New Laws on Accepting Credit Card Payments
From 1 October 2026, Australian businesses will no longer be able to add surcharges for debit, credit or prepaid card payments.
For customers, this will feel like welcome news. No one enjoys seeing an extra fee added at the checkout.
For business owners, however, the cost of accepting card payments does not disappear. It becomes another operating expense that must be absorbed, managed or built into pricing.
At The Hrkac Group, we are already speaking with clients about what this change means for pricing, profitability and cash flow, particularly for businesses where most customers choose to pay by card.
What is changing?
Currently, many businesses pass on the merchant fee charged by their payment provider.
From 1 October 2026, these surcharges will no longer be permitted for EFTPOS, debit card, credit card and prepaid card transactions.
The cost of processing those payments remains however, so instead, it becomes another business expense.
Are card surcharges really “hidden fees”?
Recent announcements have referred to card surcharges as “hidden fees”. For many small businesses, that description is frustrating.
In reality, many businesses have displayed card surcharges clearly for years. Customers were given the choice of paying by cash or card, and those choosing card simply paid the cost charged by the payment provider.
This change doesn’t remove merchant fees. It simply changes who pays them.
Ultimately, the cost of electronic payments still needs to be funded.
What could this mean for your business?
If your business processes hundreds or thousands of card transactions each month, merchant fees can add up quickly.
Although each transaction may only cost around 1% to 2%, the annual impact can be significant. Depending on turnover and payment volumes, this could represent thousands, or even tens of thousands, of dollars in additional expenses.
Businesses with lower profit margins may find they need to:
- Review their pricing
- Improve operational efficiency
- Reduce unnecessary expenses
- Reassess their payment systems
- Budget for higher operating costs
For many businesses, modest price increases across products or services may become necessary to maintain profitability.
Before increasing your prices
If you are considering increasing prices to cover merchant fees, use this as an opportunity to review the bigger picture.
Ask yourself:
- Are your current prices still aligned with rising business costs?
- Are you using the most suitable payment provider?
- Could negotiating your merchant rates reduce costs?
- Are there opportunities to improve cash flow elsewhere?
The cheapest payment provider isn’t always the best option.
Some systems provide valuable features such as customer management, reporting, automation and business integrations that may justify a slightly higher processing fee. The key is understanding the total value, rather than simply chasing the lowest percentage.
Every transaction matters
Another area worth reviewing is how payments are collected.
For example, businesses that split customer payments into deposits and final balances may unintentionally pay multiple transaction fees on the same sale, depending on their payment provider’s fee structure. Across hundreds of transactions each year, these costs can become significant.
Small adjustments to your payment processes can often improve profitability without affecting the customer experience.
Now is the time to review your business
This legislative change is a timely reminder that operating costs continue to evolve.
Rather than reacting once October arrives, now is an ideal time to review:
- Pricing strategies
- Cash flow forecasts
- Merchant service costs
- Business profitability
- Budgeting for the year ahead
Planning ahead gives you more options and helps avoid rushed decisions later.
How The Hrkac Group can help
Whether you are a sole trader, growing business or established company, understanding the financial impact of these changes is essential.
Our team can help you assess how the removal of card surcharges may affect your business, review your pricing strategy, forecast cash flow and identify practical ways to protect profitability.
If you would like to discuss how these changes could impact your business, contact The Hrkac Group today. Together, we can help you plan ahead with confidence.
For further reference:
- https://www.victorianchamber.com.au/news/credit-card-surcharges-to-be-abolished-in-australia
- https://www.accc.gov.au/consumers/pricing/card-surcharges
- https://www.rba.gov.au/payments-and-infrastructure/review-of-retail-payments-regulation/2026-03/conclusions-paper/faqs/
General Advice Warning
This information has been provided as general advice. We have not considered your financial circumstances, needs, or objectives. You should consider the appropriateness of the advice. You should obtain and consider the relevant Product Disclosure Statement (PDS) and seek the assistance of an authorised financial adviser before making any decision regarding any products or strategies mentioned in this communication. Whilst all care has been taken in the preparation of this material, it is based on our understanding of current regulatory requirements and laws at the publication date. As these laws are subject to change you should talk to an authorised adviser for the most up-to-date information. No warranty is given in respect of the information provided and accordingly neither nor its related entities, employees, or representatives accepts responsibility for any loss suffered by any person arising from reliance on this information.
Back in March, we discussed how global events could affect Australian businesses, particularly through rising fuel prices, shipping disruptions and pressure on cash flow.
Several months later, those challenges haven’t disappeared. While markets have experienced periods of stability, renewed tensions involving Iran and ongoing uncertainty surrounding global energy supplies and shipping routes continue to create volatility for businesses worldwide. Analysts continue to point to energy prices, freight costs and inflation as key risks if disruptions persist.
For businesses across Geelong and beyond, the biggest challenge isn’t predicting what will happen next. It’s making sure your business is financially prepared for whatever comes next.
Why global events still matter locally
When international events dominate the headlines, it’s easy to assume they only affect large corporations or global markets.
In reality, many local businesses feel the effects surprisingly quickly.
Potential impacts include:
- Higher fuel costs
- Increased freight and transport expenses
- Longer supplier lead times
- Rising operating costs
- Delayed customer payments
- Greater uncertainty around future pricing
For many businesses, these pressures don’t arrive all at once. They gradually place strain on day-to-day cash flow, making it harder to invest, grow or confidently plan ahead.
Cash flow remains one of the biggest risks
One of the biggest lessons from the past few years is that profitable businesses can still experience cash flow pressure.
Many businesses continue to absorb higher supplier costs while waiting 30, 60 or even 90 days for invoices to be paid.
When combined with fluctuating interest rates, changing consumer spending and ongoing global uncertainty, this timing gap can quickly become challenging.
