Tag Archives: Retirement

Boosting Super with the Work Test Exemption

If you’re a recent retiree and looking to increase your superannuation savings, here’s some good news!

The Australian Government is proposing to make it easier for recent retirees to save more super by allowing them to contribute for a year without having to show that they’ve been ‘gainfully employed’.

The former rules

Anyone below 65 can contribute to their super regardless of whether they work or not. But those aged between 65 and 74 need to meet the work test before they can make super contributions. To pass the test, they have to show that they’ve been gainfully employed for at least 40 hours over 30 consecutive days in the financial year they plan to contribute.

The government has already given members with a total super balance of less than $500,000 some flexibility to further grow their super. These individuals can carry forward any unused amount below the concessional contribution cap of $25,000 on a rolling basis for five years starting from 1 July 2018. They can use their unused cap amounts from 1 July 2019.  But people between 65 and 74 must still meet the work test before they can make these ‘catch‑up’ contributions.

The new measure

Now, to encourage this age group to save more for retirement, the government is proposing to give individuals who don’t meet the work test an extra year to beef up their super savings. From 1 July 2019, those aged between 65 and 74 with a super balance below $300,000 are able to make voluntary contributions in the first financial year that they don’t satisfy the work test requirement. Once eligible, they don’t have to remain under the $300,000 balance cap during the 12‑month period.

The annual concessional and non-concessional contributions caps will continue to apply, but members can access any unused concessional contributions cap amounts they have carried forward.

The government will assess total super balances at 30 June of the financial year in which members last met the work test.

Seek professional advice

If you’re considering contributing to your super under the proposed work test exemption, it may be wise to speak to your adviser to see how making additional super contributions may work to your advantage.

What a brilliant idea!

Did you know that it’s been almost 30 years since the superannuation guarantee was introduced in Australia, yet 40% of single women are retiring in poverty, and the fastest growing demographic of homelessness is the 55 year old woman?

In the financial services profession, there’s a couple of lovely ladies I know, who truly believe that it’s shameful a country as rich as ours has let its elderly women, after a lifetime of service and caring for others, go without enough money to care for themselves.  They’re also:

  • tired of hearing empty promises on policy change
  • overwhelmed by frightening statistics on super / gender equality
  • worried for our daughters’ futures.

So, they got to thinking!!  ‘What if we could monetise the $2.2 trillion p.a. of unpaid work performed by the 1.8 million women? What if we could create an income stream into super for the 76% of women who either don’t work or work part-time?’

Together, they’ve come up with the brilliant concept Super Rewards. 

Super Rewards is cash rewards, for women, for super.

Super Rewards is compatible with any super fund or SMSF. It’s free to join, and there are no upfront charges.  How beyond cool is that?

Each time you shop at the 120+ retailers on the Super Rewards platform, you earn money into your super. The more you shop, the more super you earn. So a percentage of what you earn, is going straight to your retirements savings, simply for doing what you may do best… SHOP!

There are some incredible brands on the platform, many of whom are Australia’s leading retailers, including Woolworths, The Iconic, Country Road, Apple, Booktopia, etc.  I had a bar fridge break down recently, so signed up and got shopping!

There are 6.7 million women in Australia aged 18-64 years old, and all of them would benefit from knowing about Super Rewards.  Together, they’re hoping to set generations of women free and improve their futures.  Together, they’re hoping to help women build their super the way it was originally intended: to live your best life, the way you choose, free of fear, doubt or financial worries.

And don’t you just love the tagline?

We are Super Rewards. Helping all women find their super power.

Check it out for yourself and see what you think!! I’d love to hear your thoughts.

Your Super is too Important to Ignore

Superannuation is the one thing you could do for your financial future this year, that could make a big difference to your retirement income. But how much do you really need?

That’s the million dollar, half a million dollar…? question.

Everyone’s needs are different.  Unexpected expenses just crop up, life gets busy and none of us have any clue how long we will actually be in retirement.

Of course, we’d like to think that the safety net of the age pension will still be around in years to come, but just how generous the country can afford to be with this payment, and who will be eligible, is also unknown as this may change year to year.  Sadly, none of us have a crystal ball, and we know it isn’t a lot!

