When is the best time to retire?
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.
The content within this blog has been sourced from our Licensee, Alliance Wealth’s blog ‘Realise Your Dream’.
https://blog.centrepointalliance.com.au/realiseyourdream/a-downsizer-update
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.
Did you know?
By 1895 each Australian State had introduced its own inheritance (estate) tax. This tax was also often referred to as “death duties”.
Federal estate tax was introduced in 1914 but was abolished 65 years later, in 1979.
The States have also abolished their inheritance taxes, starting with Queensland in 1978. By 1982, all States had abolished their state-based death duties.
Death Duties today
While it is true Australia no longer has an inheritance tax or death duties in the strict sense of the word, there are some taxes that may become payable on a person’s death.
Capital gains tax
While death itself will generally not trigger a liability to pay capital gains tax, when certain assets are sold by a person’s estate or by beneficiaries that inherit those assets, the disposal may result in capital gains tax becoming payable.
The rules governing capital gains tax are complex and will depend on the nature of the assets (e.g. shares, investment properties, former main residence). In some circumstances, the sale of an asset may be exempt from capital gains tax (such as the sale of a former main residence that is sold within two years of death).
When dealing with a deceased estate, guidance from a suitably qualified accountant or tax agent is recommended to ensure liability for tax is managed appropriately.
Superannuation
Another significant area of inheritance tax “by stealth” is a deceased person’s superannuation benefits.
Superannuation held by a person at the time of their death may include benefits in the accumulation phase, the pension phase, or a combination of both.
Superannuation benefits may be minimal – perhaps a few thousand dollars or they may be significant – potentially hundreds of thousands or even millions of dollars.
When a member of a superannuation fund passes away, their superannuation savings must be cashed “as soon as practicable” following death. While “as soon as practicable” is not specifically defined in legislation, it is generally expected superannuation death benefit should be paid within six months of a person’s death. However, this may not always be possible, particularly where a dispute occurs, there is difficulty in locating potential beneficiaries, or where superannuation assets cannot be readily sold.
Superannuation death benefits can be cashed in two ways:
- Payment of a pension to certain eligible beneficiaries – generally to a surviving spouse; and/or
- Payment of a lump sum to nominated beneficiaries or to the estate of the deceased.
Superannuation law imposes restrictions on the classes of beneficiaries that can receive a death benefit directly from a superannuation fund, either in the form of a pension paid on the death of a member or as a lump sum. Often superannuation funds will pay a member’s death benefit to their legal personal representative to be dealt with as part of their estate.
Death benefits are also not just governed by superannuation law. They are also impacted by taxation law.
A superannuation death benefit paid as a lump sum is tax-free when paid to a “dependant” (as defined in tax law). Where the death benefit is paid to the estate of the deceased, a “look through” is applied to determine who the eventual beneficiary of the superannuation death benefit will be. If the ultimate beneficiary is a “tax dependant”, the benefit is tax-free.
A tax dependant includes:
- The spouse, or former spouse of the deceased,
- The deceased’s children under 18 years of age,
- Anyone with whom the deceased had an interdependency relationship just before they died, or
- Any other person who was financially dependent on the deceased at the time of their death.
In general terms, parents, brothers, and sisters, adult children, and grandchildren of a deceased person are unlikely to be a tax dependent of the deceased. Financial dependency can be difficult to determine.
When a superannuation benefit is paid to a person other than a tax dependent, we need to determine the components of a deceased member’s death benefit. This information can be obtained from the deceased’s superannuation fund.
Tax components may include one or more of the following:
- Tax-free component
- Taxable component – taxed element
- Taxable component – untaxed element
The tax-free component generally comprises contributions made to superannuation for which a tax deduction has not been claimed. This includes non-concessional contributions and downsizer contributions.
The taxable component – taxed element will comprise tax-deductible contributions (including those made by employers and personal tax-deductible contributions) and investment earnings on contributions.
A taxable contribution – untaxed element will include certain contributions made to an untaxed superannuation fund – generally older style funds for public servants. Life insurance proceeds paid to a deceased member’s account following the member’s death may also give rise to an untaxed element.
