IFA Awards for Excellence – August 2014

Retirement Planning Perth

Mastering Retirement Planning in Perth: Your Roadmap to Financial Freedom

At Life Financial Planners, we understand that your retirement journey is a significant milestone and requires careful evaluation of your financial readiness. As you prepare to embark on this new chapter, it’s important to assess your current financial standing and plan carefully to ensure a smooth transition into retirement. Our experienced team at LIFE Financial Planners is here to guide you through these essential steps, covering key aspects such as healthcare, well-being, lifestyle, and legacy planning.

Assessing Your Financial Readiness – Retirement Savings and Investments

Before you retire, the most essential step is to evaluate your financial readiness. This involves assessing both your retirement savings and investments to determine if they align with where you envision your retirement goals. At Life Financial Planners, our expert advisers can work with you to conduct a comprehensive review of your financial position, considering factors such as risk tolerance, investment performance, and retirement income projections. We will work with you to develop a tailored retirement strategy that maximises your savings and minimises financial risks.

Understanding Centrelink Age Pension Benefits

For many Australians, Centrelink Age Pension benefits form a significant part of their retirement income. Navigating the complexities of pension and social security benefits can be daunting, but you don’t have to do it alone. Our team at Life Financial Planners has extensive knowledge and expertise in this area and can help you understand your entitlements and optimise your benefits for retirement. Ensuring you maximise your entitlements and plan for any potential changes in government policies.

Healthcare and Well-being in Retirement

As you plan for retirement, it’s essential to consider your healthcare needs and overall well-being. This includes planning for healthcare costs and maintaining your physical and mental health throughout retirement.

Planning for Healthcare Costs

Healthcare costs can be a significant expense in retirement, especially as you age and may require more medical care. Our advisers can assist you in estimating your healthcare expenses and exploring options for healthcare coverage, such as private health insurance and Medicare, developing strategies to cover these costs effectively. By planning ahead, you can ensure you have the resources to cover medical expenses and maintain your quality of life in retirement.

Maintaining Physical and Mental Health

Retirement is about more than just financial preparation; it’s also about maintaining physical and mental well-being. Our comprehensive approach to retirement planning includes considerations for your health and happiness, ensuring you can enjoy a fulfilling and active lifestyle.

Lifestyle and Legacy Planning

Defining Retirement Goals and Aspirations

Your retirement should be a time to pursue your passions, interests, and dreams to the fullest. Whether travelling the world, spending time with family or pursuing hobbies, our team will work closely with you to define your retirement goals and aspirations. By understanding your vision for retirement, we can tailor a plan that aligns smoothest with your dreams.

Creating a Legacy and Estate Plan

Planning for the future also involves considering your legacy and estate. Our advisers can help you create a comprehensive estate plan that ensures your assets are distributed according to your wishes and minimises tax implications for your beneficiaries. With our guidance, you can leave a lasting legacy for your loved ones and ensure your wishes are carried out effectively.

Plan your Retirement in Perth Successfully: Partner with a Perth Financial Planner

Financial planning assistance can make a significant difference in helping your Retirement planning. Whether you are on the brink of retirement or just beginning to contemplate it, having a solid financial strategy in place can provide you with clarity and confidence about your future.

Here at Life Financial Planners, we stand by your side, dedicated to empowering your retirement planning journey. With our experienced planners, we are equipped to guide you through navigating your retirement investments, ensuring a smooth transition process, and implementing invaluable strategies tailored to support your unique retirement lifestyle.

If you are eager to delve into discussions about your financial future and craft a retirement plan that aligns with your goals, don’t hesitate to contact Marijana or Mei at our West Perth office by dialling 08 9322 1882. We are committed to helping you understand all aspects of retirement planning and creating a tailored plan that works seamlessly for you.

Government changes affecting pensioners

Government Changes to Employment Paper in 2024

In a significant move to encourage workforce participation among pensioners, the Australian government has introduced changes outlined in its new employment white paper that may affect you. Two key amendments, the permanent increase of the work bonus and the doubling of the nil rate period, are set to provide pensioners with enhanced flexibility and reduced concerns about losing income support while returning to work. 

  1. Permanent Increase of Work Bonus:

The government’s employment white paper introduces a permanent increase in the work bonus, allowing you to retain more of your pension while employed. Effective January 1, pending parliamentary approval, if you’re a new pensioner, you’ll start with a work bonus income bank balance of $4,000, compared to the previous $0. Pre-existing and new recipients will maintain an elevated maximum work bonus balance limit of $11,800, up from $7,800. 

  1. Doubling of Nil Rate Period:

The nil rate period, applicable to income support recipients, will be extended from six to 12 fortnights. This extension grants any recipient twice the amount of time to receive income from employment before facing a potential loss of government support. The change aims to alleviate concerns about the temporary nature of work and aims to encourage you to take up short-term employment without fearing immediate consequences. 

