Make today count: #1 I will pay off my debts

Even though your financial strategy should be for the long term, there are things you can do each day to help you achieve your goals sooner. Here’s #1:

If you’re juggling a mortgage and credit cards, plus other debts like a car loan or personal loan, you probably feel like most of your income is being swallowed up by interest payments. But don’t despair: here’s what you can do right now to knock your debt on the head once and for all.

Boost your super before the rules change

Debt Management

On Wednesday 23 November 2016, the Federal Government’s proposed changes to super rules were passed by Parliament. This means that from 1 July 2017, the amount you can put into super each year will be reduced – which could impact your retirement plans. So before the changes happen, it’s a good idea to consider whether you should contribute a bit extra to your super.

Don’t wait for life to happen – Week 5: Retiring

Happy Retirees

Here’s some good news: the average life expectancy for both men and women in Australia is now over 80.5 And while it’s great that many of us can look forward to a long life, it also means we need to plan ahead so our finances will last the distance.

Even if your retirement plan is on track, or you’re already enjoying retirement, it’s worth being prepared in case your circumstances change. For instance, you could be made redundant and have to retire earlier than expected, or you might have to drop down to part-time hours for health reasons. On the flipside, during your retirement years you might take an opportunity to re-enter the workforce for a while.

It’s estimated that a couple needs $640,000 to retire comfortably, while a single person needs around $545,000.6 The smaller your nest egg, the more you’ll need to rely on the Age Pension when you retire, so it’s a good idea to grow your super as much as possible while you’re still working.

Depending on your circumstances, there may be different options for accessing your super in retirement. You could cash it out as a lump sum, set up an account based pension, or buy an annuity that will give you a regular, stable income for life. Your financial adviser can help work out which option is best for you. And if your lifestyle needs change, your financial adviser will be able to adjust your strategy so you can get the most of your finances for many years to come.

5Australian Bureau of Statistics, Life expectancy and deaths hit historic highs, 2015.
6Association of Superannuation Funds of Australia, Retirement standard, February 2016.


Disclaimer: This article has been prepared by Count Financial Limited ABN 19 001 974 625, AFSL 227232, (Count) a wholly-owned, non-guaranteed subsidiary of Commonwealth Bank of Australia ABN 48 123 123 124.

Information in this article is based on current regulatory requirements and laws, which may be subject to change. While care has been taken in the preparation of this document, no liability is accepted by Count, its related entities, agents and employees for any loss arising from reliance on this document.

This document contains general advice. It does not take account of your individual objectives, financial situation or needs. You should consider talking to a financial adviser before making a financial decision.

Don’t wait for life to happen – Week 4: Becoming a grandparent

After you’ve worked hard to give your kids the best start in life, what better reward could there be than seeing them have children of their own? As a proud grandparent, you’ll want to make sure the little ones, as well as your own children, are looked after financially when you’re gone — and that’s why estate planning is so important.

With the right financial strategy, you’ll be able to pass your wealth down to future generations. The first step is to create a Will, which specifies how you want your assets to be divided and distributed after you pass away. Having a proper Will can also help avoid disputes between your beneficiaries when the time comes.

Remember, your estate includes most things that you own — so it’s worth taking stock of all your valuable assets, and updating your Will regularly to reflect any changes in your financial or family circumstances. You might also choose to grant Enduring Power of Attorney to a trusted family member, so they can manage your affairs if you become mentally incapacitated.

But there are a few things that aren’t automatically considered part of your estate, such as your super and life insurance. You should consider whether make to make a binding nomination to a beneficiary or beneficiaries including to your estate if you would like those assets to be distributed in accordance with your Will. Some assets you own jointly with someone else may automatically pass to that person upon your death.


Disclaimer: This article has been prepared by Count Financial Limited ABN 19 001 974 625, AFSL 227232, (Count) a wholly-owned, non-guaranteed subsidiary of Commonwealth Bank of Australia ABN 48 123 123 124.