When a death benefit is paid, the components are taxed in the following manner:
- Tax-free component – is exempt from tax
- Taxable component – taxed element – taxed at 15%
- Taxable component – untaxed element – taxed at 30%
If a superannuation fund pays a death benefit directly to a beneficiary, rather than to the estate, Medicare Levy (2%) is added to the tax rates mentioned above.
Should I withdraw my super?
One of the questions often asked by seniors, particularly when it is likely their super will pass to non-tax dependants such as adult children, is whether super should be withdrawn as a lump sum while they are still living.
Remember, the tax-free component and taxable component – taxed element withdrawn as a lump sum by a member aged 60 or older, who is still living, is exempt from tax.
The answer to this question is – it depends!
For example, if a member’s superannuation balance is comprised entirely or has a significant portion of tax-free component, the tax payable on death will be minimal, if any.
However, if the benefit includes a significant portion of the taxable component, then the progressive drawing down of super as a person ages, may be worth considering.
Of course, if superannuation is withdrawn and invested outside of the superannuation system, income earned on the investments, and capital gains, will be taxable.
At the end of the day, managing superannuation in our maturing years will depend on several factors including:
- Who is the likely beneficiary – a tax dependent or a non-tax dependent?
- What are the components of the superannuation benefit – tax-free, taxable, or a combination?
- What tax is likely to be payable if superannuation is withdrawn and is invested outside the superannuation system?
- What is the member’s current health status and longevity outlook?
Unfortunately, there is no simple answer to avoiding tax payable on superannuation death benefits however there are strategies that can be drawn upon to minimise tax.
As every person’s situation will be different, seeking appropriate advice from a licensed financial adviser is recommended.
The content within this blog has been sourced from our Licensee, Alliance Wealth’s blog ‘Realise Your Dream’.
https://blog.centrepointalliance.com.au/realiseyourdream/australias-secret-inheritance-tax
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.
Financial success can look very different for everyone, whether it’s living debt-free, building an investment portfolio, or prioritising superannuation for early retirement. No matter what financial success looks like to you, there’s one thing that can accelerate your journey there, and that is a strong relationship with an expert Financial Planner.
When looking to engage the services of a local Geelong Financial Planning firm, it is important that their service offerings can accommodate your lifestyle and needs. Perhaps you are time-poor and prefer phone appointments, or value an active role in the management of your investments with regular reviews. At the Hrkac Group, our Financial Planning team are there when you need, and how you need, but there are certain times when scheduling an appointment may be required to keep you on track for financial success.
1. Annual Review
As a part of an ongoing advice service arrangement, your Financial Planner should review your financial position at least once a year. At this annual meeting, your Financial Planner will perform a thorough review of your position and current financial strategies. In particular, they should consider the following;
- Have you experienced any financial changes, such as debt levels, income and expenses?
- Has the level of investment risk you’re comfortable with changed?
- Whether your current personal insurance cover remains appropriate.
- Is your portfolio performing in line with expectations?
- If any changes to legislation or financial products could affect you.
- Are you on track to meet your goals?
2. A big life change.
Marriage, a new baby, death, divorce, moving home, the loss of a job and any other major life-changing event can impact your goals, taxes and debt significantly. Ideally, you should consult your Financial Planner if you’re going through any significant life changes at your earliest convenience.
3. Taking on significant debt.
Purchasing a new car, a new home, starting your own business, or acquiring a large debt can also massively impact your financial plan. Your Financial Planner can help outline the advantages and disadvantages of such major financial decisions, and make amendments to your financial strategies to accommodate.
4. Coming into some money.
If you have inherited a large sum of money or received a significant bonus or promotion at work, a boost to your finances could be a good prompt to meet with your Financial Planner. Your taxes, strategies, and the structure of your portfolio may be impacted. Your Financial Planner can provide insights and recommendations for investing your new windfall.
5. Estate planning
For any major changes to your estate plan, you should meet with your Financial Planner to ensure that your financial plan is structured correctly in light of the changes. Of course, your Financial Planner cannot offer legal advice, but they can ensure that your existing investments and strategies are supportive of your estate plan.
6. Retirement Planning
Preparing for the comfortable retirement you have earned through years of hard work should be at the top of everyone’s list. Whether it’s a distant thought or just around the corner, a Financial Planner can help determine your retirement income needs, maximise your retirement savings and give you the support you need to retire comfortably.
