Planting the Seed for Retirement, Now

Planning for retirement is a bit like planting a tree; the best time to plant a tree (or start planning for retirement) was 20 years ago! The second-best time to start planting or planning is now.

 

What are some simple points that people should keep in mind when thinking about retirement?

  1. Don’t think you are too young to start planning for retirement. Time goes by very quickly and we find ourselves sitting on the threshold of retirement asking, “where did the years go?”
  2. Become engaged with your Superannuation, as early as possible. Employers are currently required to contribute 9.5% of a person’s salary to super, and this is intended to increase to 12% over the coming years. However, you may also be able to make voluntary contributions to super, which can have a substantial impact on your Superannuation balance over the years. When structured correctly, voluntary contributions to super can also be very tax effective.  In most cases, your Superannuation will be your primary retirement income vehicle, and becoming engaged with your Superannuation early can mean the difference between a comfortable, and a very modest retirement.
  3. Make debt reduction your priority. Carrying a home loan or personal debt into retirement can put serious strain on your cashflow. This will often force you to draw heavily on your superannuation to reduce your debt, leading you to be unable to fund your retirement long term. Establishing a budget to prioritise debt reduction is the best way to ensure that you are on track to eliminating your debt. It can also help you to adjust your spending habits in a way that allows you to save more now, for a comfortable and sustainable financial future.

In order to have the retirement you deserve, you need to start planning as early as possible. Engage a Specialist Wealth Advisor to help you set goals, develop smart savings strategies and invest wisely for a profitable future.

HG Financial Services – Corporate Authorised Representative 401592 of Alliance Wealth Pty Ltd  ABN: 93 161 647 007 AFSL: 449221

New Year resolutions come in many shapes and sizes and range from the really challenging – I am going to get fit, healthy, drink less, lose weight – through to the less strenuous – stop watching reality TV, meditate more, read some good books, or take a break from Facebook.

For most of us, we are lucky if our New Year resolutions last more than a couple of weeks, at the most. Then, we fall back into our old ways. Sound familiar? This year, being a brand-new year and the start of the “20’s”, we would like to encourage you to spend some time to get your “super” sorted. While superannuation is about as exciting as spending a Saturday night sharpening lawn mower blades, or tidying the underwear drawer, there can be some real financial benefits in getting your super in order.

How do we get our super sorted out in the most painless way?

We all have super. And, for many people, we like our super so much we have multiple accounts! The problem is we lose track of those accounts and don’t really know what we have, where it is, or how much we have saved. The Australian Taxation Office (ATO) reports that as at 30 June 2019 there was almost $20.8 billion of lost and unclaimed super, spread over 2.8 million separate accounts. That’s a lot of money currently sitting with the ATO. Now, contrary to what you might think, the ATO is keen to reunite all that lost and unclaimed super with its rightful owners.

How did we lose our super in the first place?

Well, we move around a lot. We change address, we change jobs, and we forget to tell our super fund where they can find us. And, even when they try to get in touch by email, we probably tend to ignore those emails any way. Each time we change jobs, it can seem easier to get our new company to deposit super contributions into their “default” fund. As a result, we end up with multiple accounts with a variety of different super funds. After a while, if our super fund cannot find us, our super becomes “lost” and it is transferred to the ATO.

What can we do?

Most of us will now have a “My Gov” account. If you don’t have one, then it is time to get one. This is the way the government wants us to access government services like the ATO, Medicare, and Centrelink. Within your MyGov account, if you select the ATO service you will find an option called “super”. Within that “super” option, you can select “fund details”. Once there, it will show the details of each super account you have. You can even manage your funds from here, including the ability to combine all your super accounts into one if you wish. Doing so may help save on the fees for owning multiple super funds. However, before consolidating your super, make sure to check that you are not losing valuable benefits like insurance. Talk to a financial planner and have them check out the insurance you have or, at the very least, call up each super fund and ask then to let you have details of your insurances.

How much lost super do you think the ATO might be holding for you?

