you need to know about

Transcription

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2 your super 60s 2018

3 3 you need to know about Copyright H.E.S.T. Australia Limited 2017 This information is issued by H.E.S.T. Australia Limited ABN AFSL No , Trustee of Health Employees Superannuation Trust Australia ABN ( HESTA ). Investments may go up or down. Past performance is not a reliable indicator of future performance. This information is of a general nature. It does not take into account your objectives, financial situation or specific needs so you should look at your own financial position and requirements before making a decision. You may wish to consult an adviser when doing this. HESTA Financial Planners are Authorised Representatives of Industry Fund Services Limited (IFS) ABN AFSL IFS are responsible for the advice given by its representatives. H.E.S.T. Australia Ltd has shares in the company that owns IFS, but does not receive any commissions as a result of members using their services. HESTA Associate Superannuation Advisers and HESTA Superannuation Advisers are representatives of H.E.S.T. Australia Limited. Product ratings are only one factor to be considered when making a decision. See hesta.com.au for more information. Before making a decision about HESTA products you should read the relevant Product Disclosure Statement (call or visit hesta.com.au for a copy), and consider any relevant risks (hesta.com.au/understandingrisk).

4 4 HESTA acknowledges Aboriginal and Torres Strait Islander peoples as the Traditional Custodians of all Lands on which we come together. At HESTA, we know that Aboriginal and Torres Strait Islander cultures enrich this nation and we pay our respects to Elders, past and present. HESTA acknowledges the important contribution Aboriginal and Torres Strait Islander peoples make in creating a strong and vibrant Australian society.

5 5 When will you retire? Will you work part-time? retirement things to consider How will your fund your lifestyle? How much will you need?

6 6 financial futures 60% 29% 28% 73% Worry about running out of money in retirement Have no money in a super account Have tried to figure out how much they need to save in retirement Don t know how much money they will have for retirement Source: Professor Roslyn Russell, School of Economics, Finance and Marketing, College of Business RMIT University

7 7 FSE Financial self-efficacy scale I worry about running out of money in retirement When faced with a financial challenge, I have a hard time figuring out a solution we re more than 820,000 members strong It s hard to stick to my spending plan when unexpected expenses arise I lack confidence in my ability to manage my finances help, education and advice when you need it When unexpected expenses occur, I usually have to use credit It is challenging to make progress toward my financial goals Source: Professor Roslyn Russell, School of Economics, Finance and Marketing, College of Business RMIT University

8 8 My financial priority is to have a comfortable retirement 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 18 to to to to years All women High priority Medium priority Low priority NA Source: Professor Roslyn Russell, School of Economics, Finance and Marketing, College of Business RMIT University

9 pre-retirement strategies 9

10 10 six ways to boost your wealth Save now Investment options Work for longer Transition to Retirement Downsize or sell Spend less

11 new ways to save in super firsthome super saver scheme downsizer Contribute up to $15k each year Contribute up to $300k each** Contribution limits apply* Tax free Up to $30k can be withdrawn 65+ at time of contribution Access from 1 July 2018^ From house sales after 1 July 2018 *Contribution limits apply $25,000 before tax; $100,000 after-tax ^Withdrawals taxed at marginal tax rate less 30% offset ** From sale of primary residence held 10 years or more in the past and sold after 1 July Funds must be contributed within 90 days of settlement

12 12 first home super saver scheme Contribute $15k a year into super Max $30,000 total Saving in super means only 15% tax on investment earnings Salary sacrifice (before-tax) up to $25k* and/or After tax up to $100k** Not owned property before Over 18 when you withdraw Saving for your home Types of contributions Are you eligible? Salary Sacrifice contributions into Super limited to $25,000 per financial year and include all before tax contributions (e.g. 9.50% SG and deductible contributions) **Non concessional cap $100,000 per financial year. Please note: the Government intends to review the scheme in 18 months.

13 13 about downsizer contributions You can contribute up to $300,000 each into super from the sale of your home Sale of contract to be signed after 1 July 2018* No tax on contributions Savings from your home Impact on Centrelink benefits Income stream transfer balance cap Investment options that work best for you Things to consider 65+ when you contribute No work test Primary residence for more than 10 years (in the past) Lodge funds within 90 days of settlement Are you eligible? * The proceeds from the sale must be either exempt or partially exempt from capital gains tax (CGT) under the main residence exemption, or would be entitled to such an exemption if the home was a CGT rather than a pre-cgt (acquired before 20 September 1985) asset.