  1. Removal of Disincentives and Smoother Transitions:

These changes are intended to provide you with more confidence should you choose to re-enter the workforce before completely retiring. With an increased work bonus and a longer grace period, stepping back into the workforce is now a much smoother process. Removing the stress factor of losing perks or reapplying for support if your short-term opportunity doesn’t pan out. 

How it affects your retirement plan: 

Extended Work Opportunities 

  • The permanent increase in the work bonus allows you to retain more of your pension while engaged in employment—an additional financial incentive for you to consider working for a more extended period before retirement. 
  • The doubling of the nil rate period provides a longer window for income support recipients to receive income from employment without losing government support. It may be worth exploring part-time or short-term work opportunities if you’re nearing retirement. 

Flexible Retirement Transition: 

  • A smoother transition into retirement means you can feel more flexibility in chasing short-term work without immediate concerns about the loss of concessions or the need to reapply for support if the work arrangement doesn’t continue. 

Budgeting for Retirement: 

  • The extended work opportunities may influence decisions about the timing of your retirement and the amount of income to be generated through employment before fully retiring.

Potential Impact on Superannuation: 

  • While the changes primarily focus on pensioners and income support recipients, it’s important to note that if you currently have a superannuation account, you may be affected. Extended work periods could impact the timing and amount of superannuation contributions, affecting the overall retirement savings. 

Adaptation of Retirement Plans: 

  • If you are in the pre-retirement phase, you may need to adapt your retirement plans to consider the new opportunities and challenges presented by the changes. Factors such as part-time employment, continued skill development, and the evolving nature of the workforce may become more integral to retirement planning. 

With these changes, the Australian government is proactively addressing challenges related to workforce participation. With additional financial incentives and extended support periods, there is comfort in knowing that there is a long-term commitment to creating a supportive environment for any pensioners considering or returning to work, a positive step in the right direction for the future economic resilience of our country. 

If you’re unsure of any information shared, interested in how your retirement plan may be affected or have any general queries about retiring, contact us at (08) 9322 1882 / admin@lifefinancialplanners.com or visit our office located in West Perth. We’re ready to help you navigate your path to retirement. 

Retirement

Newest Australian Retirement Trends, Reflect Longer Work Lives.

The Australian Bureau of Statistics (ABS) has recently revealed data about a notable shift in retirement patterns for Australians. A large source of the findings relates to the upward trajectory in retirement age, especially for women, and how more Australians are choosing to stay in the workforce longer than ever before. Let’s delve into the key findings shaping the landscape of retirement in Australia. 

  1. A rise in Average Retirement Age:

The ABS data for 2020 indicates a significant change in the average age of retirement, which has increased by a year to 56.3 years. In the larger picture, this is signalling a shift in trend. Australians are opting for extended careers before embracing retirement. 

  1. Women’s Prolonged Workforce Participation:

A noteworthy aspect of this trend is the substantial increase in the average retirement age for women. From 2018 to 2020, women are now retiring at the age of 54, up from 52. This is a clear departure from traditional retirement age norms and reflects the growing trend of women staying actively engaged in the workforce. 

  1. Men’s Retirement Age Dynamics:

While the average retirement age for men decreased slightly from 59.5 years in 2018 to 59.3, the overall trend suggests a complex interplay of factors influencing retirement decisions among men. 

  1. Changing Perspectives on Retirement:

The conventional notion of retirement at 65 is transforming, with the average Australian intending to retire at that age. However, this intention contrasts with the actual retirement age, reflecting a desire among many to continue working beyond traditional retirement benchmarks. 

  1. Pension and Partner’s Income:

The ABS data underscores the pension’s continued significance as a primary income source for retirees. Interestingly, 34% of retired women rely on their partner’s income, emphasising the importance of financial independence for women in retirement. 

What does this mean for your retirement plan? 

The changing retirement landscape in Australia has several implications for if you are considering retirement or in the process of planning for retirement. Here are some key takeaways: 

  1. Extended Work-Life Expectancy:

If you are planning for retirement, there is a larger consideration of the potential for an extended work life. The consequences of this may involve reevaluating your retirement savings goals, investment strategies, and the anticipated duration of post-retirement financial support. 

  1. Redefining Retirement Age:

There is more common flexibility in the sentiment of retirement. The conventional retirement age of 65 is evolving, and it’s okay to opt for a later retirement based on personal preferences, health, and financial considerations. Your retirement plan should be flexible to accommodate any personal changes and preferences. 

  1. Gender-Specific Considerations:

Superannuation Planning for Women: The increase in the retirement age for women highlights the importance of tailored superannuation planning. Initiatives such as contributing to super during paid parental leave can enhance financial security for women in retirement. 