Superannuation is going to become more important as we age. Living a life that is solely supported by the age pension is not going to deliver the lifestyle that many aspire to for their retirement. Now is the time to take control of your super and start to make some progress in adding to your eventual retirement nest-egg.

Take control of your Super this year. Talk to our Financial Planners to get started – contact us here.

HG Financial Services – Corporate Authorised Representative 401592 of Alliance Wealth Pty Ltd  ABN: 93 161 647 007 AFSL: 449221

The information provided is general advice only has not taken into account your financial circumstances, needs or objectives. This publication should be viewed as an additional resource, not as your sole source of information. Where you are considering the acquisition, or possible acquisition, of a particular financial product, you should obtain a Product Disclosure for the relevant product before you make any decision to invest. Past performance does not necessarily indicate a financial product’s future performance. It is imperative that you seek advice from a registered professional financial adviser before making any investment decisions.

A self-managed superannuation fund (SMSF) provides members with control over the retirement savings held within their superannuation fund.

You may choose to establish and run an SMSF as an individual, as a couple (yourself and partner), or as a family, although the SMSF can’t have more than four members. SMSFs are generally established by family members who wish to consolidate their family’s superannuation savings.

With an SMSF, you decide how your super fund is managed, and control where your money is invested, within the allowable rules as set out in the governing regulations, the Superannuation Industry Supervision (SIS) Act. This potentially provides you with greater visibility over your retirement savings and can lead to a deeper understanding of how your overall wealth is tracking, giving you more confidence in your investment and lifestyle decisions, and your future financial outcomes

SMSFs are regulated by the Australian Tax Office (ATO), and unless members of the SMSF are relatives, they cannot be employees of other members. It is also a requirement that each member within the fund takes on a trustee role.

 

The Role of Trustee

A number of strict rules apply regarding who can be a trustee or director of a corporate trustee.

If there is only one member in the fund, that person can act as the sole director or, a second director can be appointed. It is also important to note that generally, it is best to use a company that has no other purpose other than the management of the superannuation fund. If you choose to use a corporate trustee, each member must be a director of that company, and each director must be a member of the SMSF.

If a person is classed as a disqualified person, they cannot act as trustee (or director of a corporate trustee). Therefore, they are unable to be a member of an SMSF.

There are a number of reasons a person can be classed as disqualified, these being:

  • Someone who has ever been convicted or charged with an offence involving dishonesty e.g. theft.
  • Someone who has ever had a civil penalty order under the Superannuation Industry (Supervision) Act 1993 made against them
  • Someone who is insolvent under administration (e.g. they are an undischarged bankrupt)
  • Someone who has been previously disqualified from acting as a trustee

If the company is in liquidation or a responsible officer is a disqualified person, a company cannot act as a trustee.

There are a number of circumstances when a person can be a member of an SMSF, but they may be unable to fulfill the role of a trustee. If this circumstance occurs, it may be possible for another person to act in their place. They could act as either the member’s personal legal representation or, under an Enduring Power of Attorney (EPoA).

These circumstances include:

  • The member wishes to hand over power to their EPoA
  • The member is under the age of 18
  • Death of a member
  • The member is ruled mentally incapable

If these circumstances are to occur, legal advice should be sought to ensure the correct process to appoint a substitute trustee is followed and to ensure the SIS rules are not breached.

 

Trustee Declaration

All trustees must accept the role in writing and confirm that they are not a disqualified person.

A ‘trustee declaration’ must be completed by all new trustees and directors of trustee companies within the first 21 days of being appointed a trustee. This form is available from the ATO. The ATO does not require this form to be sent back however, it must be retained for at least 10 years and be readily available if requested by the regulator.

 

Investment Strategy

The Trustees are required to draft and implement an investment strategy for the SMSF. They must also regularly review the Investment Strategy to ensure it continues to meet the fund’s needs and complies with the governing regulations. The investment strategy is a document that outlines the key investment guidelines that will be adopted by trustees when investing the SMSFs assets.