7. Sophisticated Investors
Whether you’re a sophisticated investor, highly diversified or simply prefer to actively monitor and engage with your portfolio, a more regular formal review may be beneficial. The right Financial Planner will be able to tailor an ongoing service package to meet your needs and offer monthly, quarterly, or biannual review services.
One size does not fit all when it comes to financial advice. Aside from initial meetings and annual reviews, financial advice can be beneficial at the many, various turning points in your life. You should always feel comfortable contacting your Financial Planner any time that you are making important decisions that may impact your finances.
If you’re interested in knowing more about what happens when you engage the services of a Financial Planner, speak to our expert Geelong Financial Planning team at The Hrkac Group. They work strategically with you to develop a tailored strategy aimed at achieving your desired financial outcomes.
Our Geelong Financial Planning team considers your individual needs, goals, and objectives. So, whether it’s retirement planning, wealth creation and management, superannuation advice or wealth protection and insurance, you can feel reassured knowing it can be handled under one roof at the Hrkac Group. If you’re looking for Financial Planning Geelong, look no further. To make an appointment to meet one of our friendly team today, feel free to contact us via email or phone 03 5224 2366.
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.
The ESG in ESG investing stands for Environmental, Social, and Governance. ESG investing is a form of socially responsible investing that prioritises financial returns along with a company’s impact on the environment, its employees and stakeholders. It is becoming a more commonly adopted practice as investors take into consideration more than just profit in their investing strategies.
Likewise, companies are becoming increasingly aware of their ESG footprint. But it can prove difficult to gather all the relevant information to ensure you are making a well-informed decision on whether a company meets or doesn’t meet ESG criteria. A great solution is to engage the services of a local Geelong Financial Planner, like The Hrkac Group who can do the groundwork for you.
There are many reasons for adopting a more sustainable investment approach. Some investors see it as a way to increase returns; many consider companies with a higher focus on ESG to be more forward-thinking and future proof.
During recent market turbulence related to the pandemic, many companies with strong ESG focuses showed lower volatility than non-ESG focussed companies. For others, it’s important that their investments align with their values. For example, an investor may choose to avoid investing in companies without carbon offset policies as climate change is an environmental issue of high importance to them.
While uniform methods to evaluate different ESG metrics are in the early stages of development, Investors can utilise various analytical approaches and data sources when determining what to invest in. Companies committed to ESG initiatives should be publishing measurable goals and their progress against those goals, in regular sustainability reports. A local Geelong Financial Planner, like The Hrkac Group can assist you in finding the pertinent data.
Read on for a breakdown of the different ESG metrics you can consider when determining where to invest.
1. Environmental: Conservation of the earth and its natural resources
The environmental component of ESG investing considers how a company’s practices affect the planet. Some examples include:
- Climate change policies
- Greenhouse gas emission targets
- Carbon footprint targets
- Pollution
- Water usage and conservation
- Overfishing and poaching
- Deforestation
- Energy efficiency and renewables
- Waste management and recycling
- Green transport solutions
- Green technologies, innovations and products
2. Social; Consideration of people & communities
The social element of ESG investing covers how a company treats its employees, customers, consumers, suppliers, and the local community. Some examples include:
- Employee satisfaction and compensation
- Employee engagement and turnover
- Employee training and development
- Employee safety policies
- Ethical supply chain sourcing
- Human rights
- Labour standards
- Gender, diversity and inclusivity in hiring, promotions, and pay increases
- Data protection and privacy
- Public stance on social justice issues
- Community relations
- Customer satisfaction
3. Governance; Standards for running a company
The governance component of ESG investing relates to business ethics. Some examples of this include:
- Executive compensation
- Policies that define and enforce ethical business practices
- Board composition; gender, diversity, representation
- Audit committee structure
- Conflicts of interest for board members
- Shareholders’ ability to nominate board candidates
- Transparency, bribery, corruption, lawsuits
- Lobbying for particular issues
- Political contributions
- Whistle-blower schemes
There are multiple ways you can apply ESG principles to your investment strategy. You can employ an exclusionary approach, in which the investor eliminates companies according to the above criteria before deciding on where to invest. Another approach is to incorporate ESG as an additional factor within a broader decision-making process. ESG investing offers the chance to vote with your dollar; where you invest your money can be a powerful way to support communities, fair wages, and a healthy planet.