  1. Health and Wellbeing in Retirement:

With a trend toward longer work lives, you can feel less pressure to leave the workforce entirely, instead opting to work part-time or engage in fulfilling activities post-retirement. Retirement plans should not only focus on financial aspects but also consider health, well-being, and opportunities for continued personal growth. 

  1. Pension and Income Sources:

Diverse Income Streams: As the pension remains a significant income source, retirees should assess their eligibility and plan for a mix of income streams. Diversification can include pensions, personal savings, and potentially continued part-time employment. 

  1. Regular Review of Retirement Plans:

Given the evolving retirement landscape, individuals should regularly assess and adapt their retirement plans. This includes reassessing financial goals, adjusting investment portfolios, and staying informed about changes in superannuation policies. 

As Australia witnesses a larger cultural shift in retirement culture, the data presented by the ABS paints a better picture of the state of our evolving work-life patterns. If you have questions about how this may affect you or wish to discuss your retirement plan, contact us at (08) 9322 1882, email admin@lifefinancialplanners.com or visit our contact page. We’re ready to help you navigate your path to retirement. 

 

Family Celebrating Stress-Free Retirement made possible by self managed super fund

A Guide to Self Managed Super Funds

A Guide to Self Managed Super Funds

A one-size-fits-all approach rarely applies to retirement, and understanding, if a Self-Managed Super Fund (SMSF) is the right choice for you, depends on your individual circumstances, needs and wants for the future. In this guide, we take a look into the world of Self-Managed Super Funds (SMSFs), sharing how they work while our experienced Financial Planners in Perth provide clear and supportive insights to help you plan a retirement that works for you. 

Understanding SMSFs: A Clear Distinction:

A Self-Managed Super Fund (SMSF) distinguishes itself as a private fund, allowing you to take the reins of your retirement destiny. It stands apart from industry and retail super funds, providing you with the freedom to shape your investment strategy and make choices aligned with your unique aspirations. 

Benefits of SMSFs:  

Choice and Freedom: SMSFs empower you with a broader spectrum of investment options, allowing you to venture into assets like real property, art, and collectibles. The flexibility to borrow for property investment further expands your horizons. 

Control Over Your Destiny: As a member-trustee, you hold the strings to your retirement investments both during your working years and when you decide to retire. This level of control extends beyond the offerings of traditional super funds. 

Tax Benefits: Enjoy reduced tax rates on investment returns within SMSFs, capped at a maximum of 15%. Post the age of 60, you can enjoy the tax-free status of your received payments, providing a valuable financial advantage. 

Scalability: The ability to bring together up to six members enhances your capacity to access investment opportunities that may elude individual investors. This scale may also contribute to keeping fees at bay, potentially amplifying your investment growth. 

Estate Planning Flexibility: SMSFs offer a unique advantage in estate planning, allowing for flexible distribution of death benefits in accordance with the trust deed and super law. 

Considerations on the SMSF Journey:  

Responsibility:

Autonomy of power requires significant responsibility. Managing an SMSF is a meticulous process to ensure you are in accord with regulatory compliance, with penalties for non-compliance ranging from fines to potential legal proceedings. 

Expertise:

SMSFs are complex, and it is best to rely on someone to help you navigate both financial and investment expertise. Trustees must stay abreast of market changes, ensure a diversified portfolio, and remain vigilant to legislative updates. 

Time Commitment:

The administration and management of an SMSF demand time and dedication. While the workload is substantial, many find a sense of purpose and involvement in running their own fund. 

Insurance Costs:

It is essential to be aware that SMSFs may entail higher insurance costs compared to public super funds, which negotiate bulk premiums with insurance providers. 

Outsourcing Options:

Recognising the demands, trustees can consider outsourcing management to professionals such as investment managers or financial advisers.  

Minimum Amount Consideration:

While there is no rigid minimum for setting up an SMSF, costs can escalate based on the fund’s complexity, structure, and associated fees. 

Frequently Asked Questions:  

Can I Borrow for Property Investment?

Indeed, SMSFs can leverage Limited Recourse Borrowing Arrangements for property investment, unlocking a pathway to diversified portfolios. 

Penalties for Non-Compliance:

Understanding the potential consequences of non-compliance is crucial, ranging from the loss of concessional tax treatment to fines and legal ramifications. 

Suitability of SMSFs:

SMSFs are not a one-size-fits-all solution. Determining their suitability requires carefully assessing individual circumstances, financial goals, and investment knowledge. Seeking advice from a financial adviser is a prudent step. 

Crafting a fulfilling retirement involves understanding the nuances, committing to the responsibilities, and seeking the guidance of qualified financial planners in Perth who are dedicated to finding the most appropriate retirement strategy for you. Remember, planning the route to retirement is as unique as you are. With informed decision-making and thoughtful planning, your SMSF can become a powerful asset driving you towards the retirement you deserve. 