Working with an experienced business accountant Geelong businesses trust can help identify potential cash flow issues before they become larger problems.
Planning gives you more options
While no one can control global events, businesses can control how prepared they are.
Now is a good time to review:
- Cash flow forecasts
- Available finance facilities
- Working capital requirements
- Business budgets
- Upcoming tax obligations
- Investment and expansion plans
Small adjustments made today can often prevent larger financial pressures later.
Whether you’re reviewing your tax position with a tax accountant Geelong businesses rely on or planning future growth, proactive financial management is becoming increasingly important.
Don’t overlook opportunities
Periods of uncertainty don’t only create challenges.
They can also create opportunities for businesses that are financially prepared.
Businesses with healthy cash flow and flexible finance arrangements are often in a stronger position to:
- Invest in equipment
- Purchase stock strategically
- Expand into new markets
- Employ additional staff
- Acquire competitors or assets
Preparation allows businesses to respond confidently rather than react under pressure.
A whole-of-business approach
At The Hrkac Group, we understand that business decisions are rarely made in isolation.
Our integrated team works across accounting, taxation, financial planning, mortgage broking and SMSF advice, allowing us to help clients consider the bigger financial picture.
Whether you need professional accounting services Geelong businesses depend on, guidance from an experienced SMSF accountant Geelong clients trust, or support with finance and cash flow planning, our team can help you make informed decisions with confidence.
Looking ahead
Global events will continue to influence the Australian economy, whether through energy prices, supply chains, inflation or business confidence. While nobody can predict exactly what will happen next, having the right financial strategy in place can help you navigate changing conditions with greater certainty.
If you’d like to review your business cash flow, financing arrangements or overall financial strategy, speak with The Hrkac Group’s team of Accountants, Lenders, and Financial Planners. A proactive conversation today could help put your business in a stronger position for whatever the months ahead may bring. Contact us via email or phone (03) 5224 2366.
If you missed our earlier article explaining how global events first began affecting Australian businesses, you can read it here.
General Advice Warning
This information has been provided as general advice. We have not considered your financial circumstances, needs, or objectives. You should consider the appropriateness of the advice. You should obtain and consider the relevant Product Disclosure Statement (PDS) and seek the assistance of an authorised financial adviser before making any decision regarding any products or strategies mentioned in this communication. Whilst all care has been taken in the preparation of this material, it is based on our understanding of current regulatory requirements and laws at the publication date. As these laws are subject to change you should talk to an authorised adviser for the most up-to-date information. No warranty is given in respect of the information provided and accordingly neither nor its related entities, employees, or representatives accepts responsibility for any loss suffered by any person arising from reliance on this information.
$18.9 Billion in Lost Super: Could Some of It Be Yours?
Australians are being urged to check their superannuation accounts after the Australian Taxation Office (ATO) revealed that the total amount of lost and unclaimed super has surged to $18.9 billion, up $1.1 billion since 2024. This staggering figure highlights the importance of staying on top of your super to ensure you’re not missing out on money that could significantly boost your retirement savings.
What Is Lost Super?
Lost super refers to money held in superannuation accounts that have become inactive or disconnected from their owners. This can happen when people change jobs, move house, change their name, or forget to update their contact details with their super fund. In some cases, individuals may have multiple super accounts and not realise they’re paying fees on each, which can erode their savings over time.
Who Might Have Lost Super?
Anyone who has ever worked in Australia and received super contributions could have lost or unclaimed super. You don’t need to be currently employed to have super sitting in an account somewhere. If you’ve changed jobs, moved overseas, or haven’t consolidated your accounts, it’s worth checking.
How to Check for Lost Super
The easiest way to check is through your myGov account:
- Log in to myGov and ensure it’s linked to the ATO.
- Navigate to the Super section to view all your super accounts.
- You’ll be able to see any lost or unclaimed super and take steps to consolidate it.
If you don’t yet have a myGov account, you can visit the ATO website for instructions on how to create one and link it to the ATO.
How to Recover Lost Super
Once you’ve identified lost super, you can:
- Consolidate your accounts by transferring funds into your preferred super fund. This can usually be done directly through myGov.
- If you’re aged 65 or older, or the amount is less than $200, you may be eligible to have it paid directly to you.
- Keep your contact details up to date with both your super fund and the ATO to prevent future loss.
Why It Matters
Even small amounts of lost super can make a big difference over time, especially when compounded with investment returns. Recovering and consolidating your super can reduce fees, simplify your finances, and help you make better decisions for your retirement.
Take Action Today
With billions of dollars sitting unclaimed, now is the time to do a quick super health check. It’s free, easy, and could uncover money you didn’t know you had. Visit ato.gov.au to learn more and take control of your super. Alternatively, ask your financial adviser to check for lost super on your behalf.
If you don’t have a financial adviser, the Geelong team of financial advisers at The Hrkac Group are happy to meet with you. As part of their service to you, they can check for lost super on your behalf and assist with tailored retirement planning strategies and investment advice Geelong clients can trust.
Get in touch today if you’d like assistance locating lost super, or if you feel it may be time to review or adjust your retirement plans and investment strategies. Our team can help provide guidance tailored to your financial goals and future plans.
The content within this blog has been sourced from our Licensee, Alliance Wealth’s blog ‘Realise Your Dream’.
General Advice Warning
This information has been provided as general advice. We have not considered your financial circumstances, needs, or objectives. You should consider the appropriateness of the advice. You should obtain and consider the relevant Product Disclosure Statement (PDS) and seek the assistance of an authorised financial adviser before making any decision regarding any products or strategies mentioned in this communication. Whilst all care has been taken in the preparation of this material, it is based on our understanding of current regulatory requirements and laws at the publication date. As these laws are subject to change you should talk to an authorised adviser for the most up-to-date information. No warranty is given in respect of the information provided and accordingly neither nor its related entities, employees, or representatives accepts responsibility for any loss suffered by any person arising from reliance on this information.
