It’s December – the month that always seem to race by as we approach the end of the year and all the festivities it brings. We hope you all have a lovely, happy, and safe festive season.
While it is the season for giving, financial well-being is a gift worth giving yourself and something that will have a positive impact on your financial future. Read more in our December newsletter here.
In a study conducted by the Productivity Commission it has been projected that the value of inheritances in Australia over the next 30 years will quadruple. By 2050 it is estimated that Baby Boomers will pass on an estimated $224 billion each year in inheritances to younger generations.
Ensuring a smooth transition of wealth between generations involves careful planning and communication. Starting early allows for comprehensive strategies, helps to minimize potential conflict and maximize tax efficiency. Having transparent discussions with family members about wealth transfer plans, intentions and values helps manage expectations and reduce misunderstandings. Ensuring your Wills are up to date and establishing an Estate Plan is crucial in allowing you to control how your assets are to be distributed. Seeking advice from a Financial Planner (along with other professionals) will give you your best chance at ensuring your wealth transfers through generations successfully. Our Advisers talk to clients about not only their wealth but their families, and using the family tree, have in-depth discussions about their generational wealth wishes and concerns helping to develop plans to suit their needs. If this is something you would like to start planning for, give us a call on (03) 5229 0577, we are here and happy to help.
Read more on common pitfalls to avoid when passing on your wealth here
Source: Wealth Transfer: Baby Boomers to pass on $224b by 2050, AFR
Preparing to retire is emotional and practical. Making a retirement plan can help you manage your finances, and cope better as your life and priorities change.
MAKE A RETIREMENT PLAN
Your retirement plan can be simple or detailed. Include:
THINK ABOUT WHEN YOU WANT TO RETIRE
There’s no set age you need to be to retire. It will depend on your health, work options, finances and personal situation.
Are you retiring in ten years, two to five years, or next year? If you have a partner, when will they retire? Knowing how much time you have helps you make a retirement plan.
Talk about your retirement priorities with a partner, colleague or friend. If you need professional advice to plan for retirement, speak to us.
CONSIDER YOUR LIFESTYLE AND PRIORITIES
Set your priorities
Think about what your lifestyle will look and feel like. What are the things that matter most?
Consider:
Keep working, reduce hours or retrain
Continuing to earn an income, even part-time, can help your retirement savings last longer. If you want to keep working, options include:
Plan where you will live
If you own your home:
If you’re renting:
WORK OUT YOUR INCOME AND LIVING COSTS
How much money you’ll need for living costs in retirement depends on your lifestyle priorities and what you can afford.
For most people, your retirement income will be a combination of superannuation and the Age Pension. If you don’t have much super, you may be more reliant on the pension. If you do have super, think about how and when to withdraw it. You may also have some savings or investments.
Work out your living costs
Consider:
As a rule of thumb, try allowing for two thirds of your current living costs. This is a useful guide, that assumes reduced costs for work and that you’ve paid off your mortgage.
Your spending may be higher when you first retire. For example, if you plan to travel or update your home. You may also need to allow more for health care as you get older.
Prioritise the things that matter most in retirement.
Get your super income
You can get your super when you retire and reach your ‘preservation age’. That is between 55 and 60, depending on when you were born.
When you are eligible to withdraw your super, your main options are:
You could also consider a transition to retirement strategy. You can use some of, and keep contributing to, your super while working.
Your super fund will be able to provide you with factual information about your super. Contact us for financial planning advice.
Claim government benefits
From age 67 (or earlier, if born before 1957), you may be eligible for government benefits such as:
For questions about government benefits, call Centrelink’s older Australians line on 132 300. Ask to speak to a Financial Information Service (FIS) officer (for free). The helpline is open Monday to Friday, 8:00am to 5:00pm.
See how long your super and Age Pension will last.
Add in savings and investments
If you have money in savings, this could top up your retirement income.
If you have investments like shares or investment property, think about whether to keep or sell. Check the costs, tax impact and whether it will affect your government benefits.
PLAN FOR YOUR FUTURE
Grow your income
If you can, consider contributing more to your super.
Save for an emergency
Save an emergency fund to give yourself a safety net for unexpected bills like repairs or medical costs.
Pay off debt
If you have a mortgage or other debts, consider how best to pay them off. For tips on how to do this, see get debt under control.
