Roadmap to retiring young

25 October, 20238 November, 2023 Updated on8 November, 2023 Budgeting, Retirement

The dream of retiring young is one that captivates many peoples’ imaginations. The freedom to live life on your own terms, doing what you want, when you want is undeniably appealing, but is it attainable?

We say yes!

It doesn’t just happen, though. As with any goal, it takes planning and dedication along with a clear understanding of when and how you expect to achieve that goal.

Early retirement, as a concept, means different things to different people. Therefore, the first step on the road to your early retirement is to be clear about what it will look like, starting with:

Timing: when do you want to retire?

Lifestyle: what do you plan to do? Think travel, hobbies, daily activities, etc.

With an understanding of what retirement means to you, you can begin the process of charting a course to achieving it.

Develop a roadmap to early retirement by considering:

Your current financial position
Conduct an audit of your income, expenses, assets and liabilities. Look at where your money is going and identify areas where you can cut back on unnecessary spending. This financial health assessment will help you determine how much money you need to live on weekly, monthly, yearly. It will form the basis of how much you’ll need to accumulate before you can retire.

This is important because under normal circumstances, you won’t have access to your superannuation savings until you reach your retirement age, as determined by government regulations.
Charting your journey
Having ascertained your retirement goals and your current financial position, now consider other points such as potential investment returns, tax, inflation, and how much to put aside to build a sufficient nest-egg.

A financial adviser will help you develop a comprehensive financial plan, tailored specifically for you, identifying clear financial milestones and outlining a roadmap for reaching them.

Over time, as goals evolve and circumstances change, your adviser can tweak your plan so you stay on track to achieve your early retirement goal.
Spending
A crucial step in the journey to early retirement is minimising unnecessary spending. Since you’ve already evaluated your spending habits, you’ve identified areas where you can cut back on spending without sacrificing your quality of life.

Be mindful of the difference between needs and wants, remembering that every dollar saved can be invested towards your early retirement.

When thinking about a purchase, ask yourself if the item is more important than the freedom of retiring young – keep your eyes on the end goal!
Diversified investments
Whether through real estate, stocks, or other investments that generate passive income, a varied portfolio will better support your retirement lifestyle during periods of economic fluctuation.

As you’ll still be obliged to submit an annual tax return, when developing an investment portfolio, tax minimisation should also be considered.

Your financial adviser will assist you to identify the most appropriate investment vehicles for you, and, as your retirement approaches, arrange an income stream that ensures your funds last the duration.

Attaining any financial goal requires discipline. Coach yourself to say ‘no’ to indulgences in the present, remembering that with the right roadmap and financial know-how, you really can make your dream of early retirement come true.

The information provided in this article is general in nature only and does not constitute personal financial advice. 

Super success for women

2 December, 202017 September, 2021 Updated on17 September, 2021 Retirement, Superannuation

While women earn less and spend less time in the workforce than men, sharply reducing their super contributions throughout their working lives, there are some simple steps women can take to boost their retirement savings. The Simple Facts This inequality is simply due to women earning and working less. Women in full-time work earn on average 18 per cent less than men, while almost half of all women in the workforce work part-time with an estimated 220,000 women missing out on any super contributions each year simply because they earn less than $450 a month – the lower threshold for super guarantee contributions. Women also miss out on super contributions because they are often absent from the workforce for extended periods while on maternity leave or looking after loved ones, be they children or other family relatives. When they do return to the workforce, it is frequently in casual positions or working for themselves, where the need to make super contributions is so often overlooked. Check your super fund fees and charges The solution lies with women taking control of their super and choosing the best possible super fund, which typically means low fees and good, low-risk investment options. Regularly check what, if any, personal insurance premiums are paid from your precious super savings. While insurance is essential while you are raising a family, as you get older, you might find your need for insurance diminishes. You may be able to reduce your coverage and with it the cost of premiums from your super. (Remember to always check with your adviser before cancelling any insurances.) Make sure you take the time to consolidate your super accounts into one low cost super fund. Visit the Australian Tax Office website to consolidate your super or ask your adviser to do this for you. Wherever possible, ensure you continue to make contributions throughout your working life, starting as early as possible and not neglecting your superannuation during periods when you are out of the workforce, working on a part-time basis or self-employed. Maximise Your Contributions Make sure you speak to your adviser to maximise your contributions, and in doing so, minimise your tax bill at the end of the financial year. If you expect your income to be less than $52,000 in a financial year, make sure you take advantage of the Federal Government’s co-contribution scheme. By putting just $20 a week of after-tax income into super, you will receive up to $500 from the Government directly into your super account as soon as you lodge your tax return. That’s a guaranteed 50 per cent return on your money and the best investment you will ever make. If you are earning less than $37,000 a year, you should receive the Federal Government’s low-income superannuation tax offset of $500. Both payments happen automatically, meaning you don’t have to apply or complete additional paperwork to receive them. Still, you should check your superannuation account to make sure these payments are there. If you need more advice about your super, talk to us today. The information provided in this article is general in nature only and does not constitute personal financial advice.

