June Newsletter 2024

 

The end of the financial year is fast approaching and Winter has officially arrived, which will see some head to warmer climates, and others embracing the cold on the snowfields. A slight increase in the Consumer Price Index has delayed expectations for interest rate cuts, impacting share prices and causing the Aussie dollar to fall from its mid-month peak.

With the financial year drawing to a close, it’s the perfect time to review your finances and set the stage for a successful new financial year. In the June edition of our Newsletter, we’ll explore essential tasks for a smooth transition to the new financial year, the trend of loud budgeting for sharing financial goals, and the balance between current living and future planning. Have a read here

How much will I need to retire?

 

One of the most common questions we get asked is “How much will I need to retire?”.  This is the question from someone who is focused on their capital values, whereas we concentrate on income.  Our answer is usually “How much does life cost you?”.  How much do you need to spend to do all the things you want to do?  The answer is different for everyone.  There is no standard figure when working with individual clients and there are many other factors that influence how much people spend on their lifestyle.  The Association of Superannuation Funds in Australia (ASFA) have completed research on the average amount people spend depending on the type of retirement they would like, and the following information is based on this.

 

Living your best life in retirement

If you’re nearing retirement age, it’s likely you’re wondering if you will have enough saved to give up work and take it easy, particularly as cost-of-living increases hit some of the basic expenses such as energy, insurance, food, and health costs.

Fortunately, someone has already worked out what you might need.

The Association of Superannuation Funds in Australia (ASFA) updates its Retirement Standard every year, which provides a breakdown of expenses for two types of lifestyles: modest and comfortable. i

Based on our average life expectancy – for women it is just over 85 years and men 81 – if you are about to retire at say age 67, you will have between 14 and 18 years in retirement, on average and depending on your gender. ii

ASFA finds that a couple needs $46,944 a year to live a modest lifestyle and $72,148 to live a comfortable lifestyle. That’s equal to $902 a week and $1387 respectively. The figure is of course lower for a single person – $32,666 for a modest lifestyle ($628 a week) or $51,278 ($986) for a comfortable lifestyle. iii

What does that add up to? ASFA estimates that, for a modest lifestyle, a single person or a couple would need savings of $100,000 at retirement age, while for a modest lifestyle, a couple would need at least $690,000. iv

A modest lifestyle means being able to afford everyday expenses such as basic health insurance, communication, clothing, and household goods but not going overboard. The difference between a modest and a comfortable lifestyle can be significant. For example, there is no room in a modest budget to update a kitchen or a bathroom; similarly overseas holidays are not an option.

The rule of thumb for a comfortable retirement is an estimated 70 per cent of your current annual income. v (The reason you need less is that you no longer need to commute to work and you don’t need to buy work clothes.)

 

Building your nest egg

So how can you build up a sufficient nest egg to provide for a good life in retirement? There are three main sources: superannuation, pension, and investments/savings. Superannuation has the key advantage that the money in your pension is tax free in retirement.

Your superannuation pension can be augmented with the government’s Aged Pension either from the moment you retire or later when your original nest egg diminishes.

Your income and assets will be taken into account if you apply for the Age Pension but even if you receive a pension from your super fund, you may still be eligible for a part Age Pension. You may also be eligible for rent assistance and a Health Care Card, which provides concessions on medicines. vi

 

Money keeps growing

It’s also important to remember that the amount you accumulate up to retirement will still be generating an income, whether its rentals from investment properties or merely the growth in the value of your share investments and the accumulation of money from any dividends paid.

You can also continue to add to your superannuation by, for instance, selling your family home and downsizing, as long as you have lived in the home for more than 10 years.

If you are single, $300,000 can go into your super when you downsize and $600,000 if you are a couple. This figure is independent of any other superannuation caps. vii

Planning for a good life in retirement often require just that – planning. If you would like to discuss how retirement will work for you, then give us a call. Please don’t just sit with the majority, and look into your own personal circumstances, goals and objectives.  One of our advisers will be able be able to assist to show you what your retirement could look like.

 

Retirement Standard – Association of Superannuation Funds of Australia
ii Life expectancy, 2020 – 2022 | Australian Bureau of Statistics (abs.gov.au)
iii https://www.superannuation.asn.au/media-release/retiree-budgets-continue-to-face-significant-cost-pressures
iv https://www.superannuation.asn.au/resources/retirement-standard/
https://www.gesb.wa.gov.au/members/retirement/how-retirement-works/cost-of-living-in-retirement
vi Assets test for Age Pension – Age Pension – Services Australia
vii Downsizer super contributions | Australian Taxation Office (ato.gov.au)

May Newsletter 2024

 

As winter sets in, discussions around the 2024-25 Federal Budget intensify, with a focus on finding balance between alleviating cost of living pressures without fueling inflation. Consumer spending remains subdued, reflected in a 0.4% decline in retail sales in March amid a 3.6% annual increase in the Consumer Price Index, particularly impacting education, health, housing, and food prices. Market activity reflects anticipation of interest rate hikes in both Australia and the US, with the S&P/ASX 200 down 2.5% for April, while the Australian dollar shows resilience against a strengthening US dollar, influenced partly by the weakening Japanese yen.