Make an estate plan
Decide what you want done with your assets when you die. Check you have an up-to-date will and powers of attorney, and a nominated beneficiary for your super.
GET HELP IF YOU NEED IT
Source:
Reproduced with the permission of ASIC’s MoneySmart Team. This article was originally published at https://moneysmart.gov.au/retirement-income/prepare-to-retire
Important note: This provides general information and hasn’t taken your circumstances into account. It’s important to consider your particular circumstances before deciding what’s right for you. Although the information is from sources considered reliable, we do not guarantee that it is accurate or complete. You should not rely upon it and should seek qualified advice before making any investment decision. Except where liability under any statute cannot be excluded, we do not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person. Past performance is not a reliable guide to future returns.
Important
Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business nor our Licensee takes any responsibility for any action or any service provided by the author. Any links have been provided with permission for information purposes only and will take you to external websites, which are not connected to our company in any way. Note: Our company does not endorse and is not responsible for the accuracy of the contents/information contained within the linked site(s) accessible from this page.
In November, attention is focused on the highly-anticipated “race that stops a nation” and the simultaneous meeting of the Reserve Bank. As the days grow longer with the approach of summer, the countdown to the holiday season commences.
These hot topics are covered in our Newsletter:
Have a read here
Our worlds have certainly been tested in these last few years. Coming off the back of a world-wide pandemic, the first in 100 years, and now faced with daily footage showing the horrors of wars and discontent across various countries, it is understandable that many investors are nervous about the impact of these events upon their hard-earned savings. Simply looking at returns in the last month only heightens such fears, with growth assets like Australian Equities returning -3.14% and Australian Listed Property returning -6.19%. Even defensive asset classes such as Australian Bonds have returned -1.35% in the last month1.
Feeling anxious is understandable. It is times like these we often see investors make emotion-based decisions in the short-term, which negatively impact their potential returns over the longer term.
This is where the value of financial planning comes into play. Financial planning literally does it’s best work when times are tough. When markets are soaring, every man and his dog will be telling you about the level of profit made on (insert investment type here). While boasts can be made about having great financial insight, it’s actually not all that hard to make good financial decisions in up-markets.
At Income Solutions, we are very proud of our clients and the journey they have taken to secure their financial futures. Our clients have invested their time, helped us examine their needs and have created well-defined and achievable goals and objectives. This investment of time is no light and breezy task. Defining life goals and making important decisions can be emotional and daunting, and some people find it easier to find continual distractions rather than commit to this task. However, those who can say “Yes we have done it” can look to their long-term plans knowing that short term market volatility has been factored into their financial modelling. These clients have valued the education provided and understand that investment markets experience ups and downs. Our clients understand that holding your ground and sticking to the plan in times of volatility provides you with the best chance of still being on the scene for the upswing when market conditions change. This becomes the defining factor in how well your emotions can handle market volatility. Planning. Education. Reviewing. 3 very important words that provide comfort in times of market volatility – because market volatility is something that has been experienced in the past, is evident in present times, and will come around again in the future. History has shown this to be true:
If you are not already a valued client of Income Solutions, contact us today. We’d love to meet you:
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1 Source – Australian Unity Research Insights, October 2023
This information is of a general nature only and has been provided without taking account of your objectives, financial situation or needs. Because of this, you should consider whether the information is appropriate in light of your particular objectives, financial situation and needs.
Cost of living increases have impacted household budgets right across Australia. When this is combined with insurance premium increases, it’s not difficult to understand why many people are tempted to cancel their insurance cover. After all, until a claim event happens, it is easy to view insurances as an unnecessary expense. Before giving into the temptation, here’s some points to consider:
If you are feeling the pinch and want to look for ways to keep your cover but relieve the financial strain, these options may be available to you:
Protecting your most important asset (…..that’s you) may be the most important financial decision you can make. As you can see, there may be options available to change, but retain, your personal insurance. If you require assistance, feel welcome to contact the Income Solutions Advice team on (03) 5229 0577 or sending us an email to contactus@incomesolutions.com.au.
Can you believe it is October already!?
The AFL season for 2023 concluded over the weekend with Collingwood securing their 16th premiership after a thrilling four-point win over Brisbane. In Victoria, the Spring Racing Carnival is in full swing with three months of racing, entertainment, fashion and fun across the state. And, as October draws to a close, let’s not forget about all the spooky Halloween festivities!
