Retirement on the Horizon
People aged between 50 - 64
At this point your priorities are starting to shift. No long is your financial strategy focussed on taking risk and growing wealth, you are starting to think about whether you can retire at some point in the future.
And by retirement, this can have a wide definition, it is not necessarily retiring from work all together, but more having the freedom to choose how you decide to allocate your time each week without the constraints of having to earn a certain amount of money to make ends meet.
In the past you had time to make up for losses and were inlined to take more risk due to this fact however now, time is now getting shorter and you do not have the same luxury of time when making risky financial investment decisions.
So then comes the crossroads, how do you make sure that you are on track to hit your retirement goals and what actions do you need to be taking to get there. And how to maximise the interaction being being self funded in retirement, but also leveraging the benefits and assistance offered to retirees by the federal government - something known as achieving the retirement sweetspot.
Now is the time to seek out and implement a well structured retirement plan designed for your future needs. It will cover practical issues such as whether you should make extra superannuation contributions, how to boost retirement income and overall tax effectiveness, reviewing your existing investment assets, agreeing on a plan to reduce your debt to zero and working out your succession plan to ensure your assets pass to who you wish to in a tax efficient manner.
Our financial roadmap process covers all this and more. We will analyse your current situation and create a step by step roadmap for you with easy to follow actionable items.
We challenge your thinking about your investments and help you engage with the right mindset as you work towards retirement. For instance, investment properties that have produced strong capital growth may have served you well in the past but after you stop working, passive income becomes more important than capital growth.
So working out a strategy to transition to passive income focussed investments (such as a house and granny flat or airbnb style apartment) in a way to also minimise capital gains tax is a key part of your retirement roadmap.
The financial roadmap process also covers scenario analysis so that you have clarity over the financial impact of decisions you could make such as:
- What if I reduced to part-time work?
- What if I retired earlier (or later) than I planned?
- When is the best time to retire financially?
- What is the impact on my finances if I provide an early inheritance to my family, will I get more government benefits?
- What is the financial impact if I downsize home versus not downsizing?
We provide this scenario analysis and actionable advice on the most effective way to growth wealth towards defined retirement goal posts, reduce your taxes, repay your loans and optimise your finances in order to meet your post retirement spending needs all within the framework of the financial roadmap.
In summary, we assess your financial and lifestyle goals and put together a retirement focussed financial roadmap in order to firstly determine if you are on track, and then what changes and optimisations are required to maximise your finances in the years leading up to your retirement. By seeking professional advice, we hope that you will retire earlier, and with more money to spend like many of our clients do as a result of our work with them.
Case study
John and Gwen are in their 50’s and have 2 adult children still living with them. John is self-employed and both John and Gwen work full-time but would like to transition to part-time. They have a household income of $300,000 and home loan of $150,000 which is partially offset.
Their main concern is around whether they are maximising their opportunities with superannuation and when they will be able to retire and how much money they will require. They want to retire in their mid 60’s and are not sure if this is possible. After going through the financial planning process with FinancialAdvisor.com.au, John and Gwen received advice on how to maximise their opportunities within superannuation. The advice recommended they restructure the way they received their income and as a result, they now save thousands of dollars in tax and are also able to make additional contributions to superannuation – boosting their retirement nest egg.
The financial plan also covered the issue of how much money they will require to achieve financial security and independence in retirement and showed projections based on different scenarios to provide them with a better understanding of how the different decisions they make could affect their financial position in the future.
The advice also reviewed their budget (recommending they reduce spending) and provided John and Gwen with a clear repayment schedule for their remaining home loan, freeing up substantial cash flow that could be used to build their retirement savings. Insurances were also addressed, as were Wills, Power of Attorney, Power of Guardianship, and managing taxation and asset protection of the inheritances to their children.
Testimonial
“Several friends had mentioned how superannuation was a good way to reduce tax and save money for retirement but without help, we were not able to act upon it. After being introduced to FinancialAdvisor.com.au from a friend, we now have a fantastic strategy in place managed by FinancialAdvisor.com.au so that we can get the most out of superannuation and lower our tax bill.
We also now know when retirement is financially viable and hope to be able to retire a few years earlier than we thought possible on several more thousands of dollars each year to spend than we also thought possible.”
John and Gwen (surname withheld)