Information in this article is based on current regulatory requirements and laws, which may be subject to change. While care has been taken in the preparation of this document, no liability is accepted by Count, its related entities, agents and employees for any loss arising from reliance on this document.

This document contains general advice. It does not take account of your individual objectives, financial situation or needs. You should consider talking to a financial adviser before making a financial decision.

Government super announcements

Government super announcements

Non-concessional contributions cap: 500K lifetime cap replaced by new annual cap

The Government has announced that the 2016-17 Federal Budget proposal to introduce a lifetime non-concessional cap of $500,000 will not go ahead. In its place, the Government has proposed the introduction of an annual non-concessional contributions cap of $100,000 per year.

New annual non-concessional cap

From 1 July 2017, the Government has proposed lowering the annual non‑concessional contributions cap from $180,000 to $100,000. In addition, individuals with a balance of more than $1.6 million will no longer be eligible to make non‑concessional contributions.

The bring forward rule where individuals under age 65 are eligible to bring forward 3 years of non‑concessional contributions will still be available.

The $1.6 million threshold will be based on an individual’s balance as at 30 June of the previous year. Individuals with balances close to $1.6 million will only be able to bring forward the annual cap amount for the number of years that would take their balance to $1.6 million.

Transitional arrangements will apply. Where the non-concessional bring forward has been triggered but not fully used before 1 July 2017, the remaining bring forward amount will be reassessed on 1 July 2017 to reflect the new annual caps.  It may, therefore, be beneficial to take advantage of the $540,000 non-concessional cap this financial year as it will be reduced from next financial year.

Other proposed changes

In the Government’s media release, it was also announced that they will not proceed with the proposal to remove the work test requirement for contributions for those aged 65 to 74.  Individuals between 65 and 74 will be eligible to make annual non-concessional contributions of $100,000 if they meet the work test, but will not be able to access the bring-forward provision.

In addition, the commencement date of the proposed catch-up concessional superannuation contributions will be deferred by 12 months to 1 July 2018.

Contact us to find out how this may affect you.

REQUEST A CALL BACK


Disclaimer: This article has been prepared by Count Financial Limited ABN 19 001 974 625, AFSL 227232, (Count) a wholly-owned, non-guaranteed subsidiary of Commonwealth Bank of Australia ABN 48 123 123 124.

Information in this article is based on current regulatory requirements and laws, which may be subject to change. While care has been taken in the preparation of this document, no liability is accepted by Count, its related entities, agents and employees for any loss arising from reliance on this document.

This document contains general advice. It does not take account of your individual objectives, financial situation or needs. You should consider talking to a financial adviser before making a financial decision.

Take charge of your Retirement Journey – Part 2

Whether you’re already retired, planning to retire next year or in 20 years, knowing the kind of lifestyle you want in retirement and having a sound financial plan in place will help make your retirement dreams a reality – Part 2

 

Last year ASFA also launched a new Retirement Standard for older retirees, Spending patterns of older retirees: New ASFA Retirement Standard,4 designed to provide a picture of how spending requirements change as people enter their late 80s and early 90s, again benchmarking both a ‘comfortable’ or ‘modest’ lifestyle. Perhaps spending more on health care and support including medical costs while spending less on leisurely activities. This information can help those who have already retired plan for later years and budget accordingly.

Funds required per year for a ‘comfortable’ retirement lifestyle for older retirees:

Single – $38,460 per year
Couple – $59,937 per year

Funds required per year for a ‘modest’ retirement lifestyle for older retirees:

Single – $23,062 per year
Couple – $34,257 per year

It’s also important to discuss with your financial adviser how you can plan for aged care costs, should you eventually need it. According to ASFA5, the probability of requiring aged care is high – the likelihood that a female aged 65 will enter permanent residential aged care in her lifetime is 54% and for a male this is 37%.

This means aged care planning is an important part of your retirement plan, so no matter how near or far, or even if you don’t think you will need it, talking to your financial adviser about it now can help you be financially prepared for whatever the future may hold.