Retirement planning in Geelong: Do you really need $1 million in super to retire comfortably?
When it comes to retirement planning in Geelong, one of the most common questions we hear is whether you really need $1 million in superannuation to retire comfortably. It’s a figure often repeated in the media, but for many Australians planning their future with a financial planner in Geelong, it can create unnecessary pressure.
The reality is that retirement planning in Geelong is far more personal than a single number. Let’s break down the facts and look at what a comfortable retirement in Australia really involves, and how clear financial advice in Geelong can help you plan with confidence.
The $1 Million Super Myth
The idea that $1 million is the magic number for retirement is widespread, but it doesn’t reflect how most Australians actually retire.
Research shows that 94 percent of Australians who retired in the past five years did so with less than $1 million in superannuation.
Many retirees live comfortably with lower balances, particularly when they own their home and are eligible for the Age Pension. This is where thoughtful retirement planning, supported by local Geelong financial advisers, can help you make the most of what you already have, rather than chasing an unrealistic figure.
What Does a “Comfortable” Retirement Really Mean?
To help define what “comfortable” means, the Association of Superannuation Funds of Australia (ASFA) publishes its Retirement Standard. As of June 2025, ASFA estimates that a comfortable retirement lifestyle requires an annual income of approximately:
• $53,289 for singles
This level of income allows for everyday living expenses, leisure activities, domestic and occasional international travel, private health insurance and a reliable car.
Based on these assumptions, ASFA suggests super balances at retirement age (67) of:
• $595,000 for singles
These figures assume you own your home and receive a part Age Pension, and they sit well below the often-quoted $1 million mark. For many people, this provides reassurance that retirement planning in Geelong is more achievable than they may have thought.
The Role of the Age Pension in Retirement Planning Geelong
The Age Pension remains a crucial part of retirement income for many Australians. Around two-thirds of people aged 65 and over receive some form of government support.
When combined with superannuation and other assets, the Age Pension can significantly reduce the amount of super you need to maintain a comfortable lifestyle. Research from Super Consumers Australia suggests that:
- A single homeowner may only need around $310,000 in super
- A couple may need around $420,000, assuming they receive the Age Pension
This highlights why personalised financial advice is so important. At the Hrkac Group, financial planners’ in Geelong can help you understand how superannuation, government support and other investments work together as part of a broader wealth planning strategy.
Retirement Planning in Geelong Is Personal
There is no one-size-fits-all approach to retirement.
Some people want to travel regularly or pursue hobbies, while others value time with family, community involvement or a quieter pace of life. These lifestyle choices have a significant impact on how much income you will need in retirement.
Other key factors include:
- Whether you own your home
- Your health and life expectancy
- Your spending habits
- Your existing investments and assets
This is where professional retirement planning and wealth management in Geelong can make a real difference. A clear, tailored plan helps ensure your finances support the life you want to live.
So, Do You Really Need $1 Million in Super?
For most Australians, the answer is no.
While having more super can provide greater flexibility and peace of mind, many people retire with less than $1 million and still enjoy a financially comfortable retirement. The key is thoughtful planning, realistic expectations and understanding how all parts of your financial position fit together.
Rather than focusing on a single number, effective retirement planning looks at income, lifestyle and long-term sustainability.
How The Hrkac Group Supports Retirement Planning in Geelong
The Hrkac Group provides financial planning and wealth management services for individuals, families and business owners across Geelong and surrounding regions.
Our financial advisers work alongside accountants and mortgage brokers under one roof, allowing us to take a holistic view of your financial position. Whether you are reviewing your superannuation, planning for retirement or seeking long-term financial advice, our team helps you plan with confidence and clarity.
Final Thoughts
Instead of fixating on a million-dollar super balance, focus on building a retirement plan that reflects your personal circumstances and goals.
Online calculators can be helpful, but personalised financial advice ensures your strategy remains realistic, flexible and aligned with your future plans. Retirement is about more than money, it’s about living well, with purpose and peace of mind.
If you are considering retirement planning, our team is here to help.
Book an appointment with one of our Financial Planing Advisers today or call our Geelong office.
For all General and Accounting enquiries, phone (03) 5224 2366
For all Financial Advisory enquiries, phone (03) 5221 2355
FAQs
How much super do I really need to retire comfortably in Australia?
The amount of super you need depends on your lifestyle, whether you own your home and your eligibility for the Age Pension. Many Australians retire comfortably with less than $1 million, especially with good retirement planning advice.
Is $1 million in super realistic for most Australians?
For most people, reaching $1 million in super is not necessary. A financial planner can help you understand what is realistic based on your income, savings and retirement goals.
How does the Age Pension affect retirement planning?
The Age Pension can significantly supplement your retirement income. Understanding how it interacts with your superannuation is an important part of retirement planning in Australia.
Should I speak to a financial adviser before retiring?
Yes. A financial adviser can help you assess your super, investments and retirement income options, ensuring your plan is tailored to your circumstances and future needs.
The content within this blog has been sourced and adapted from, Alliance Wealth’s blog ‘Realise Your Dream’.
General Advice Warning
This information has been provided as general advice. We have not considered your financial circumstances, needs, or objectives. You should consider the appropriateness of the advice. You should obtain and consider the relevant Product Disclosure Statement (PDS) and seek the assistance of an authorised financial adviser before making any decision regarding any products or strategies mentioned in this communication. Whilst all care has been taken in the preparation of this material, it is based on our understanding of current regulatory requirements and laws at the publication date. As these laws are subject to change you should talk to an authorised adviser for the most up-to-date information. No warranty is given in respect of the information provided and accordingly neither nor its related entities, employees, or representatives accepts responsibility for any loss suffered by any person arising from reliance on this information.
From 20 September 2025, the Australian Government will increase the deeming rates used to calculate income from financial assets for Centrelink and DVA income-support payments.
