Retire in a better place Smart retirement strategies

Transcription

1 Retire in a better place Smart retirement strategies

2 Making the most of your retirement You re probably getting excited about how you ll spend all that extra time. You might even be planning trips to those places you ve always wanted to see. But more importantly, you ve probably started to think about how much money you re going to want or need for all your plans. By making informed decisions, you ll have a better chance of doing exactly what you want to do when you retire. There are plenty of options available that can help you reach your retirement goals and you might not be aware of them all just yet. But the good news is that with a little planning (and some help from the right people) you can get the most out of your money today, while looking forward to an exciting future. Whether you re thinking about retirement, are about to retire, or are already enjoying retirement, our MLC Advice financial advisers can help you make the right decisions so you ll have a better chance of doing exactly what you want to do. 2 Retire in a better place Retire in a better place 3

3 Will you have the money to retire the way you want to? Finding a strategy that suits you Retirement means different things to different people so it s important to identify your goals and find the right solution so you can retire on your terms. The advisers at MLC Advice can help you assess your situation and work out appropriate strategies to help reach your retirement goals sooner. How much is enough? These days we re keeping more active, staying healthier and living longer. It makes it more important than ever to plan for the longer term and to make sure you have the money to live the life you want. But how much money is that? It s difficult to put an exact figure on it but as a guide, for those aged around 65 years, for a comfortable retirement you ll need $1,156 per week (for a couple) or $841 per week (for a single). 1 So it s never been more important to invest for your retirement. Everyone is different though so some questions to think about first include: What age do you plan to retire? What sort of lifestyle do you want? Have you paid off all your debts? Will you need extra money for other needs such as holidays or a new car? We can help you work out how much you ll realistically need and show you how to achieve it. 1 ASFA Retirement Standard June Quarter 2017, national. Budgets for various households and living standards for those aged around 65. Figures rounded up to the nearest dollar. 4 Retire in a better place Super is the natural go-to when it comes to saving for retirement. But there are opportunities to grow your wealth in other ways. Keep in mind that retirement is no longer an all-ornothing proposition. Whether it s choosing to build your retirement nest egg in a tax-effective way with salary sacrifice or working part-time and supplementing your reduced income with super payments or a combination of both it comes down to what s right for you. Investing inside and outside super Super is one of the best ways to save for your retirement because of its favourable tax treatment. Super earnings are generally taxed at a maximum rate of just 15%. But it s not the only option out there. You can also grow your wealth by investing outside of super in assets such as property and shares. To make sure you re investing tax effectively, it may be worth considering gearing. Suitable for those with their mortgage under control, this strategy involves borrowing against the equity in your home to invest in other assets outside of super. It can allow you to make a much larger investment than you could have otherwise, but it can also magnify losses. Borrowing to invest isn t a strategy for everyone. MLC Advice advisers can explain the recommended investment timeframes and risks associated with a gearing strategy to help you decide whether it s the right move for you. For a detailed breakdown of budget estimates refer to: Retire in a better place 5

4 Salary sacrifice In order to boost your retirement nest egg you may want to get some of your pay or bonus to be paid into your super before tax is deducted. Known as salary sacrifice, these contributions are generally taxed at the concessional rate of 15%, 2 not your marginal rate which could be up to 47% (incl. Medicare Levy). Depending on your circumstances, this strategy could reduce the tax you pay on salary, wages or bonus by up to 32%. Transition to retirement Another option to consider is to scale back your working hours and start a transition to retirement (TTR) pension that could help you replace your reduced income. This strategy gives you the chance to test the waters - so you can see whether you re really ready to stop work altogether. To be able to commence a TTR pension, you must reach your preservation age. The preservation age is 55 for those born before 1 July 1960 and gradually increases to 60 depending on your date of birth. You re likely to pay less tax on the income you receive from the TTR pension than you do on your salary or business income. As a result, you ll generally need to draw less income from the TTR pension to replace your reduced salary. You can t draw more than 10% of the account balance each year. We can help you assess all the issues that need to be considered and determine the right pre-retirement strategy that suits your needs and circumstances. Using your super wisely When you retire it s tempting to withdraw all your super at once. But if you do, depending on your age and the amount of lump sum withdrawn, you could end up with a significant tax burden. So it might be a smarter move to use your super to start an income stream. That way, you won t have to pay lump sum taxes, or tax on any earnings your money makes while it s in the pension fund. 3 Want to know more? We can guide you through all the options and help you choose which one best suits your needs. Here s how it works: You invest some of your super in a TTR pension and draw at least minimum income each year, which is 4% of the account balance per annum. Investment earnings are taxed at a maximum of 15% and not your marginal tax rate. 6 Retire in a better place 2 Individuals with income above $250,000 in 2017/18 will pay an additional 15% tax on salary sacrifice and other concessional super contributions within the concessional cap (which is $25,000 in 2017/18). 3 No tax will be payable by your fund on investment earnings in an account based pension, when you permanently retire, reach age 65 or meet another condition of release. Retire in a better place 7