When can you access funds for your retirement?

Currently you must be at least 65 to be eligible for the Government Age Pension, but from 1 July 2017 the qualifying age will increase by six months. It will continue to increase by six months every two years until 1 July 2023, when the qualifying age will be 67. The ‘preservation age’, or the age at which you can access your super, ranges from 55 to 60, depending on when you were born. Accessing your super when you retire, assumes you have reached the reservation age or some other condition of release. If you are not permanently retired then you may still be able to access part of your super under a transition to retirement pension.

Whether you’re working or not, once you’re over 65 you can access your super.

What does retirement look like for Australians?

The Australian Bureau of Statistics (ABS) Retirement and Retirement Intentions, Australia6 (July 2012 to June 2013) says the average age for recent retirees, or those that had retired in the five years prior, was 63.3 years for men and 59.6 years for women.

The main reasons for retirement, the ABS report says, were ‘reached retirement age/eligible for superannuation/pension’ and ‘sickness, injury or disability’.

Of the 4.7 million people in the workforce and over the age of 45, 3.7 million people unsurprisingly said they intend to retire sometime in the future. Far more interesting is the fact that 605,400 people said they never intend to retire, and 385,500 did not know whether they intend to retire.

Around 40% of full-time workers said they intend to work part-time before retirement, to phase in the retirement lifestyle. And 54% of this group said they intend to change to a different line of work during their transition to retirement.

Finally, of the people intending to retire, the ABS states:

  • 17% intend to retire at 70 or older
  • 49% intend to retire between 65 and 69
  • 25% intend to retire between 60 and 64
  • 9% intend to retire between 45 and 59.

This makes the average age of intended retirement 63.4 years. More importantly, the figures indicate the broad range of options available. No longer is a full-time worker offered a gold watch and shown the door at a certain age. There are many choices around retirement, particularly for those that have achieved their financial goals.

If you haven’t already, when will you retire?

The figures from the ASFA Retirement Standard assume retiree age of 65. If you plan to leave work five years earlier, that is five more years of income you’ll require. But if you’re one of the 17% of full-time workers that plans to stay in the workplace until you’re 70 or older, the opposite is true.

Putting a date on your retirement, whether it is likely to change or not, is important in terms of planning. Knowing your time left in the job market helps you to figure out your risk profile and investment mix. And knowledge of the number of years you’re likely to be retired for helps you to understand how much you’ll need in retirement. Being in control of your retirement timeline and familiar with all of the relevant facts means you’re able to make changes along the way, and can be confident in the end result. But you don’t need to do it on your own.

A financial adviser will continue to walk you through your retirement planning process – whether it’s near, far or you are already enjoying it. Your financial adviser can recommend the financial strategies that can assist you in reaching your retirement goals, such as salary sacrificing, concessional and non-concessional contributions, transition to retirement, spouse contributions and also help you with aged care planning.

Starting to take charge and plan now can only help your retirement plans.

 


2 The Association of Superannuation Funds of Australia, ASFA Retirement Standard, September 2015.

3 The Association of Superannuation Funds of Australia, Spending patterns of older retirees: New ASFA Retirement Standard, September 2015.

4 Ibid.

5 ASFA 2015 Media release: 26 November 2015, Superannuation well placed to play a role in health and aged care funding and advice: ASFA.

6 Creative Commons license – http://www.abs.gov.au/ausstats/abs@.nsf/Latestproducts/6238.0Main%20Features3July%202012%20to%20June%202013?opendocument&tabname=Summary&prodno=6238.0&issue=July%202012%20to%20June%202013&num=&view


Disclaimer: This article has been prepared by Count Financial Limited ABN 19 001 974 625, AFSL 227232, (Count) a wholly-owned, non-guaranteed subsidiary of Commonwealth Bank of Australia ABN 48 123 123 124.