So what exactly are some of the big expenses in retirement we need to budget for?

  • Healthcare
  • Aged Care
  • Food and Beverages
  • Utilities
  • Travel
  • Entertainment
  • Planned or unplanned expenses, i.e. a new car or home renovations

What major impacts could affect our superannuation?

  • How long you live
  • Your health
  • The rate of inflation
  • How much you earn on investments
  • Whether or not you have dependents – yes some retirees still have dependents!

It is wise to have a plan when it comes to your retirement income and a professional financial adviser can help you get a plan in place that is easy for you to manage now, and meets the needs of your ideal retirement.

If you want to start to get your super sorted this year, give me a call on 07 5593 0855.

Punch and Judy do Super Splitting

This one is for our Aussie readers and a great strategy for some couples to help manage their retirement savings.  If you’re an international reader, does your government offer something similar?  I’d love to hear how it’s done in your country.

A spouse contribution split can help reduce a member’s total superannuation (retirement savings) balance below a trigger point or, when used as an ongoing annual strategy, can help achieve a measure of account equalisation between spouses.  It can also be helpful to reduce a super balance where one spouse is somewhat older than another.

Firstly, to be eligible, the receiving spouse must be under 65 and, if over preservation age, not retired. (Where the receiving spouse turns 65 during the year of the split, action will need to take place before their birthday and is paid as a rollover super benefit.)

Too much jargon right?   So what does it look like?

Punch and Judy are married.  Punch is now the sole breadwinner as Judy wants to stay home for a couple of years while The Baby is still cute.  She’s not earning and her Super retirement savings will be impacted.

Punch is on a good wicket and gets a hefty amount paid into his Super fund by his employer.  Because Judy is amazing, and doing a brilliant job with their kid, Punch wants to make sure she’s not disadvantaged and chooses to split his super with her.

Punch has a sufficient account balance and as his boss has put in a $25,000 contribution, he can pass over up to 85% or $21,250 to Judy’s fund.  Happy wife, happy life!

Punch is a good partner, be like Punch… (ok, he’s usually a tosser, but this time he’s nice!)

Contributions splitting does not reduce the contributions originally made for the member for reporting and contribution caps purposes.

If you think Super Splitting could be beneficial for your family, it’s worth chatting with an adviser to find out more to find out the tips and traps and whether it’s right for you.

Five financial moves to make in your 40’s

In your 40’s? Here’s 5 moves to make so you can get financially ahead.

Being in your 40’s can involve balancing many different responsibilities and it becomes easy to neglect your own financial well-being. But it’s not too late to secure your future. Here are 5 tips that may help you financially make the most of your 40’s.

1.      Create a plan

If you don’t have a financial plan, then it’s totally time to get one. Ensure that it’s based on your needs and priorities. By working with a professional adviser, you may be able to tailor a plan that can help you maximise your ability to save and invest.

2.      Grow savings

Your 40’s could be your peak earning years, so it may be a good idea to ramp up your savings and funnel some of your income into superannuation or investment accounts. Be sure to do your homework and consult with a professional financial adviser about your options and reducing debt.

3.      Check your superannuation

A quick super health check may help you optimise your retirement savings. For example, by choosing a different investment option or type of risk, you may be able to earn better returns on your super. If you have a few funds, consolidating your accounts may help save on fees. Again, seek advice from a professional adviser before acting as you may leave yourself open to losing some important benefits.

4.      Avoid lifestyle creep

People usually have a tendency to inflate their standard of living as they earn more and can then afford more things, such as a better car or house. While it’s natural to want the finer things in life, you’ll likely end up with little to no financial gain if your spending rises as quickly or more quickly, than your income. Try stick to your long-term financial goals and remember the big picture.  You lived on your income until you got the pay rise or bonus, so chances are, you still can, and stash the difference.

5.      Invest more

Your 40’s may be a good time to invest more – or diversify your investments – to help you grow your long-term savings.  Keep in mind that it’s important to choose instruments that suit your risk appetite and time horizon. Developing a strategy with your financial adviser might make it easier achieve the return required to reach your financial goals.

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.

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!