14 14 what s the difference super tax vs marginal tax? 45% 15% Up to $250,000 income 32.5% 37% 19% 2018/19 INCOME RANGE 0% 0-18,201 18,201-37,000 37,001-90,000 90, , ,001+

15 know the difference? salary package (outside super) before tax (into super) Tax free Tax 15% Limits per annum* Limits per annum Up to $9,010 or $15,900 $25,000 * Salary Package (outside Super) limits differ pending employer status based on 18/19 FBT Year ** Salary Sacrifice (into Super) limits include all before tax contributions (e.g. 9.50% SG) Both will impact eligibility for some Government Benefits e.g. Co-contribution

16 16 know your limits Before-tax contributions $25,000 p.a. After-tax contributions $100,000 p.a. Note: no further after-tax contributions can be made once super reaches $1.6 million

17 17 super top up from the government $1 from you 50c Potentially from the government for eligible members * more for your super *For 2018/19 maximum if total adjusted income less than $37,697. Sliding scale up to $52,697. Includes assessable income plus reportable fringe benefits and before-tax amounts.

18 18 about government co-contributions If you earn under $52,000 you could be eligible for a government co-contribution This is where the government could top up 50c for every $1 you put in. (Maximum co-contribution $500 if income less than $37,697*) After tax contributions One of the major benefits of making after-tax contributions is that you could also receive a bonus super top up from the government. Good for your super Paid employment in the financial year Super fund has your Tax file number Lodge Tax Return Not be on temporary visa Under age 71 At least 10% of income from employment or running a business Are you eligible? * Income includes reportable fringe benefits + salary sacrifice contributions.

19 19 other ways to build your super Spouse tax offset You can make contributions on behalf of your spouse <65yrs old OR between 65 and 69 yr old if they meet a work test. 18% tax offset of up to $540 where spousal income <$37,000 Low income superannuation tax offset (LISTO) If you have an adjusted taxable income up to $37,000 you will receive a refund into your super account of the tax paid on your super contributions, up to $500

20 20 age 57 conditions of release when can you access your super Age Age Age Age 60 Age 65 Other transition to retirement or retired and changed jobs working or not hardship; incapacity Preservation rules 1 July 2018

21 Transition to Retirement 21

22 22 how can you access your super? Boost your super while working Reduce your hours, not your income Tax-free payments after age 60

23 Your income 23 Plan your retirement while working Take a portion of your income and put it into your super. You ll pay 15% tax on this amount, instead of your income tax rate. Your super

24 Your income 24 You can then take some of your super to top up your income. Payments from super are generally taxed less than your income. Your super

25 Your income 25 Boost your super Continue to work full-time Take advantage of a lower tax rate Your super

26 26 stop working and draw an income Your income Your benefits and entitlements Your super

27 27 case study this is Sandra Aged 60 Works full time Wants to keep working till age 67 How could a TTR Strategy assist Sandra? salary $60,000 super $150,000 objective build super

28 28 TTR effect Age 60 Start TTR No change in net income Receive regular payments (min 4% max 10%) Employer + Salary Sacrifice up to $25,000 pa potentially $3,834 more into super every year

29 retirement incomes 29

30 30 what are the risks? Financial Longevity

31 31 retirement the basics You have a choice Leave your money in super Withdraw funds from your super Create an income stream An Income Stream Provides you with regular payments Can help supplement your income in retirement

32 32 income in retirement Super and account based pensions Investments Encore career Age Pension Annuities

33 33 case study remember Sandra? Now aged 66 Decided to retire How will she meet her ongoing lifestyle expenses? retirement savings $265,000 savings in the bank $10,000 car $15,000 home contents $10,000

34 34 case study Sandra s income Fortnightly income Sandra s HESTA Income Stream is looking good, starting with a $265,000 balance Age Pension $755 per fortnight HESTA Income Stream $565 per fortnight Total income $1,320 per fortnight Earnings from cash savings excluded from fortnightly income. Age pension determined by Assets test and reduced by $3 per $1,000 in excess of $250,000, i.e. $150 per fortnight on assessable assets of $300,000. This example is an illustration only and is not guaranteed in any way. Actual outcomes may differ.

35 35 Case study: Sandra s next chapter downsizing age 68 sells home after 1 July 2018 contributes $135,000 to super from sale proceeds reboots income stream receives regular payments $970 pfn (6.3%) age pension reduced to $350 pfn Total income $1,320 per fortnight Earnings from cash savings excluded from fortnightly income. This example is an illustration only and is not guaranteed in any way. Actual outcomes may differ.