Read more in our May Newsletter here

Finance Quiz with Quizmaster Ash

 

Are you ready to put your financial knowledge to the test? Our office Quizmaster Ash has put together a set of questions designed to sharpen your skills and expand your money-minded prowess.

Here at Income Solutions we are all about empowering our clients with the tools and knowledge they need to make informed financial decisions. So buckle up, grab a pen and put your knowledge to the test! (answers at the bottom)

 

1.What is the primary purpose of the Super Guarantee (SG) in Australia?

a) To provide government welfare benefits

b) To mandate employer contributions to employees’ super funds

c) To offer tax breaks on personal savings

d) To subsidize healthcare expenses

 

2. What type of life insurance pays out a lump sum benefit to the policyholder’s beneficiaries upon their death?

a) Term life insurance

b) Whole life insurance

c) Trauma insurance

d) Income protection insurance

 

3. What is the term used to describe an investment strategy that aims to mimic the performance of a specific market index?

a) Active investing

b) Speculative investing

c) Passive investing

d) Growth investing

 

4. Which of the following documents allows individuals to specify their wishes regarding the distribution of their assets after death?

a) Superannuation beneficiary nomination form

b) Tax return

c) Last will and testament

d) Investment portfolio summary

 

5. What age are individuals in Australia typically eligible to access their superannuation funds?

a) 55 years old

b) 60 years old

c) 65 years old

d) Preservation age, which varies depending on date of birth

 

Thanks for playing along, stay tuned for more quizzes with Quizmaster Ash!

 

 

 

Answers:

  1. b) To mandate employer contributions to employees super funds
  2. a) Term life insurance
  3. c) Passive investing
  4. c) Last will and testament
  5. d) Preservation age, which varies depending on date of birth

 

Income Solutions Geelong No 2 Pty Ltd, ACN 644 550 078 T/A Income Solutions is a Corporate Authorised Representative of Personal Financial Services Limited ABN 26 098 725 145, AFSL 234459
The advice in this post is of a general nature only and has not been tailored to your personal circumstances. Please seek personal advice prior to acting on this information.

April Newsletter 2024

 

As April begins and we return to work after Easter, we hope you enjoyed a peaceful and rejuvenating holiday weekend.
 
Our latest newsletter brings a round-up of market movements for the past month, a summary of the new increased super contribution caps and a few tips on boosting your IQ for later in life.
 
Have a read here

Podcasts to help boost your financial literacy

 

Personal finance is the management of your income, expenses, savings, investments, and debt. It affects every aspect of your life, from your lifestyle choices to your mental health.

In this article, we’ll explore how you can build your knowledge around various aspects of personal finance. Here’s a handy list of some great financial podcasts you can listen to on the go to help boost your financial literacy.

A round-up of some of the top financial podcasts of 2023:

MONEY MANAGEMENT

The Australian Finance Podcast  covers the basics of money, investing, and financial independence in Australia. Hosts Owen Rask and Kate Campbell share their insights, tips, and stories.

The Money Puzzle hosted by journalist David Taylor, explores the complex world of money and economics, featuring interviews with experts, policymakers, as well as ordinary Australians.

INVESTING

Australia Investors Podcast hosted by Owen Rask, reveals the lessons, insights, and challenges some of Australia’s most successful investors and entrepreneurs have faced along their investing journeys.

Equity Mates Investing aims to break down the barriers and jargon of investing. Hosts Bryce and Alec chat with experts, fund managers, and industry leaders to learn the basics of investing, discover new opportunities, and hear inspiring stories.

REAL ESTATE

The Property Couch is hosted by Bryce Holdaway and Ben Kingsley, two of Australia’s leading property experts. This show teaches you how to invest in property and avoid making costly mistakes.

Property Investment, Success & Money hosted by Michael Yardney it features interviews with successful property investors, entrepreneurs, and thought leaders. Michael Yardney is considered one of Australia’s most trusted property advisers.

FOR WOMEN 

She’s on the Money empowers women to take control of their finances and achieve their goals. Hosted by Victoria Devine, a millennial money expert and award-winning financial adviser.

Girls That Invest hosted by Sonia and Taylor, two young women who are passionate about investing, inspires and educates women to start investing.

FOR YOUNG ADULTS AND MILLENNIALS

This is Money (formerly My Millennial Money) helps millennials make smart money decisions and have fun along the way. Hosted by Glen James, John Pidgeon, and Jess Knaus.

How to Money is hosted by Matt and Joel, two best friends who love saving, investing, and spending wisely. This podcast features practical advice, reviews, and valuable money lessons.

These podcasts are a great starting point to increase your financial knowledge. When you’re ready to take the next step, we can help you put some actionable plans in place to build your wealth and safeguard your future. Give us a call on (03) 5229 0577 or get in touch through our website here.

