CASE STUDY: Retirees

CASE STUDY: Retirees

John & Jane were within years of retirement when we first met. Although there weren’t many years left to retirement age, there were a number of strategies available to assist them in meeting their retirement objectives.

We identified their primary goals were to live a very comfortable lifestyle in retirement, including extensive travel. They wanted to do a substantial renovation on their home, they loved where they lived but the house was now dated. They wanted to ensure they had adequate income whilst they moved into and through retirement, as well as ensuring that their remaining assets when paid to their Estate would be as tax effective as possible. A full analysis of their financial position was undertaken.

Extensive financial modelling was prepared as a guide to show how long their savings may last through retirement. It indicated a sizeable portion would remain and most likely be passed to their children. After discussion, it was decided a recontribution strategy would be implemented to minimise any tax payable by their future estate.

They owned 2 properties, one of which was an investment property. We identified that the investment property fell within the Small Business Capital Gains Exemption criteria and they were able to move that property to super via an SMSF and qualify for a stamp duty transfer exemption as well as an exemption on the capital gains.

As the clients approached the age at which they thought they would retire, they wanted to continue working part time so an income stream was established to supplement their income needs. Working part time allowed them to ease into retirement, take on more Grandparent duties and start to travel the world whilst they remained fit and healthy.

Whilst they continued to work, their retirement savings were further boosted with salary sacrifice contributions which reduced their personal tax positions. Excess cashflow was also redirected back into super to build their future nest egg.

Once retired, John and Jane were able to sell the property in pension phase. Their retirement savings were further boosted by not having to pay capital gains tax on the sale of the property.

Many long discussions were held regarding what their retirement plans looked like. Financial modelling can only be a guide to determine how long assets may last, any additional expenses along the way that are not planned can significantly change or reduce how long savings may last. In line with our more conservative approach, we discussed the importance of factoring in as many desired expenses or wrapping an annual budget around these and ensuring they remained mindful of their general lifestyle budget.

The pension income streams eventually replaced their entire employment income when the time came for full retirement and this was adjusted a number of times along the way as they settled in.

Now well into ticking off items on their bucket list, they have been able to stay on track in their spending whilst enjoying all the fruits of their labour. As more flexibility was factored into their spending, they have also been able to set up investment bonds to gift the grandchildren for their 21st birthdays.

Our clients were happy to take a holistic approach and allow a full assessment of their personal and financial position. This allowed us to provide recommendations on every area of advice.

We continue to work with John and Jane through their retirement journey via our Ongoing Administration Service. This is an important part of the advice process so we can ensure that their objectives continue to be met.