5 Planning for things not going to plan Making the most of social security Even the best laid plans can come unstuck. From economic recessions to divorce or illness, unexpected events can seriously impact your savings, and therefore your retirement. Don t worry. We can help you structure your portfolio to limit any surprise downturns. We can also make sure you re properly covered by insurance. Looking out for your children It s not just your poor health that could negatively impact your retirement savings. What would happen if you lost one of your adult children to an accident or illness and they didn t have any life insurance? Would you have sufficient funds to raise their children if necessary? It s a difficult situation to think about but it highlights just how important it is to talk to your kids about taking out insurance, so that you d all be protected if the very worst did happen. Retired and can t make ends meet? Depending on your circumstances, you might qualify for an Age Pension or other social security benefits and/or concessions including: Disability Support Pension Carer Payment and Carer Allowance Family Tax Benefit and Child Care Benefit (if you re a grandparent and responsible for looking after your grandchildren) Commonwealth Seniors Health Card Low Income Health Care Card Rent Assistance. We can help you find out what you re entitled to. 8 Retire in a better place Retire in a better place 9

6 Where there s a Will, there s a way There are many good reasons to get a Will and to make sure it remains up to date. Not only will it ensure things are done your way, it will also make sure your loved ones are properly cared for, financially and emotionally. If you die intestate, your family might have to go through the courts or tribunals to sort things out a lengthy, expensive process. Even then the people you care most about could miss out on entitlements from your estate while your home and other assets might get sold to divide everything up perhaps the complete opposite of what you wanted to happen. Find someone to protect your plan When considering estate planning, it s just as important to think of someone over 18 that you trust to act as your enduring Power of Attorney. They would then have the legal right to make certain decisions on your behalf if you re no longer able to. At the same time, keep in mind that without an enduring Power of Attorney, an administrative body like a public guardian, may make decisions on your behalf instead. So if you want to feel confident that your loved ones are looked after, talk to us. We ll help you to keep your estate in order. Find out more Talk to an adviser at your local MLC Advice centre or go to mlcadvice.com.au 10 Retire in a better place Retire in a better place 11

7 For more information call MLC Advice from anywhere in Australia on or contact your local financial adviser. Postal address MLC Advice, PO Box 200 North Sydney NSW 2059 Registered office Ground Floor, MLC Building Miller Street North Sydney NSW 2060 mlcadvice.com.au Important information This publication is provided by GWM Adviser Services Limited ( GWMAS ) trading as MLC Advice ABN AFSL , a member of the National Australia Bank ( NAB ) group of companies ( NAB Group ). MLC Advice financial advisers are authorised representatives of GWMAS. NAB does not guarantee or otherwise accept any liability in respect of the financial advice or services provided by GWMAS or its authorised representatives. This information may constitute general advice. It has been prepared without taking account of your objectives, financial situation or needs and because of that you should, before acting on the advice, consider the appropriateness of the advice having regard to your personal objectives, financial situation and needs. Please seek personal financial advice prior to acting on this information. Any general tax information provided in this publication is intended as a guide only and is based on our general understanding of taxation laws. It is not intended to be a substitute for specialised taxation advice or an assessment of your liabilities, obligations or claim entitlements that arise, or could arise, under taxation law, and we recommend you consult with a registered tax agent. A