This is the first change in five years, and it could affect how much Age Pension, Disability Support Pension, or Veteran Payment you receive. If you’re unsure what this means for your personal situation, The Hrkac Group’s Financial Planning Advisers can help you understand and prepare for these changes. Here’s what the new Centrelink deeming rates mean for pensioners, retirees, and veterans, and how The Hrkac Group can help.
What Are Centrelink Deeming Rates?
Deeming rates are used by Centrelink and the Department of Veterans’ Affairs (DVA) to estimate how much income you earn from financial assets like bank accounts, shares, and superannuation. Instead of looking at your actual earnings, the government assumes a set rate of return.
From 20 September:
- The lower deeming rate will rise from 0.25% to 0.75%.
- The upper deeming rate will rise from 2.25% to 2.75%.
These rates apply to:
- Singles: First $64,200 of financial assets at the lower rate; anything above at the upper rate.
- Couples: First $106,200 combined at the lower rate; anything above at the upper rate.
Who Will Be Affected?
About 460,000 Age Pensioners and thousands more on DVA and other income support payments will be impacted. If you’re receiving a part pension and have financial assets, your deemed income will increase, which could reduce your pension or other income support payment.
For example:
The new deeming rates mean your deemed income will be higher, so your pension may reduce sooner than before. However, the government is also increasing pension rates through indexation, which may offset some of the impact.
The new deeming rates mean your deemed income will be higher, so your pension may reduce sooner than before. However, the government is also increasing pension rates through indexation, which may offset some of the impact.
Selling Your Home? You May Get an Exemption
If you sell your principal home and plan to buy, build, or renovate a new one, the sale proceeds can be exempt from the assets test for up to 24 months.
During this time:
- You’ll still be assessed as a homeowner.
- The exempt funds will be deemed at the lower rate only (0.75 % from 20 September).
This exemption helps retirees who are downsizing or relocating avoid losing their pension while they transition to a new home.
What You Can Do
How The Hrkac Group Can Help
Navigating Centrelink rules and pension thresholds can be complex. Our experienced Financial Planning Team
can:
- Review your assets and income to assess potential impacts.
- Advise on strategies to minimise reductions to your payments.
- Support you with Centrelink correspondence and applications.
You don’t have to manage these changes alone,
book an appointment with one of our Geelong Financial Planing Advisers today to ensure you’re making informed financial decisions.
The content within this blog has been sourced from our Licensee, Alliance Wealth’s blog ‘Realise Your Dream’.
General Advice Warning
This information has been provided as general advice. We have not considered your financial circumstances, needs, or objectives. You should consider the appropriateness of the advice. You should obtain and consider the relevant Product Disclosure Statement (PDS) and seek the assistance of an authorised financial adviser before making any decision regarding any products or strategies mentioned in this communication. Whilst all care has been taken in the preparation of this material, it is based on our understanding of current regulatory requirements and laws at the publication date. As these laws are subject to change you should talk to an authorised adviser for the most up-to-date information. No warranty is given in respect of the information provided and accordingly neither nor its related entities, employees, or representatives accepts responsibility for any loss suffered by any person arising from reliance on this information.
As Donald Trump secures another term as President of the United States, Australia faces a complex array of potential impacts. Trump’s policies and leadership style, characterised by unpredictability and a strong focus on American interests, could influence Australia in several key areas:
Trade and Economy
Trump’s approach to trade, particularly his use of tariffs, could have significant implications for Australia. During his first term, Trump imposed tariffs on various imports to protect American industries. If he implements similar measures again, Australia might need to navigate new trade barriers. Additionally, a potential trade war between the US and China could disrupt global markets, affecting Australia’s economy due to its strong trade ties with both nations.
Australia’s export sectors, such as agriculture and mining, could be particularly vulnerable to any new tariffs or trade restrictions. The US is a significant market for Australian goods, and any changes in trade policy could impact Australian businesses and workers. Furthermore, the uncertainty surrounding global trade policies might lead to market volatility, affecting investment and economic growth in Australia.
Foreign Policy and Security
Australia’s strategic alliance with the US, particularly through the AUKUS partnership, is likely to continue. However, Trump’s foreign policy, especially towards China, could create challenges. His administration’s hawkish stance on China might force Australia to balance its diplomatic relations carefully. Moreover, any shifts in US support for global conflicts, such as the war in Ukraine, could pressure Australia to increase its own contributions.
The Indo-Pacific region, where Australia plays a crucial role, could see heightened tensions under a Trump presidency. Australia’s defence and security policies might need to adapt to a more assertive US stance in the region. This could involve increased military cooperation with the US, as well as greater investment in defence capabilities to ensure regional stability.
Climate Policy
Trump’s stance on climate change, including his intention to withdraw from international agreements like the Paris Accord, contrasts sharply with Australia’s current climate policies. This divergence could strain the bilateral relationship, particularly as Australia seeks to advance its own climate initiatives. Trump’s focus on boosting fossil fuel production may also impact global energy markets, influencing Australia’s energy sector.
Australia’s commitment to reducing carbon emissions and transitioning to renewable energy sources might face challenges if the US under Trump prioritizes fossil fuels. This could affect international climate negotiations and Australia’s ability to meet its climate targets. Additionally, Australian businesses involved in renewable energy might find it harder to compete in a global market influenced by US energy policies.
Diplomatic Relations
Managing diplomatic relations with a Trump administration could be delicate. Australia’s current ambassador to the US, Kevin Rudd, has previously had contentious interactions with Trump, which might complicate diplomatic efforts. Ensuring strong communication and cooperation will be crucial for maintaining a stable and productive relationship.
Australia’s diplomatic strategy may need to focus on finding common ground with the Trump administration on key issues while advocating for its own interests. This could involve leveraging Australia’s role in international organisations and multilateral forums to build alliances and promote its policy objectives.