If you’re interested in knowing more about the world of ESG investing, speak to the expert Geelong Financial Planning team at The Hrkac Group. We consider your individual needs, goals, and objectives and work strategically with you to develop a tailored strategy aimed at achieving your desired financial outcomes. Make an appointment today via contact us, or phone (03) 5221 2355.
You may be thinking of retirement or wanting to start setting some long-term financial goals. Maybe you’ve come into a sudden windfall of cash and you’re wondering what to do with. Planning for your financial future is one of the most significant things you can do for yourself, and your loved ones. Financial Planners are experts in helping people manage their money and in monitoring and reaching their financial goals. They can provide a range of Financial Planning services, from wealth creation & management, superannuation, wealth protection & insurance, to retirement planning.
A Financial Planner will focus on your financial situation, needs and goals. A professional, qualified and experienced Financial Planner will be able to help you implement the most appropriate strategy to achieve your desired outcomes. They will advise you of the benefits, alternatives, costs, and risks associated with your available options, and help you choose the one that is right for you.
We recommend following the guide below to help you choose a Financial Planner that is suitable for you.
1. Consider what you need from a Financial Planner.
What type of guidance are you looking for exactly? Before seeking financial advice it’s wise to make sure you have a fairly good idea of what you’re hoping to get out of it. This depends on your stage of life, how much money you have, and what you’re trying to achieve.
If you’re just trying to save money, figure out how much to contribute to your super or what to do with an inheritance, your enquiry may be resolved by one-off advice. This could include recommendations about budgeting, superannuation consolidation or insurance.
If you’ve reached a point in your life where you want to start being strategic about your financial future, you may be needing help developing a holistic financial plan. This may comprise advice on topics such as investment portfolios, tax planning, life insurance and in-depth retirement planning. The outcome is a comprehensive plan that will help you secure your finances well into the future.
As an individual’s circumstances and situation can change over time, Financial Planners will generally offer Ongoing Advice & Review Services. These services will include regular reviews and monitoring of the recommendations, which helps ensure that they remain appropriate, and continue to meet a person’s ongoing needs.
2. Research Financial Planners & ask questions.
Before you commit to a Financial Planner, you want to ensure you’re engaging the best person for you and your circumstances. The best way to see what a Financial Planner offers is to read their Financial Services Guide (FSG). This provides an overview of their qualifications, the services they offer, how they charge and their Australian Financial Services (AFS) licence details. Anyone who gives personal financial advice must be authorised through an AFS licensee.
It’s always a good idea to have a list of questions for your Financial Planner handy to help you make your decision. Here’s a short list to help you get started:
- What are your qualifications?
- What are your fees?
- Do you receive any commissions or incentives from the financial products you recommend?
There’s no one-size-fits-all in Financial Planning, so ensure you do your homework to find the right one.
3. Choose your services.
What specific Financial Planning services do you want to learn more about or put into action? To help you decide, here’s a brief overview of some of the services Financial Planners can offer.
- Superannuation: A Financial Planner can assist you in choosing a super fund, advise you on how much you should be contributing to your fund, or help you with investing your super. They can also help you organise insurance through your super.
- Insurance: This could include guidance on life insurance, total and permanent disability insurance, or income protection insurance
- Personal investments: There are many personal investment options available, and each serves a different purpose. Whether it’s property, shares or ETF’s, managed funds or bonds, a Financial Planner will have the knowledge to recommend an investment strategy to achieve your goals.
- Retirement Planning: A Financial Planner can support you to determine your retirement income needs, maximise you super contributions, ensure you’re invested appropriately, or even transition into retirement early.
Doing your homework on the services you’re interested in will set you up for success in your first session. It’ll also help you get the most out of your initial meeting.
Planning for your financial future is all about making your money work for you by choosing the right financial strategies. Financial Planners have the knowledge and experience you need to help you take control of your financial future.
Here at the Hrkac Group, we are a team of experienced, capable and respected Financial Planners who are passionate about educating you on the strategies and options available to get the best possible outcome for you.