Information in this article is based on current regulatory requirements and laws, which may be subject to change. While care has been taken in the preparation of this document, no liability is accepted by Count, its related entities, agents and employees for any loss arising from reliance on this document.

This document contains general advice. It does not take account of your individual objectives, financial situation or needs. You should consider talking to a financial adviser before making a financial decision.

Take charge of your Retirement Journey – Part 1

Happy Retirees

Whether you’re already retired, planning to retire next year or in 20 years, knowing the kind of lifestyle you want in retirement and having a sound financial plan in place will help make your retirement dreams a reality.

 

When will you retire? How long will you spend in retirement? How much money will you need in retirement? What will your retirement lifestyle look like? If you’re already retired, what should your budget look like and what will you need to plan for as you get older? Your financial adviser can also assist with the complexities of aged care and help you select the preferred option for your individual situation. Answering these questions now can give you real peace of mind, and lead to a satisfying, fulfilling and financially secure retirement.

Retirement lifestyles – which one suits you?

Beer or bubbly? Caviar or chips? Harbour front mansion or sea-change shack? We all have different hopes, dreams and lifestyle requirements. Defining yours is an important step in planning your retirement. In order to help define how much you’ll need to spend each year in retirement, now or in the future, the Association of Superannuation Funds Australia (ASFA) releases an updated Retirement Standard 2 every quarter. This Retirement Standard benchmarks how much, in today’s dollars, retired singles and couples aged around 70 need to spend each year to enjoy what ASFA define as either a ‘comfortable’ or ‘modest’ retirement lifestyle described using everyday indicators.

A ‘comfortable’ retirement is defined by ASFA as enabling an older, healthy retiree to be involved in a broad range of leisure activities and to have a good standard of living through the purchase of such things as: household goods, private health insurance, a reasonable car, good clothes, a range of electronic equipment, and domestic and occasionally international holiday travel.

Funds required per year for a ‘comfortable’ retirement lifestyle:

Single – $42,962 per year
Couple – $58,915 per year

A ‘modest’ retirement is defined by ASFA as better than the Age Pension, but still only able to afford fairly basic activities such as one or two short breaks in Australia closer to where you live, infrequently eating out at cheaper restaurants, owning an older car, buying reasonable clothes, haircuts at basic salons, infrequent paid leisure activities and private health cover but with little money left over for home repairs.

Funds required per year for a ‘modest’ retirement lifestyle:

Single – $23,695 per year
Couple – $34,090 per year

Age Pension only:

Includes day trips in your own city, only inexpensive takeaway meals, no car, basic clothes, less frequent haircuts, very low-cost leisure activities, less heating in winter, no private health insurance and no budget for home repairs.

Single – $22,666 per year
Couple – $34,169 per year

Of course, you may prefer more than a ‘comfortable’ lifestyle. But these ASFA figures provide excellent starting points for understanding the potential costs of living in retirement.

Planning for later years of retirement

Australians are living longer and spending more time in retirement than ever before. An increasing number of Australians will live to age 90 and beyond.3  This may bring a new set of challenges to retirement, which can mean it’s even more important to have a plan in place.

NEXT: Take charge of your Retirement Journey – Part 2


2 The Association of Superannuation Funds of Australia, ASFA Retirement Standard, September 2015.

3 The Association of Superannuation Funds of Australia, Spending patterns of older retirees: New ASFA Retirement Standard, September 2015.


Disclaimer: This article has been prepared by Count Financial Limited ABN 19 001 974 625, AFSL 227232, (Count) a wholly-owned, non-guaranteed subsidiary of Commonwealth Bank of Australia ABN 48 123 123 124.

Information in this article is based on current regulatory requirements and laws, which may be subject to change. While care has been taken in the preparation of this document, no liability is accepted by Count, its related entities, agents and employees for any loss arising from reliance on this document.

This document contains general advice. It does not take account of your individual objectives, financial situation or needs. You should consider talking to a financial adviser before making a financial decision.