The legal bit 22/01/2016 PRACTICAL SOLUTIONS FOR COMPLEX MATTERS.

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1 January 2016 PRACTICAL SOLUTIONS FOR COMPLEX MATTERS. The legal bit Any views expressed in this webinar are the presenter s alone and should not be attributed to any other person. Any advice in this presentation is general advice only and does not take into account the objectives, financial situation or needs of any particular person. You should obtain financial advice relevant to your circumstances before making investment decisions. Whilst every care has been taken in the preparation of this information, Australian Unity Personal Financial Services Ltd does not guarantee the accuracy or completeness of the information. Australian Unity Personal Financial Services Ltd does not guarantee any particular outcome or future performance. Past performance is not a reliable indicator of future performance. Australian Unity Personal Financial Services Ltd is not a registered tax agent. If you intend to rely on any tax advice in this document you should seek advice from a registered tax agent. Australian Unity Personal Financial Services Ltd ABN , AFSL & Australian Credit Licence No , 114 Albert Road, South Melbourne, VIC Health & Finance Integrated is a Corporate Authorised Representative of Australian Unity Personal Financial Services Limited (ABN ) AFSL , 114 Albert Road South Melbourne VIC

2 Presenters: William Johns Managing Director Certified Financial Planner CFP, Bachelor of Business (Applied Finance & Financial Planning). Master in Disability Studies (School of Medicine, Nursing & Health Science. Flinders University) Carer & Advocate for the past 16 years. Recognised Industry expert in disability & complex health related financial planning issues. Contact: Maximising your income- a simple overview 1. Work (full time, part time, casual) 2. Disability Support Pension 3. Income Stream using superannuation savings 4. Income from other sources such as rental property 5. Insurance payments (such as Income Protection Insurance) Are you over the age of 65 years? Y 2

3 Behind the scenes- the science of income What is income? Income is money received regularly through work or through investment. It can also come from Social Security if you are eligible. 3

4 Where does your income come from? Sources of income: Savings/ investment Income from work or Income Protection Insurance Centrelink (safety net) If you are not working Sources of income: Savings/ investments Super Assets Centrelink (safety net) 4

5 Income Layering. An approach Certainty of future income Structuring your income correctly: Meet Jenny Jenny is 49 and was diagnosed with MS 3 years ago. works part time, and earns $70,000 a year. has $200,000 in superannuation savings $100,000 in a term deposit Rents Jenny does not like taking risks with her investment What happens if Jenny stops working? 5

6 Jenny decides to stop working $4000 comes from guaranteed source (e.g. annuity, no capital growth) $4000 comes from investment source (that grows in the long term) Income from 2.5% = $2,500 Income from 4%* = $8,000 DSP $20,500 (rounded) Total income:$31,000 4% is the minimum allowable Jenny s mother decides to help Jenny s mother is not happy. She decides to leave Jenny (now or via Will), $300,000 to help Jenny secure her future. Jenny invests the funds and earns 4%, this gives her an added income of $12,000 However, Centrelink has tests and they reduce her pension by $7,170! Therefore, $300,000 in additional assets only resulted in $4,830 increase in income! 6

7 What could have Jenny done? 1. Jenny s mother could have donated the money to Jenny via a Special Disability Trust (if eligible) 2. Jenny can contribute the funds to her superannuation as non-concessional contribution and preserve it. (be aware of concessional contribution caps, excess taxes) If the right structure is used, then Jenny could be $7,170 better of, taking her total income $43,000 Note: I have ignored income tax implications, implictions to Jenny s mother s situation such as taxes and loss in income. Please seek advice. Is your superannuation investment designed to generate an income? As Jenny was exploring her options, she found that her superannuation account consisted of different assets. She is in a default fund that has 70% growth assets. 7

8 Different assets typically generate different income Bringing it all together. Income from 2.5% = $2,500 Income from 4%* = $8,000 DSP $20,500 (rounded) 8

9 What have you learned from Jenny? 1. Always aim to protect your safety-net. 2. Understand the different ways you can own your money (structures) and their impact 3. Choosing the right investment for your circumstances is crucial to long lasting financial security. 4. Do not put things off, seek professional financial advice. The 5 important rules about income Rule 1: Maximise your entitlements Visit Centrelink or call us even if you are working to discuss your eligibility. If you are being assisted at home, your carers may be eligible for assistance even if you are not. Did you know as a single person, you can earn up to $1,896 and a couple can earn up to $2902 combined before the Disability Support Pension is cut off? Remember, income is derived from employment and from investments! 9

10 Find out your Centrelink entitlements You could be eligible for various benefits such as For you Disability Support Pension (do you qualify?) Mobility Allowance (if you are working, even a few hours) Rental Allowance (if you are renting or boarding) Newstart Allowance For your carer Carers Allowance Carers Payment Rental Allowance Newstart Allowance Rule 2: Save a 10 % of what you make. If you are working, this automatically happens. Superannuation is the national saving scheme! 9.5% of your income gets saved automatically. 10

11 Rule 3: Reduce your expenses What are some ways to reduce your expenses? Here are some tips we think work well.. a) Shop at lower cost brands like Aldi, Costco (average saving is around 50%) If you spent $150 a week, that s $75 in savings, or $3,900 a year!!! b) Buy discounted technology (20% drop on average) c) Shop around using price comparison website (from Third Party green-slip to TVs.. Check out websites like ozbargain.com.au d) Shop around for insurances for your car- don t just renew. Next time you get a renewal notice, call them and ask them to issue a new policy, not a renewal. See the difference! e) Negotiate with your electricity and gas providers (negotiate up to 15% off) f) Are you eligible for Affordable Housing? Or Housing subsidies? g) What about superannuation expenses? Rule 4: Be careful with what you got. Insure your income producing assets adequately Do you understand the risks of how superannuation is invested? Are you careful with yourself? Are you pushing too hard? 11

12 Rule 5: If it s not your specialty, seek qualified advice. Mistakes can be very costly Can cause you added stress and anxiety (not good for someone with MS) Your time in the work-force is precious, you cannot afford getting it wrong. Always know the implications Before you access superannuation consider the impact on: 1. Centrelink entitlements 2. Taxes 3. Housing entitlements Beware of contribution caps and how much you can contribute to superannuation. Also beware of the restrictions. Money could get stuck in there if you do not meet the definition of incapacity according to the Superannuation Industry (Supervision) Act. 12

13 Special offer to you We can help you with Special Disability Trust assessment $150 (save $185) 20% off our standard fees for people with MS or their carers Extra 5% if you are unable to access our services face to face and use technology (skype etc) for appointments Initial assessment of your situation at our cost (free to you) Q&A! Please Ask (8 AM-5 PM) William: (24 Hour emergency) 13