Your SMSF Journey Starts Here

While they are vastly rising in popularity, SMSFs are still complicated to implement and maintain, requiring the right planning and expertise. Our team of  SPAA Accredited SMSF Specialist Advisers will bring a wealth of experience and skill to ensure that your SMSF requirements are met and upheld from inception to finalisation. For more information, contact us via phone 08 9322 1882 or email admin@lifefinancialplanners.com 

How Much Money Do I Need to Retire?

Embarking on the path to retirement is no simple task—it requires thought, planning, and a guided understanding of the many options and strategies available to you. At Life Financial Planners, based in Perth, we recognize that everyone’s journey to retirement is unique. With decades of financial expertise, our team has put together an introductory guide to plan your retirement. Our experts are ready to answer your questions by phone, email, or in person at our West Perth office.

How Much Money Do I Need to Retire?

Discover the key components shaping your retirement fund as we explore living expenses, healthcare, and lifestyle choices. Uncover crucial insights and tips to confidently determine the magic number for a secure and prosperous retirement. Join us on this financial journey towards a stress-free and well-prepared retirement.

Before answering how much money do you need to retire, we need to have a look at these few factors. These factors play vital role in understanding how much you need when you retire.

Understand Your Ideal Retirement Lifestyle:

Retirement isn’t a one-size-fits-all concept; it’s a bespoke experience crafted around your unique aspirations. While general guidelines suggest aiming for approximately 67% of your current annual income to maintain your lifestyle in retirement, the specifics depend on the dreams you harbour for this new chapter.

Modest, Comfortable, or Age Pension: Deciphering the Differences:

Distinguishing between a modest and comfortable retirement lifestyle involves understanding the financial nuances. ASFA’s Retirement Standard provides valuable insights, suggesting that a couple aspiring to a comfortable lifestyle will require $70,806 annually, while those aiming for modest living should budget $45,946. Your retirement budget should align with your priorities and aspirations, whether it’s travel, hobbies, or maintaining a certain standard of living.

Your minimum lifestyle requirement

Evaluate your current spending habits to identify your ‘minimum lifestyle requirements.’ Consider factors like from everyday costs to potential mortgage or rent payments during retirement. Understanding your minimum lifestyle requirements lays the foundation for a strategic and sustainable retirement plan.

Your Retirement Timeline:

The journey to retirement isn’t just about reaching a financial goal; it’s also about when you embark on this new phase of life—the correlation between your retirement timeline and your financial landscape. The earlier you start saving, the more you can maximise your resources, shaping a retirement that aligns with your dreams.

Your Current Lifestyle:

Retirement offers an opportunity to reassess your current lifestyle. While it’s essential to maintain your lifestyle if affordable and enjoyable, this phase allows for a meaningful shake-up. Reflect on spending choices, prioritise what truly matters, and use your newfound freedom to focus on meaningful experiences and relationships.

Living on Less Income After Retirement:

Understanding why you can live on 33% less income in retirement involves factors like mortgage payoff, senior discounts, tax-free income from super, and eligibility for the Age Pension. While personal wealth and choices play a role, for the majority of Australians, these figures hold true, allowing for a comfortable retirement on a reduced income.

Handle Inflation Impact:

Inflation’s impact on retirement savings can be significant. To combat its effects, consider holding a diversified portfolio, including equities, real estate investments, or international bonds. A professional retirement planner can assist in devising a strategy to navigate inflation’s challenges effectively.

How Much Super Is Enough to Retire:

Guidelines like the Two-Thirds Rule suggest aiming for around two-thirds of your current income annually to maintain your lifestyle in retirement. ASFA estimates a couple needing $690,000 in their super fund for a comfortable retirement at age 67. Tailor your retirement savings target using super projection calculators and consider various variables like homeownership, marital status, and desired lifestyle.

How to Spend Your Retirement Funds:

Implement a sustainable withdrawal strategy to ensure your retirement funds last. Explore methods like fixed percentage withdrawals, the 4% rule, fixed dollar withdrawals, bucket strategies, market-based approaches, and custom approaches tailored to your portfolio, goals, and personal circumstances.

Funding Your Retirement: Strategies for Financial Freedom:

We explore various avenues to fund your retirement nest egg. From superannuation, investments, and assets to the age pension, this section provides a holistic view of the financial tools at your disposal.

Securing a Fulfilling Retirement with Life Financial Planners:

With a commitment to ensuring your retirement is not just financially secure but profoundly fulfilling, Life Financial Planners in Perth is dedicated to helping you retire in the best financial position possible. Contact our ASFL licensed, independent planners today.

If you have questions or wish to discuss your retirement plan, contact us at (08) 9322 1882, email admin@lifefinancialplanners.com or visit our contact page. We’re ready to help you navigate your path to retirement.