Check out our October Newsletter here
When you run your own business a good retirement plan can bring real peace of mind. Read more about your options – and why it’s never too early to start.
PLANNING YOUR RETIREMENT
When you’re busy running your own business retiring could be the last thing on your mind. But planning your retirement well in advance can make it easier to enjoy the future you want.
WILL YOU SELL YOUR BUSINESS?
Many business owners plan to sell their business to fund their retirement – but it’s important to be realistic. It isn’t always easy to find a buyer who’s prepared to pay the price you want, particularly if you’re hoping for a quick sale. And, even if you intend to keep on working well beyond retirement age, unforeseen circumstances such as poor health or a change in market conditions could force your hand, so it’s important to be prepared.
ALLOW PLENTY OF TIME
If possible, you should give yourself at least three years to plan for the sale of your business. Most buyers will want to see three years of financial statements and you’ll also need time to work on increasing the value of your business. This could include everything from keeping your equipment up to date and making sure your premises are always clean and well-maintained to boosting your sales with a strong online presence. Remember that a buyer is investing in the future of the business so they’ll want to see positive yet realistic forecasts.
In the meantime, it’s also important to protect your business with the right insurance. Appropriate Income Protection, Total and Permanent Disability (TPD), Trauma and Business Expenses insurance can help prevent debt from accumulating if you’re unable to work and enable you to pay someone to keep your business up and running if you can’t.
SUCCESSION PLANNING
Passing your business on to a family member or employee may sound straightforward but, again, you should allow plenty of time to work through the process and clarify all the details. For example, do you intend to retain any interest in the business? Who will own any property, such as the business premises? And, if your successor plans to buy the business from you, can you be sure they’ll have access to the money when you want it?
A good succession plan will cover all this and more to ensure you can make the transition with minimum disruption and maximum benefit. And it’s important to talk to a professional adviser about how you can best structure your business to protect your assets and minimise tax.
SAVING MONEY FOR RETIREMENT
Personal superannuation isn’t compulsory for small business owners so you might be tempted to put investing in your business ahead of your savings. This can be risky as there’s no guarantee your business alone will provide enough money for you to live comfortably in retirement.
Building your business and your superannuation investment simultaneously can help to mitigate the risk. Many business owners choose a self-managed superannuation fund (SMSF) as this may provide benefits such as a lower tax rate, more investment options and flexibility when it comes to drawing an income. However, a SMSF isn’t right for everyone so you need to discuss your strategy with a professional adviser.
PLANNING TO LIVE LONGER
In general, Australians are living longer, which means you could spend decades in retirement. Ideally, you’ll have enough savings to cover your expenses well into your nineties.
Financial security in retirement could underpin many of the decisions you make about your business so it’s important to think about the lifestyle you want. As a general rule, if you own your own home, you’ll need 70-80 per cent of your pre-retirement income to maintain the same standard of living. The age pension and other government supplements provide a safety net but, at the moment, these are set at about 28 per cent of the average wage, and this is very unlikely to increase.
The most successful retirement planning is long term. Your spending and your needs are sure to change as your retirement progresses so your plan must be adaptable enough to evolve. And it’s never too early to take action. Once you have your retirement goal in mind you can work out the steps that will help you take control of your retirement and enjoy the lifestyle you want.
Footy Finals Fever is here and so is our September Newsletter. The winter chill is slowly retreating and making way for warmer Spring days, perfect for getting out in the garden or enjoying the great outdoors.
This month we discuss buying insurance through your Super, how the Aussie dollar impacts your investments and some out of the ordinary holiday destinations to spark the travel bug.
It’s widely acknowledged that scammers are becoming increasingly adept. Given the constantly evolving nature of this domain, scammers are ceaselessly crafting fresh approaches to separate you from your diligently earned money – and their reach is extensive.
Although one might readily assume “I won’t be targeted,” those who never anticipated falling prey to scams are in fact some of the most susceptible to manipulation. Despite the prevailing notion that elderly individuals are the primary targets, it’s actually Generation X, Millennials, and Generation Z that tend to report higher instances of financial losses due to fraudulent activities compared to seniors.
Here we explore some of the common scams doing the rounds, and what you can do if your finances have been compromised.