Take control of your future today by meeting with the Geelong-based Financial Planning team at The Hrkac Group. Call us today on 03 5221 2355.
This information has been provided as general advice. We have not considered your personal or financial circumstances, needs or objectives. You should consider the appropriateness of the advice. You should obtain and consider the relevant Product Disclosure Statement and seek the assistance of an authorised financial adviser before making any decision regarding any products or strategies mentioned in this communication.
The Australian government has recently announced some significant changes to superannuation contributions affecting Australians saving for their retirement.
Concessional (pre-tax) Contributions Cap Increase
From July 1, 2021, the concessional contributions cap increased from the current limit of $25,000 per annum to $27,500 per annum.
This cap includes your employer’s compulsory Superannuation Guarantee Contributions, and voluntary contributions, including salary sacrifice and personal contributions for which you claim a deduction.
Those that take advantage of the increase in concessional contribution limits may benefit from a larger tax-deduction and therefore additional tax savings.
Carry-Forward Unused Concessional Contributions
Where your total superannuation balance is less than $500,000 as of 30th of June, and you are eligible to make superannuation contributions within the following financial year, you can utilise carry-forward unused concessional contributions.
Carry-forward concessional contribution rules allow you to access unused concessional contribution cap amounts from the 2018-2019 financial year onwards to make extra concessional contributions. Unused concessional contributions can be carried forward for 5 years.
An unused cap amount occurs when the concessional contributions you made in a financial year were less than your general concessional contributions cap. This means you can make concessional contributions above the general concessional contributions cap for the year.
Non-Concessional (after-tax) Contributions Cap Increase & Transfer Balance Cap Increase
From July 1, 2021, the non-concessional contributions cap increased from $100,000 per annum to $110,000 per annum.
The transfer balance cap also increased from $1.6 to $1.7 million. This is the limit on the amount you can transfer into the tax-free retirement phase within superannuation.
Your total superannuation balance determines your eligibility to make non-concessional contributions.
This means that if your total superannuation balance at the end of the 2020-21 financial year was less than $1.7 million, you may be able to make non-concessional contributions of at least $110,000 in the 2021-22 financial year.
Increase to the Cut-Off Age for Accessing the Bring-Forward Arrangement
In certain circumstances, you may be eligible to make non-concessional contributions in excess of your annual cap. This is known as the bring-forward arrangement, which allows you to utilise the current and some or all of the subsequent two financial years’ non-concessional contribution limits.
Under the revised rules, those aged 66 and under as of the 1st of July of the financial year, can access the bring-forward rule, provided the contribution is made prior to their 67th birthday.
This means individuals aged 65 and 66 who were not previously able to access the bring forward non-concessional contributions cap may now do so.
If you’re interested in discussing how these changes may benefit you, please contact the financial planning experts at HG Financial Services. Make an appointment today to see a superannuation advisor via Contact Us, or phone 03 5221 2355.
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 Alliance Wealth Pty Ltd nor its related entities, employees or representatives accepts responsibility for any loss suffered by any person arising from reliance on this information.
Are you looking at buying a property but worried about having the cash handy for a deposit? You could consider a deposit bond.
A deposit bond is a financial agreement that can be used in place of a cash deposit when purchasing a property, guaranteeing to the seller that the buyer will pay the full deposit at a later date.
Deposit bonds are used instead of cash to pay a deposit on a property. If you decide to use a deposit bond, you will pay the purchase price, plus the deposit and stamp duty at settlement.
Here are 10 things you need to know about deposit bonds:
1. Vendor Approval Is Essential
Before lodging your application, it’s crucial that you seek approval from the vendor/real estate agent to use a deposit bond to purchase the property, instead of a cash deposit.
2. Eligibility Requirements Must Be Met
To be eligible for a deposit bond:
- You must have a formal finance approval; or
- You must have at least a pre-approval that’s subject to valuation only; or
- If you’re selling a property and funds from the proceeds of the sale are enough to purchase your new property outright, then you are eligible.
If none of the above applies to you, please talk to one of our specialist mortgage brokers.
3. The Cost Of Deposit Bonds Vary
The cost of a deposit bond depends on the value of the property and the length of time to settlement.
If you were to purchase a home for $500,000 and need a 10% deposit of $50,000. It would cost you around $600 for a deposit bond. If you’d like a rough estimate, contact our specialist mortgage brokers.