Consideration must be given to the following when preparing an investment strategy:

  • Whether or not the trustees of the SMSF should hold insurance cover for the members of the SMSF
  • The capability to liquidate investments to meet cash flow requirements as they become apparent
  • The capability of the fund to discharge its liabilities as they become apparent (including the ability to pay benefits to members as required)
  • The risks in making, holding, and realising investments and the likely return to be derived, having regard to the fund’s objectives and expected cash flow requirements
  • The configuration of the SMSF’s investments to ensure adequate diversification (as seen to be appropriate)

The investment strategy should be documented in writing and be reviewed regularly, at the very least annually. Investments that do not fit within the strategy should not be retained.

 

Where to begin:

If you are wanting to gain more control over your Superannuation Fund and would like to discuss the potential benefits of an SMSF to yourself, and/or your family, contact Stephen Gray or our Financial Planning Team at The Hrkac Group on (03) 5221 2355 to book a Financial Planning Consultation to find out if an SMSF could be appropriate for you.

 

Further Information

Note: The ATO has available a range of publications, videos, and other various information to assist trustees of SMSFs. It is encouraged that trustees access this information, review it and ensure they understand what they are taking on. This additional information can be accessed from the ATO’s website (www.ato.gov.au).

DISCLAIMER The information contained in this newsletter is of a general nature only and may not take into account your particular objectives, financial situation, or needs. Accordingly, the information should not be used, relied upon, or treated as a substitute for personal financial advice. While all care has been taken in the preparation of this information, no warranty is given in respect of the information provided, and accordingly, neither Centrepoint Alliance Limited nor its related bodies corporate, employees or agents shall be liable for any loss (howsoever arising) with respect to decisions or actions taken as a result of you acting upon such information.

What would you do if a key employee was to injure themselves at work or suffer serious illness and is unable to work? How do you protect your business income?

Our dedicated Financial Services team are pleased to be able to now offer clients Key Person Income Protection Insurance.

This insurance has the ability to replace the income that would have been generated by yourself or a key employee.

This can assist in many ways especially in terms of saving you from the potential of losing clients or forfeiting contracts. All without disrupting your business operations.

What could be more beneficial than protecting your business income?

Get in today to see one of our Financial Services team members who are eager to work with you to protect your business.

Please Contact Us via e-mail or phone 03 5221 2355.

How Our Financial Planners Geelong Can Help You Have a Better Life

Why do we need a financial planner? Put simply, to have a better life. We either navigate our way through our own finances to work out the best way to achieve this or, we employ professional financial planners who are qualified, trained and well versed in the best ways to plan for your future. And your financial planners Geelong are the HRKAC team.

A recent Forbes article aptly stated that the real point of good financial planning “isn’t to have more money, but a better life”. This sentiment rings true as we work towards a work/life balance that is possibly the best reward at the end of the day.

Your financial plan must be a plan that fits in with where you are in your life. It must be structured around where you are placed now financially as well as working towards you obtaining the goals you seek. Our Geelong financial planners will work with you to discuss more than just the numbers. We want to know who you are, what you want and why. This is how we work with you to achieve the number on aim of us all – a better life.

Geelong’s Financial Planning Specialists

The problem with most accountants is… they’re just accountants. And by that we don’t mean JUST accountants – we mean they only provide accounting services – nothing else.

Everyone, no matter whether you’re in business or an individual, should not see accounting as their only form of financial management.

Most of us have an accountant because most of us pay taxes and need to submit our tax returns to the ATO. But unfortunately, not everyone has a good Geelong accountant AND a financial planner, whose role is to help you achieve your future financial goals, not just go over what’s happened in the past year.

That’s the major strength of our organisation. The HRKAC Group can assist you with accounting services such as financial recording, taxation returns, and tax planning – and we can also assist you in thinking about your financial future with the help of our qualified, professional financial planners.

There are many investment strategies available for our clients regardless of their level of income because financial planning isn’t just for those with a lot of money sitting in the bank, it’s also about giving people on modest incomes strategies to get financially ahead for a brighter future.

So instead of just looking at your financial past, why not look at your financial future with the Geelong financial planners at the HRKAC Group.