 

Any advice is general in nature only and has been prepared without considering your needs, objectives or financial situation. Before acting on it, you should consider its appropriateness for you, having regard to those factors. Before making any decision about whether to acquire a financial product, you should obtain the Product Disclosure Statement.

Income Solutions Geelong No 2 Pty Ltd, ACN 644 550 078 T/A Income Solutions is a Corporate Authorised Representative of Personal Financial Services Limited ABN 26 098 725 145, AFSL 234459.

ReferenceTAL

March Newsletter 2024

 

After a summer of extreme weather in Australia, Autumn’s cooler climate is anticipated. Economic indicators vary, with inflation at a two-year low suggesting a potential rate cut, while retail sales show mixed results and the Australian dollar remains weak despite a slight increase in share prices influenced by global market events.

In this months newsletter we discuss the impact of the proposed tax on superannuation balances over $3 million, and it’s implications for investment strategy and end-of-financial-year contributions. We also talk about the importance of insurance and how it can serve as a tool to address broader risks in life. And last but not least we look at mankind’s long history of trying to stop the clock and reverse the effects of aging from Cleopatra’s donkey milk baths to Ponce de Leon’s search for the fountain of youth.

Read more here

Investing mistakes to avoid

 

Achieving success in investing and improving your investment portfolio often hinges on minimizing errors rather than solely focusing on identifying the ‘next big thing’.

The key lies in adopting a composed and thoughtful strategy, steering clear of blindly following trends or relying on popular advice.

Let’s explore some common investment pitfalls and examine the fundamental principles essential for building a resilient and prosperous portfolio.

Read more here

Roses are red, Violets are blue. It’s so romantic, talking money with you.

 

Money can be a contentious topic in any relationship. Yet, its significance cannot be understated. Among the myriad of issues that couples navigate, financial matters often rank high in terms of importance and potential conflict. Despite its sensitivity, discussing finances openly and honestly with your partner is not only crucial but can also strengthen the bond between you. Let’s delve into why this conversation is so essential.

 

  1. Establishing Trust and Transparency:

Open communication about finances builds trust and transparency within a relationship. Sharing details about income, debts, savings, and financial goals demonstrates a willingness to be vulnerable and honest with your partner. It lays the foundation for a strong and secure partnership where both parties feel valued and respected.

 

  1. Aligning Goals and Priorities:

Money touches every aspect of our lives, from daily expenses to long-term aspirations. By discussing finances, couples can ensure that they are on the same page regarding their goals and priorities. Whether it’s saving for a house, planning for retirement, or budgeting for vacations, having these conversations allows partners to align their visions for the future and work together towards common objectives.

 

  1. Resolving Conflicts and Reducing Stress:

Financial disagreements are a leading cause of relationship stress and conflict. However, avoiding these discussions only exacerbates the problem. By addressing financial issues head-on, couples can identify potential sources of tension and work towards mutually beneficial solutions. Whether it’s creating a budget, renegotiating spending habits, or seeking professional advice, proactive communication can alleviate stress and prevent conflicts from escalating.

 

  1. Building a Strong Financial Foundation:

Successful financial planning requires teamwork. When couples openly discuss their finances, they can leverage each other’s strengths and expertise to build a strong financial foundation. Whether one partner is more knowledgeable about investments or budgeting, pooling resources and working together allows couples to make informed decisions that benefit both parties in the long run.

 

  1. Navigating Life’s Transitions:

Life is full of unexpected twists and turns, many of which have financial implications. Whether it’s job loss, illness, or a new addition to the family, discussing finances prepares couples to navigate these transitions together. By planning for contingencies and having open conversations about financial priorities, couples can weather life’s storms with greater resilience and unity.

 

  1. Cultivating Intimacy and Connection:

While discussing finances may seem mundane, it can actually deepen intimacy and connection within a relationship. Sharing financial goals, dreams, and fears fosters a sense of intimacy and understanding between partners. It requires vulnerability and trust, which are essential components of any healthy relationship.

 

  1. Strengthening Commitment:

Finally, discussing finances reaffirms a couple’s commitment to each other and their shared future. It signals a willingness to face challenges together and work towards common goals. By openly discussing finances, couples demonstrate their commitment to building a strong and enduring partnership built on trust, communication, and mutual support.

 

In conclusion, discussing finances with your partner is not just about money—it’s about building a strong and resilient relationship. By fostering trust, aligning goals, resolving conflicts, and cultivating intimacy, couples can navigate the complexities of financial management together. So, don’t shy away from these conversations. Embrace them as an opportunity to strengthen your bond and lay the groundwork for a secure and prosperous future together.

 

If you are ready to discuss your financial future get in contact with one of our Advisers today by giving us a call on (03) 5229 0577.

 

The advice on this site is of a general nature only and has not been tailored to your personal circumstances. Please seek personal advice prior to acting on this information.

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