4. Deposit Bonds and Bank Guarantees Are Different
A deposit bond and a bank guarantee are similar in that they provide a guarantee to the vendor that the purchaser will pay the deposit at settlement. However, there are some key differences that you should consider before making a decision.
Security – Deposit bonds are unsecured, and bank guarantees are secured.
Although deposit bonds require an eligibility assessment to ensure you have the financial capacity to settle on your purchase, they are unsecured. Whereas bank guarantees are secured and require real estate or cash security to release.
Cost – Deposit bonds have a one-off fee, but bank guarantees have higher set up and ongoing costs.
Time – Deposit bonds are usually faster to obtain than a bank guarantee, as they require less paperwork and have a simple application process.
5. Time Needed For A Deposit Bond When You Have An Off The Plan Purchase
Most of time, when you buy an off the plan purchase a deposit bond is issued up to the ‘sunset clause’ date. A sunset clause date is found in your contract of sale and allows the vendor or purchaser to rescind the contract if the title of the property has not been created by a specific date.
6. First Home Buyers Are Eligible
As a First Home Buyer, you can obtain a deposit bond if you:
- Already have formal approval for your finance through a family guarantor loan, and
- Your property settles within six months.
If settlement is more than six months or you don’t have finance approval, your guarantor will need to apply with you for your deposit bond. You or your guarantor will need to have a property with the equity to release a deposit bond. This is to ensure the guarantor can pay back the deposit bond amount in the unlikely event of a claim on your bond.
7. No Repayments
If you use a deposit bond, you never actually pay back the deposit unless there is a claim. Its purpose is to provide reassurance to the vendor that you have sufficient funds to complete the purchase at settlement. Therefore, at settlement, you will pay the purchase price, plus the deposit and stamp duty.
The only cost involved is the deposit bond fee, which is provided to the lender up front.
8. No Interest Payments
No interest payments are required, besides the one-off deposit bond fee.
9. Deposit Bonds Can Be Issued Within 4-48 Hours
Once the lender has received your signed application with the bond fee payment, your deposit bond can be approved and issued within 4 to 48 hours. Once approved, the bond deposit is released immediately. The Hrkac Group typically have your deposit bond ready in less than one business hour!
10. The Best Way To Obtain A Deposit Bond Is Through A Mortgage Broker
The Hrkac Group make it easy to apply for a deposit bond. Contact our team and we will work with your deposit bond provider on your behalf, so you don’t need to add another thing to your list.
The supporting documents you need will depend on your application type, so we’ll tell you exactly what you need to provide. Then, when the application is ready, we’ll send it to you for electronic signing. It’s as easy as that!
If you have any questions about the topics discussed in this blog, feel free to contact our specialist mortgage brokers, who will provide a personalised and custom service based on your individual circumstances.
H G Financial Services Pty Ltd ABN 25 123 478 907 is a Corporate Authorised Representative no.401592 of Alliance Wealth Pty Ltd
Alliance Wealth Pty Ltd ABN 93 161 647 007
AFSL 449221
FSG – www.centrepointalliance.com.au/fsg/aw
There’s a lot of talk about growing wealth and protecting assets when it comes to financial advice, but do you really know what that means?
When you engage a Financial Advisor, you expect them to give you advice on how to make your money work for you. Whilst this is true, it’s a broad description and doesn’t cover the nitty gritty of what they can do for you and your future.
Like anything, you are paying a Financial Advisor for their experience and knowledge, and ability to assist you in meeting your goals and ultimately leave you in a better position.
We all have goals to achieve; whether it’s buying your first house, retiring in style, paying debts or investing for long-term gain, Financial Advisors are here to help you manage your money, assets and expectations so you can plan for the future lifestyle you pictured.
So, what do financial advisors actually do?
For Superannuation
As we’ve written about previously, the second best time to start planning your retirement is now, so with that in mind when it comes to Superannuation a Financial Advisor does many things to help you, well before retirement:
- Choosing a super fund
- Investing your super
- Organising insurance through your super
- Contributing to your super
- Implementing tax effective strategies
Throughout your working life, you will accrue super to help you later in life when you no longer can (or want) to work. This money will be invested and continue to grow as you work, setting you up for the future.