Conclusion
A Trump presidency presents both challenges and opportunities for Australia. Navigating trade policies, maintaining strategic alliances, addressing climate policy differences, and managing diplomatic relations will require careful and strategic planning. As global dynamics evolve, Australia’s ability to adapt and respond to these changes will be key to sustaining its interests and partnerships on the international stage.
Australia’s response to a Trump presidency will need to be multifaceted, involving economic, diplomatic, and social strategies to ensure that it can effectively manage the impacts and continue to thrive in a changing global environment.
The content within this blog has been sourced from our Licensee, Alliance Wealth’s blog ‘Realise Your Dream’.
General Advice Warning
This information has been provided as general advice. We have not considered your financial circumstances, needs, or objectives. You should consider the appropriateness of the advice. You should obtain and consider the relevant Product Disclosure Statement (PDS) and seek the assistance of an authorised financial adviser before making any decision regarding any products or strategies mentioned in this communication. Whilst all care has been taken in the preparation of this material, it is based on our understanding of current regulatory requirements and laws at the publication date. As these laws are subject to change you should talk to an authorised adviser for the most up-to-date information. No warranty is given in respect of the information provided and accordingly neither nor its related entities, employees, or representatives accepts responsibility for any loss suffered by any person arising from reliance on this information.
When planning for retirement, one of the key considerations is ensuring a steady income stream to support your lifestyle. Annuities can be an effective solution for this. But what exactly is an annuity, and how can it benefit you?
What is an Annuity?
An annuity is a financial product that provides a series of regular payments in exchange for a lump sum investment. These payments can be made for a specified period or for the rest of your life, depending on the type of annuity you choose. Essentially, an annuity converts your superannuation savings or other investments into a predictable income stream.
Types of Annuities
- Fixed Term Annuities: These provide payments for a set period, such as 10 or 20 years. The amount you receive is predetermined and does not change, unless indexed, offering certainty and stability.
- Lifetime Annuities: These provide payments for the rest of your life, regardless of how long you live. This can be particularly beneficial for those concerned about outliving their savings.
- Indexed Annuities: These adjust payments in line with inflation, helping to maintain your purchasing power over time.
- Market Linked Annuities: New types of annuities offer an opportunity to participate in an increased income because of positive investment returns. However, payments may be less predictable than other types of annuities.
- Deferred Annuities: These start payments at a future date, allowing your investment to grow in the meantime.
Benefits of Annuities
- Guaranteed Income: Annuities offer a reliable income stream, which can help cover your living expenses in retirement.
- Peace of Mind: Knowing you have a guaranteed income can reduce financial stress and help you enjoy your retirement.
- Tax Advantages: In Australia, the income from annuities purchased with superannuation money is generally tax-free if you are over 60. Annuities purchased with non-superannuation money can also deliver a favourable tax treatment.
- Social Security: Several types of annuities are very favourably assessed under both the assets and income tests for the Australian age pension.
Considerations
- Inflation Risk: Annuities that do not adjust for inflation can erode your purchasing power over time.
- Fees and Charges: Be aware of any fees associated with purchasing an annuity. These are embedded in the income quoted and can impact your overall returns.
- Flexibility: Annuities are generally less flexible than other investment options, as your money may be locked in once you purchase the product.
Is an Annuity Right for You?
Annuities can be a valuable part of a diversified retirement strategy, providing stability and peace of mind. However, they may not be suitable for everyone. It’s important to consider your individual financial situation, retirement goals, and risk tolerance. Consulting with a financial advisor can help you determine if an annuity is the right choice for you.
The content within this blog has been sourced from our Licensee, Alliance Wealth’s blog ‘Realise Your Dream’.
https://blog.centrepointalliance.com.au/realiseyourdream/what-is-an-annuity
General Advice Warning
This information has been provided as general advice. We have not considered your financial circumstances, needs, or objectives. You should consider the appropriateness of the advice. You should obtain and consider the relevant Product Disclosure Statement (PDS) and seek the assistance of an authorised financial adviser before making any decision regarding any products or strategies mentioned in this communication. Whilst all care has been taken in the preparation of this material, it is based on our understanding of current regulatory requirements and laws at the publication date. As these laws are subject to change you should talk to an authorised adviser for the most up-to-date information. No warranty is given in respect of the information provided and accordingly neither nor its related entities, employees, or representatives accepts responsibility for any loss suffered by any person arising from reliance on this information.
Retirement Planning Geelong
Retirement – A phase many of us daydream about. Whether it involves spending more time with family, travelling the world, or volunteering for a cause we’re passionate about, one thing is certain: retirement costs money.
So, when should you take the plunge into retirement, and how much money is enough to comfortably retire?
What Is the Best Age to Retire?
Ultimately, deciding when to retire is a highly personal choice. However, here are some key considerations:
Average Retirement Age: Of the 140,000 Australians who retired in 2020, the average age was 64.3. Most people still expect to retire in their mid-to-late- 60s.
Financial Factors
Your ability to finance retirement plays a crucial role. Key sources of income for retirees include:
- Government Pension: Currently, the government pension is the primary source of personal income for retirees in Australia.
- Superannuation: Many retirees rely on their superannuation funds or account-based pensions (drawn from their super balance).
- Age Pension: For those born on or after 1 January 1957, the qualifying age for the age pension is 67.
Factors to Consider Before Retiring
- Assets: Evaluate your assets, including home ownership, savings, and investments outside of super.
- Annual Expenses: Understand your annual spending needs.
- Savings: Decide how much you’re willing to dip into your savings.
- Housing: Consider downsizing or selling your house.
- Part-Time Work: Decide if you’ll continue working part-time after retiring.
- Age Pension Entitlements: Keep in mind that earning over a certain amount per fortnight can affect the amount of pension you receive, however, recent changes allow an age pensioner to earn more from working without it affecting their age pension.
