep in mind that super funds may offer limited cover. Talk to your adviser on how to ensure you have enough cover.  And make sure you don’t constantly erode the value of your retirement savings with large premiums.

Waiting for a longer period

When taking out income protection insurance, you can choose a waiting period. The longer you wait before receiving income benefit payments, the lower your premiums.  Make sure you have enough in savings or an offset account to tide you over – and remember, payments are made 30 days in arrears – so a 30 day waiting period may still mean 60 days before you get paid!

You can also choose between an indemnity policy and an agreed value policy. Taking out indemnity cover may help you keep the costs down because premiums are generally lower than those for agreed value cover.

Income protection premiums are usually tax deductible if you fund your cover outside super, helping make this policy affordable. If you pay your insurance through your super, premiums are generally tax deductible to the super fund.

Getting advice

With so much to consider, seeking advice from a professional financial adviser is important to help make insurance affordable – and manageable – for you and your circumstances.  Give us a call if you’d like some help.  07 5593 0855.

Beating the stress of Redundancy

Don’t let losing your job throw you into deep difficulty. Sort out your finances early.

Being made redundant doesn’t have to throw you and your family into financial trouble, although it’s likely to knock you about to start with.  Stay on top of your finances by planning and setting a budget with the help of your financial adviser.

Know your financial status

So, why an Adviser?

Firstly, you need to know where you stand financially.  Your adviser can help you do this by looking at your savings, the size of your redundancy payments and your total expenses over the coming months.

Your adviser can also take you through the types of redundancy payments you may be eligible for and help you understand the tax implications they may have.  Some  may be best directed into superannuation to help save on tax and for retirement.

Once you have a final figure of your available funds, you and your adviser can see how it stacks up against your total expenses for the next two to three months.  This will give you clear insight into whether you’ll be in the money… or out.

Work with your adviser to set a budget

With a clear idea of your financial standing, your adviser can help you set an appropriate budget or offer suggestions on how to make ends meet.  Alternately, there’s plenty of online templates available if you want to DIY, one of my favourite sites is the ASIC MoneySmart Budget Planner.

This may help you avoid any shortfall, assuming you don’t earn any income in the next two to three months.  It may also trigger you to think of areas you can cut back on while things are tough.

Think of other ways

If cutting back on non-essential expenses is not enough to make up the shortfall, your adviser may suggest other ways you can manage your finances, including getting a part-time job.  Others decide to turn hobbies into careers, or investigate driving with Uber, doing deliveries or hiring out a room or two on Air BnB whilst looking for full-time work.

Perhaps a chat with the bank or your loan providers will be in order.

Check if you’re eligible for government assistance. Talk to your adviser about the income support payments available to you.

Get back on your feet

Look at your job loss as a temporary setback and aim to get back on your feet as soon as you can.  Maybe there’s a silver lining and things will be much better for you moving forwards.  Reach out to your financial adviser for support.  Opportunities to rejoin the workforce might be waiting just around the corner.

Try using online platforms like Seek or Indeed to job hunt.  And make sure your LinkedIn profile is up to date.  Many agencies now look at that rather than ask for a resume.

And good luck!

You can save through Super for your First Home!

new scheme may help you make your dream of owning a home come true!!

Ongoing high property prices have made owning a home unattainable for lots of prospective first‑time home buyers.  The First Home Super Saver scheme, passed by the Australian Government in December 2017, may help keep the dream of buying a first home alive and well.

The new scheme helps you save for your first home by allowing you to use the concessionally taxed superannuation environment to build your housing deposit.  Eligible voluntary contributions are limited to $15,000 in any one financial year and $30,000 across all financial years.  They include both voluntary concessional and voluntary non-concessional contributions.

You are able to withdraw these eligible contributions and associated earnings from 1 July 2018 to buy or build a first home. You may be allowed to withdraw 100% of eligible non-concessional contributions and 85% of eligible concessional contributions.

Are you eligible?

To have your contributions released, you must be at least 18 years of age and not have owned property in Australia previously, or have already asked the Commissioner of Taxation to release funds under the scheme.  As a bonus, if you have owned property in the past, you may still qualify if the Commissioner determines that you have suffered a financial difficulty that led to the loss of your property.

The Australian Taxation Office (ATO) will assess eligibility to withdraw contributions on an individual basis.  This basically means that you and your partner or a family member can each apply for a release of contributions to buy the same property!

Once your super fund releases your contributions, the Commissioner of Taxation will withhold tax. This will be calculated at your marginal tax rate less a 30% offset.

You have up to 12 months from the time you receive the first amount to sign a contract to buy or build a house. (But, if you still really need more time, you may apply for an extension of up to 12 months.)

Get advice too!

It’s important to seek professional advice before you consider making or withdrawing voluntary super contributions to buy your first home.  Talk to your adviser to see how the scheme can work for you.  Or we’d be happy to help walk you through it if you still have more questions.

A little bit of life… according to Amanda