Choosing the right super fund for you can be daunting, do I go for a Retail fund or an Industry fund or a SMSF? Can I choose where the money is being invested? Do I need to make personal contributions? All these questions can be answered by a Financial Advisor once they have gotten to know you and assessed your future goals.
Financial Advisors add value to your Superannuation by using their experience to educate you on the ins and outs of Superannuation, making sure that your individual set up is in alignment with what you want to achieve.
Financial Advisors will help you get involved early so that you can achieve your retirement lifestyle goals.
For Retirement Planning
As you approach retirement and the vision of your future comes more into focus, it might not look as you had pictured. If this is the case a Financial Advisor can help you to:
- Determined your retirement income needs
- Maximise super contributions
- Ensure you’re invested appropriately
- Regain control
- Or transition into retirement early
For those whose retirement is fast approaching, Financial Advisors can help you to figure out how much income you’ll need to generate from your Superannuation throughout retirement, to fulfil your lifestyle. If things aren’t aligning, they can take you through any adjustments that need to be made in order to bring you closer to your goals.
Not only do Financial Advisors look at whether you’ll have enough to sustain your lifestyle, they also provide you with the reassurance you need to reduce the stress of retiring and give you back control of your future.
For Post-Retirement Income Strategies
After retirement, your money doesn’t stop working for you. Although you are accessing your Superannuation, the funds continue to be invested and grow with you so, it’s important that they are monitored and adjusted on an ongoing basis – this is where Financial Advisors can help.
It’s not just Superannuation that can assist you in funding your retirement either. There are many income generating investments that can be utilised to build your bespoke retirement income plan, such as managed funds and annuities. A Financial Advisor can ensure that your entire financial position is incorporated to provide you with the best possible outcome to support you throughout retirement.
For Insurances
Often a daunting topic, Financial Advisors are well versed in which insurances are available to you through you Superannuation, or directly, and how to best to structure them. If you don’t know what insurances you might have, or even what you might need, Advisors will assess your situation and help you understand the levels of cover that you need in order to protect yourself and your family if the unexpected should happen. The types of insurance cover that should be considered are:
- Life
- Total and Permanent Disability
- Trauma
- Income Protection
Unfortunately, not all cover is made equal and with so many provider options, it is easy to settle for an insurance policy that may not give you what you and your family need. A Financial Advisor will undertake a full assessment of your personal situation, and recommend the right comprehensive cover for you.
For Personal Investments
So, you’ve got savings in the bank and you know that property is an option, but you’re wondering what else is out there to invest your money in for a good future return?
There’s a lot to think about when it comes to investment options:
- What do you want to achieve?
- How long do you want to invest for?
- How much risk do you want to take?
- Are you looking for tax effective investments?
- Do you have specific ethical preferences?
- Are you more cost conscious?
There are many investment options available, and each serve a different purpose. Whether it’s shares or ETF’s, managed funds or bonds, a Financial Advisor will have the skills and knowledge to recommend an investment strategy to achieve your goals.
So, do you need a Financial Advisor?
Planning for your future involves a lot more than writing down your financial goals and wishing they will come true. Creating a financial plan is all about making your money work effectively, by choosing the right strategies for your individual circumstances.
Daunting as it is, Financial Advisors are here to give you the tools you need meet your goals and take control of your financial future. Here at the Hrkac Group, we are a team of experienced, capable and respected advisors who are passionate about educating you on the strategies and options available to get the best possible outcome for you.
Why use Hrkac Group’s Financial Advisors?
Our Financial Planning team are here to bring you value through their experience and wealth of knowledge. They are here to educate you on how to make your money work for you and achieve the goals you’ve set together.
The team of experienced advisors will use the initial meeting to get to know you, do a deep dive to assess your situation and help you to realise your financial goals.
Once your goals are in place, they will create a bespoke financial plan that will leave you with the best possible outcome. But the process does not end here, you can feel assured that our team of advisors will monitor your financial plan closely and ensure that it continues to meet your goals at each annual review, so that you’re free to live your life with a little less stress.
Find out more information about our Financial Advice services here.
Contact us today to start your Financial Planning journey: email or phone 03 5221 2355.