But it’s not just about the money
While the financial aspects of retirement are vitally important, it is not the only consideration. In many ways, and perhaps more importantly, the non-financial aspects need to be considered carefully. Ask yourself, and honestly answer the following questions:
How will you spend your time?
A couple of weeks in retirement will just feel like being on holiday, but how will you adjust to every week being like the weekend?
Will you suffer from irrelevance?
When people are working and are part of a workplace structure, they have a certain status that comes with the position they hold. They may be an expert in a particular field. However, in retirement, that status may simply evaporate.
Has your health called “full time”?
For some, the time to retire may be heralded by physical or mental health concerns. Perhaps either the brain or the body is no longer able to cope with the day-to-day pressure of work. Sadly, for some, this may be at a time much earlier than they would have liked.
Caring for others
The current generation of people entering retirement is sometimes referred to as the “sandwich generation”. They become the carers for their grandchildren and their older parents and relatives. While the need to care for others will often be the driver behind people deciding to retire, careful consideration needs to be given to incorporating plenty of time for yourself. You should not swap one full-time job for another (unpaid) full-time job.
Expert advice on Retirement Planning Geelong with the Hrkac Group
While finances and other personal circumstances can dictate the right time to retire, merely retiring because you have reached some arbitrary age dictated by a bureaucrat somewhere in their ivory tower should not be an option. Remember, in Australia, there is generally no mandatory retirement age.
Retire on your terms and when it is best for you. Seek qualified, independent financial advice to tailor your retirement plan to your specific circumstances when thinking about retirement planning Geelong. Remember, there’s no one-size-fits-all approach, but thoughtful planning can help you transition into a fulfilling retirement phase.
Contact us and get in touch and get the professional advice you need today! Call our team of Financial Advisors on (03) 5224 2366 or book your appointment here.
The content within this blog has been sourced from our Licensee, Alliance Wealth’s blog ‘Realise Your Dream’.
https://blog.centrepointalliance.com.au/realiseyourdream/when-is-the-right-time-toretire
General Advice Warning
This information has been provided as general advice. We have not considered your financial circumstances, needs, or objectives. You should consider the appropriateness of the advice. You should obtain and consider the relevant Product Disclosure Statement (PDS) and seek the assistance of an authorised financial adviser before making any decision regarding any products or strategies mentioned in this communication. Whilst all care has been taken in the preparation of this material, it is based on our understanding of current regulatory requirements and laws at the publication date. As these laws are subject to change you should talk to an authorised adviser for the most up-to-date information. No warranty is given in respect of the information provided and accordingly neither nor its related entities, employees, or representatives accepts responsibility for any loss suffered by any person arising from reliance on this information.
Many retirees use their superannuation to commence a pension that pays income at regular intervals. The most common type of pension is an account-based pension. These are also sometimes referred to by their former name – allocated pensions.
Account-based pensions are a very tax-effective way of setting up super to provide a regular flow of income in retirement.
However, like anything to do with super, some hurdles need to be cleared first. This will ensure the efficient and compliant operation of a pension account.
Let’s focus on the amount of income that needs to be drawn each financial year.
For an account-based pension to receive optimal tax treatment, a minimum amount of income needs to be drawn each year. This is based on a formula that varies with age.
When a pension first commences to be paid, and on 1 July each year thereafter, a percentage factor is applied to the balance of the pension account. The result is the minimum income that needs to be paid from the pension account in the coming year.
The following table sets out the current minimum percentages:
Age on 1 July |
Percentage |
| Under 65 | 4% |
| 65 to 74 | 5% |
| 75 to 79 | 6% |
| 80 to 84 | 7% |
| 85 to 89 | 9% |
| 90 to 94 | 11% |
| 95 and over | 14% |
In simple terms, a 72-year-old with a pension account balance of $340,000 on 1 July 2023 needs to draw a minimum income of $17,000 in the 2023-24 financial year.
The maximum income is not capped, except for pension paid under transition to retirement rules where the pension income is capped at a maximum of 10% of the account balance each year.
If a pension commences part way through a financial year (i.e. other than on 1 July) the minimum income that is required to be drawn is pro-rated for the number of days in the financial year the pension is in force.
Taking our earlier example of a 72-year-old, if their pension commenced on 1 September 2023, the minimum income they will need to draw in 2023-24 is $17,000 x 303/365, or $14,112.
As a result of the economic turmoil that accompanied the recent global pandemic, the government reduced the minimum income to be drawn from an account-based pension (and certain other types of superannuation income stream) by 50% for the 2019-20, 2020-21, 2021-22 and 2022-23 financial years. Therefore, during these periods, a person aged between 65 and 74 only needed to draw an income of 2½% of their account balance to satisfy the prescribed minimum.
For any readers that had taken advantage of the lower minimum income requirement for the past 4 financial years, the discount was discontinued from 1 July 2023. Therefore, if you find you are being paid more income from your account-based pension than you need, it would be a good time to speak with a financial planner and discover the options that may be available to you.
By way of example: If you have been receiving income from your pension account of (say) $30,000 and this had been adequate for topping up your income needs, now having to draw an income of $60,000 may be more than needed. One option, particularly for many people under the age of 75, might be to simply re-contribute the excess income back into superannuation as a non-concessional contribution. However, before implementing specific strategies, seek appropriate advice.
Retirement Planning Geelong
Meet with The Hrkac Group Geelong-based Financial Planning team and make an appointment. You can book with us via our booking link, email or phone (03) 5224 2366.