36 36 investing your way You've worked hard for your money. Now let it work hard for you.

37 Centrelink 37

38 38 about the age pension Affects people born New Age Pension age singles couples $ per fortnight $ (each) per fortnight 1 July Dec Jan Jun July Dec Jan Source: A Guide to Australian Government Payments 12 May 2018, rates include pension supplement and Energy Supplement

39 39 age pension asset test thresholds Threshold* Cut-out point singles Homeowner $253,750 $556,500 Non-homeowner $456,750 $759,500 couples Homeowner $380,500 $837,000 Non-homeowner $583,500 $1,040,000 * To qualify for the full Age Pension (12 May 2018) Source: Centrelink

40 40 age pension income test thresholds Full pension* No pension single income $168 per fortnight $1,983 per fortnight $4,368 p.a. $51,563 p.a. couples income $300 per fortnight $3,036 per fortnight $7,800 p.a. $78,946 p.a. * To qualify for the full Age Pension (12 May 2018) Source: Centrelink

41 41 age pension income test Deemed Asset Threshold Deeming Rate single pension Up to $50, % Over $50, % pensioner couple Up to $83, % Over $83, % As at 12 May 2018 Source: Centrelink

42 42 case study about a couple Patricia Age 60 Works 3 days pw $26,000 No plans to retire $50,000 in savings John Age 66 Decided to retire $350,000 in savings Assumptions: $400,000 combined super savings; bank savings $125,000; cars worth $25,000; contents of $10,000.

43 43 case study about a couple Things to consider Keep working? Centrelinksupport Need $1,800 per fortnight Want $3,000 pa for holidays Queries and concerns Meeting rising cost of living Enough for retirement? Cautious investors Assumptions: need $46,800 pa to meet expenses plus $3,000 per year for holidays plus $1,040 pa for co-contribution. Cautious investor returns objective 5% pa

44 44 the strategy income stream effect Patricia salary ($26,000 pa) John income stream ($17,500 pa) John age pension (10,067 pa) Total income needed ($46,800 pa) $913 per fortnight $673 per fortnight $362 per fortnight $1,800 per fortnight plus $3,000 pa for holidays & extras Earnings from cash savings excluded from fortnightly income. John draws minimum income stream 5% pa. Age pension determined by Income test (Salary + deeming of savings and income stream). This example is an illustration only and is not guaranteed in any way. Actual outcomes may differ.

45 45 longevity the story This example is an illustration only and is not guaranteed in any way. Actual outcomes may differ. $ Retirement funding Person B Person A Assumption:returns for cautious investor 5% pa; indexation 2.5%; income need $1,800 per fortnight plus $3k pa holiday. Patricia saves $40 per fortnight to super + Government Co-contribution $500 pa. Patricia retires 2024; Age pension starts for Patricia 2024;John s life expectancy 2036 and Patricia 2044; John age 100 in 2051.

46 46 What would their story look like if One-off holiday in 2020 costing $50,000 Higher risk profile for potentially higher returns They increased income to $2,000 pfn Patricia worked 2 days pw and retired at age 63

47 47 longevity a changing story This example is an illustration only and is not guaranteed in any way. Actual outcomes may differ. $ Retirement funding Person B Person A Assumptions: returns for moderate investor 5.5% pa; indexation 2.5%; income need $2,000 per fortnight Patricia retires 2020; $50k holiday 2020; Age pension for Patricia 2024; John s life expectancy 2036 and Patricia 2044; funds could be depleted by 2049

48 48 structuring super how advice can help Structuring super Lowering costs Removing death benefit tax for kids Getting the most from Centrelink Investing how you want Taking advantage of combined incomes

49 49 consider seeking advice There are important things you need to consider so you don t lose your entitlements

50 50 concession cards Commonwealth Seniors Health Card Need to be age pension age Adjusted taxable income (ATI) of: < $53,799 single < $86,076 couple Pensioners Concession Card Need to be in receipt of age pension As at 12 May 2018 Source: Centrelink

51 51 HESTA advice team here for good for you Phone Video conference Face to face

52 52 HESTA Financial Planning You can access personalised advice outside of super non-super investments advice for couples super comparisons centrelink strategies estate planning aged care options ongoing review service wealth protection

53 53 I ve never met a member who regrets topping up their super, but I ve met many members who regret that they didn t. Cheryl Heath HESTA Member Education Manager 2016

54 54 next steps Contact us: hesta.com.au general enquiries