The content within this blog has been sourced from our Licensee, Alliance Wealth’s blog ‘Realise Your Dream’.
https://blog.centrepointalliance.com.au/realiseyourdream/how-much-should-i-draw-from-my-pension
General Advice Warning
This information has been provided as general advice. We have not considered your financial circumstances, needs, or objectives. You should consider the appropriateness of the advice. You should obtain and consider the relevant Product Disclosure Statement (PDS) and seek the assistance of an authorised financial adviser before making any decision regarding any products or strategies mentioned in this communication. Whilst all care has been taken in the preparation of this material, it is based on our understanding of current regulatory requirements and laws at the publication date. As these laws are subject to change you should talk to an authorised adviser for the most up-to-date information. No warranty is given in respect of the information provided and accordingly, neither nor its related entities, employees, or representatives accept responsibility for any loss suffered by any person arising from reliance on this information.
One of the surprising things about superannuation is the lack of engagement people have with it.
It is not until retirement begins to appear on the distant horizon that many start to become more interested in how healthy, or otherwise, their retirement nest egg is looking.
One of the problems that has emerged with super over the years has been the proliferation of individual accounts. It was not uncommon for a person to have several individual accounts. Each time a person changed jobs; a new super fund would be opened. This leads to the duplication of super accounts and with that, the duplication of fees and often, insurance coverage.
However, in recent years the trend for people to have multiple accounts has been trending down. For the most part, has been a good thing.
Superannuation Law Requirements
Recent changes to superannuation laws now require employers to look for existing superannuation accounts before simply paying their new employees’ super to their default fund. In addition, superannuation laws specifically require superannuation funds to identify and consolidate multiple superannuation accounts held by their members. This is referred to as intra-fund consolidation.
The Australian Securities and Investment Commission (ASIC) carried out a survey and found that three out of nine trustees of superannuation funds did not have policies in place to identify members with multiple accounts. ASIC is working with super fund trustees to increase compliance in this area. While the idea of consolidating super and eliminating multiple accounts will be desirable, there will be occasions where having more than one superannuation account is either necessary or desirable. Superannuation benefits will generally comprise a taxable component and a tax-free component.
Estate Planning
When it comes to estate planning, there may be value in making non-concessional contributions, which form part of the tax-free component. This separates accumulation accounts thereby quarantines them from taxable superannuation benefits.
Often superannuation fund membership will include life and total and permanent disablement insurance cover. And, in many instances, this cover has been included without the need for the member to meet any medical requirements.
Therefore, for a superannuation fund member that has multiple superannuation accounts with embedded life insurance cover, and their health makes it unlikely they can obtain insurance either at all, or at an affordable price if they were medically underwritten, holding more than one superannuation account with life insurance attached can be a bonus.
There will be situations when consolidating superannuation accounts cannot be done. Alternatively by doing so would not be in a member’s best interest.
The obligations imposed on superannuation funds to consolidate their members’ multiple accounts into a single superannuation account may be contrary to some of the strategies that have been specifically structured to obtain a particular outcome. With that in mind, it is important to pay attention to any correspondence you receive from your superannuation fund. Remember reinstating a former situation, particularly if intra-fund consolidation has occurred, may be difficult and very time-consuming.
Expert financial advice with The Hrkac Group
Having a financial planner on your team can be worth its weight in gold when navigating the complexities of superannuation. Plan a meeting with our Geelong-based Financial Planning team. Make an appointment today via our booking link, email or phone (03) 5224 2366
The content within this blog has been sourced from our Licensee, Alliance Wealth’s blog ‘Realise Your Dream’.
General Advice Warning
This information has been provided as general advice. We have not considered your financial circumstances, needs, or objectives. You should consider the appropriateness of the advice. You should obtain and consider the relevant Product Disclosure Statement (PDS) and seek the assistance of an authorised financial adviser before making any decision regarding any products or strategies mentioned in this communication. Whilst all care has been taken in the preparation of this material, it is based on our understanding of current regulatory requirements and laws at the publication date. As these laws are subject to change you should talk to an authorised adviser for the most up-to-date information. No warranty is given in respect of the information provided and accordingly neither nor its related entities, employees, or representatives accepts responsibility for any loss suffered by any person arising from reliance on this information.
If you are one of those people that are looking for opportunities to maximise your super and claim a tax deduction along the way, there are strategies that may help.
However, like most things relating to superannuation, there are some conditions attached.
In this blog, I will focus on concessional contributions and the ability many people have to exceed their annual concessional contribution cap without adverse tax consequences.
What is a concessional contribution?
Concessional contributions are those contributions made to a superannuation fund by an employer, on behalf of their employees. Employer contributions include the compulsory 10.5% ‘superannuation guarantee’ contributions, contributions made under a salary sacrifice arrangement, and other discretionary contributions an employer may make.
Personal contributions are also concessional contributions when a tax deduction is claimed for the contribution.
Concessional contributions are treated as taxable income of the superannuation fund to which they are made, meaning they are taxed within the super fund at a rate of 15%. This is sometimes referred to as ‘contributions tax’.
Contribution cap
The current annual cap or limit on concessional contributions is $27,500.
Where concessional contributions exceed this annual cap, an excess concessional contribution arises. Exceeding the cap is something that should generally be avoided. When a contribution exceeds the cap, the excess will be taxed at a person’s marginal tax rate.
But wait, there’s more!
Before 1 July 2018, if a person didn’t fully use their concessional contribution cap in a particular financial year, the unused portion was lost.
From July 2018 this changed.
Subject to meeting certain conditions, a person may now carry forward the unused portion of their concessional contribution cap, which has accrued since 1 July 2018, for up to five years.
However, there is one condition that needs to be satisfied.
To be able to carry forward the unused portion of the concessional contribution cap, a person must have a total superannuation balance of less than $500,000.
Total superannuation balance
The total superannuation balance is the value of all superannuation a person holds, including pension accounts, calculated on the previous 30 June [1].
By way of example, Bertina had a superannuation account with a balance of $58,000 and an account-based pension with a balance of $420,000 on 30 June 2022. Her total superannuation balance is $478,000.
Therefore, she has met the first condition enabling her to carry forward the unused portion of her concessional contribution cap that has accrued since 1 July 2018, to the 2022-23 financial year.
Taking advantage of the carry-forward opportunity
Let’s assume that Bertina is 64 years old and retired. In 2022-23 she sold an investment property that resulted in a capital gain of $100,000 being added to her other assessable income.
Bertina’s concessional contribution cap for 2022-23 is $27,500.
In this circumstance, Bertina could make a personal contribution to superannuation and claim a tax deduction of $27,500 to help offset the tax payable on her income, including her capital gain.
However, if she has any unused concessional contribution cap that has accrued since 1 July 2018, she is able to carry the unused cap forward to 2022-23.
For the sake of this conversation, let’s assume that the unused cap from 1 July 2018 through to 30 June 2022 totals $50,000. Bertina is able to make a personal tax-deductible contribution to superannuation of up to $77,500 in 2022-2023.
This will go a long way towards reducing the tax she might otherwise be paying on her capital gain.
Speaking of tax
When it comes to making superannuation contributions, tax is just one consideration.
As mentioned earlier, tax-deductible superannuation contributions, such as the one Bertina intends to make, are treated as taxable income of the superannuation fund. In this example, the contributions tax that will be deducted from Bertina’s contribution of $77,500 is $11,625.
Before claiming the tax deduction for personal superannuation contributions, Bertina will need to ensure that her personal income tax rate is 15% or more, otherwise, she could end up paying more tax than necessary.
Is there anything else to consider?
People are generally able to make concessional contributions to super if they are under 67 years of age. From 67 through until turning 75, they will need to have met a work test, or be eligible for the work test exemption, to make personal contributions to super.
For those that are employed, carrying forward the unused concessional contribution cap can be useful when looking to make contributions under a salary sacrifice arrangement, or even when topping up concessional contributions by making personal tax-deductible contributions.
Like most things involving superannuation, there are a lot of moving parts – multiple issues to be considered.
When looking to maximise contributions to superannuation we highly recommend you consult with a qualified financial adviser to ensure the strategy is appropriate.
[1] Special rules apply for members of defined benefit superannuation funds and for pensions other than account-based pensions
The content within this blog has been sourced from our Licensee, Alliance Wealth’s blog ‘Realise Your Dream’.
https:// https://blog.centrepointalliance.com.au/realiseyourdream/some-timely-advice-0
General Advice Warning
This information has been provided as general advice. We have not considered your financial circumstances, needs, or objectives. You should consider the appropriateness of the advice. You should obtain and consider the relevant Product Disclosure Statement (PDS) and seek the assistance of an authorised financial adviser before making any decision regarding any products or strategies mentioned in this communication. Whilst all care has been taken in the preparation of this material, it is based on our understanding of current regulatory requirements and laws at the publication date. As these laws are subject to change you should talk to an authorised adviser for the most up-to-date information. No warranty is given in respect of the information provided and accordingly, neither nor its related entities, employees, or representatives accepts responsibility for any loss suffered by any person arising from reliance on this information.
Liability limited by a scheme approved under Professional Standards Legislation.
Back on the 1st of July 2018, a new opportunity arose that allowed older Australians to make contributions to superannuation without meeting the normal age limits and other conditions required for making contributions.
The introduction of “downsizer contributions”, which allows older Australians to contribute up to $300,000 of the sales proceeds of an eligible dwelling to superannuation, has been a real hit.
In the first year of the scheme, approximately $1bn of downsizer contributions were made. But this has increased significantly since then.
In her video address to the SMSF Association National Conference held in early 2022, the (then) Minister for Superannuation, Financial Services, and the Digital Economy, Senator Jane Hume stated that $9.4bn of downsizer contributions have been made.
The ability for older Australians to channel additional money into superannuation has been a winner.
The original purpose behind introducing downsizer contributions was to help address Australia’s housing crisis by encouraging older Australians to downsize their accommodation and move to smaller homes.
Like most things in life, there are conditions attached to making downsizer contributions, including:
- The home must be situated in Australia, not be a caravan, houseboat, or mobile home, and have been owned by a contributor or their spouse for more than 10 years,
- The home must, at least for a part of the time it was owned, have been the contributor’s principal place of residence. That is, the sale must qualify for at least a partial exemption from the capital gains tax,
- The contribution is made to superannuation within 90 days of receiving the sale proceeds,
- A written election notice is given to the superannuation fund, no later than when the contribution is made, informing the superannuation fund the contribution is a downsizer contribution,
- A downsizer contribution has not previously been made, and
- The contributor was aged 55 or over at the time of making their contribution.
The maximum downsizer contribution is $300,000 per person. Therefore, a couple could jointly contribute up to $600,000 of the sale proceeds of their home to superannuation.
When first introduced in July 2018, a person had to be aged 65 or older to be able to make a downsizer contribution.
From 1 July 2022, the minimum age was reduced to 60.
Legislation that sees the minimum age further reduced to 55 received Royal Assent on 12 December 2022, with the reduced age limit taking effect from 1 January 2023.
The opportunity to contribute up to $300,000 of the sale proceeds of a family home to superannuation is very attractive.
With a reduction in the qualifying age limit to 55, we will see more Australians having the opportunity to bolster their retirement savings.
However, even though the age limit for making downsizer contributions has been reduced, the other conditions remain in place.
If planning to sell your family home and contribute surplus proceeds to superannuation, it is important to understand the conditions that need to be met for a downsizer contribution to be eligible.
In addition, for those receiving an income support benefit from the Government, including an age pension, be mindful that selling your family home and spending less on replacement accommodation, whether making a downsizer contribution or not, may result in a reduction of your income support benefit.
When considering downsizing, and potentially making additional contributions to superannuation it is important to seek appropriate financial advice before proceeding.