Financial Education for a Successful Future

30 August, 202329 August, 2023 Updated on29 August, 2023 Education, Finance

Think back to when you got your first job and that sweet taste of financial independence. Regardless of what age you started working, it’s unlikely you knew how to manage that first paycheck. Let’s face it; our world isn’t particularly adept at teaching financial literacy to the younger generation. I don’t know about you, but when I was in school, we learned trigonometry (SOH-CAH-TOA is still permanently etched in my brain), which has been helpful for all the times I’ve needed to solve the missing sides and angles of a right triangle, but not so much for managing my financial affairs as an adult. It’s time we change that narrative by sparking open, honest discussions about money and giving our young adults the financial tools they need to flourish. The Need for Open Discussions About Finance Money talk has often been cloaked in secrecy, even considered taboo in some households. This needs to change. Parents can play an integral role in setting their children up for financial success by fostering an environment where money conversations flow freely. Open dialogue demystifies the world of finance and empowers young adults to make informed decisions. Using Positive Language As we foster an environment of open discussions around money, it’s important to remember that the language we use significantly impacts the subconscious beliefs and attitudes our children will develop. Just as negativity can breed fear and anxiety, positive language can cultivate a healthy relationship with money. Instead of saying, “We can’t afford this,” try saying, “Let’s work out how we can save for this.” This small shift in dialogue encourages a mindset of abundance and possibility rather than scarcity. It helps young adults view financial challenges as opportunities for growth, aiding them in building a positive and proactive belief system around money. Financial Goal Setting Goals give us direction and purpose. Whether saving for a first car, paying off a student loan, or investing in their first property, encouraging young adults to set and work towards financial goals from an early age is a great way to help them build discipline and a future focussed mindset. It’s equally important to celebrate milestones, no matter how small. This positive reinforcement nurtures a sense of achievement and motivation, propelling them further on their financial journey. The Essentials of Budgeting Ever heard of the saying, “Failing to plan is planning to fail”? That’s precisely why budgeting is so important. Budgeting is not about limiting yourself; it’s about making your money work for you. The 50/30/20 rule, where 50% of your income goes towards needs, 30% towards wants, and 20% towards savings, is a great place to start for young adults because it’s simple and gets them in the habit of saving from an early age. Understanding and Practicing Responsible Spending Managing your money doesn’t mean you have to miss out on the things you enjoy. It’s all about responsible spending. Need versus want is a timeless debate, but helping young adults to understand the difference is key. Impulse spending is something that can often sabotage budgeting and saving efforts. A great tip for young adults to help them avoid impulse spending is to implement a 48-hour waiting period for non-essential spending. This allows time to consider whether the purchase is within their budget and aligned with their financial goals. We’re not just equipping our young adults with financial knowledge but empowering them to build a successful financial future. So, let’s keep the money conversations flowing and start helping our young adults build habits that will set them up for financial success. The narrative changes today!   The information provided in this article is general in nature only and does not constitute personal financial advice.  

Six super hacks to retire richer

28 April, 202115 April, 2021 Updated on15 April, 2021 Retirement, Superannuation

While it’s easy to be discouraged by superannuation and fear you will never have enough money saved to stop working, remember even a modest superannuation balance can make a big difference in retirement. For every $100,000 saved in superannuation, you can expect these funds to generate a return of 6%, or $6,000, a year. When this is paid out as a pension, it equates to $500 a month tax-free. Of course, this is doubled if both you and your partner have $100,000 each in super. Depending on your overall financial situation, this can be paid in addition to you receiving a full age pension. Here are six super hacks to help you maximise your super balance: Hack 1. Consolidate your accounts Consolidate all your superannuation accounts into one account best suited to your needs. The Australian Tax Office says some 6 million Australians have multiple super accounts, wasting millions of dollars in duplicated charges. These unnecessary fees will needlessly erode your super balance. Consolidating multiple accounts is easy. Simply log on to the ATO’s website and with one click, choose one account to accept all your funds. This alone could save you thousands of dollars. Hack 2. Review your super contributions Check your employer is contributing the right amount to superannuation from your wages each week. If you believe there is a shortfall, contact the ATO to investigate on your behalf. Hack 3. Take advantage of co-contributions If you earn less than $52,697 a year, consider making additional after-tax super contributions to take advantage of a matching contribution from the government, called a co-contribution. Under this scheme, you can contribute up to $1,000 of after-tax money and receive a maximum co-contribution of $500. This is a 50 % return on your investment. The government will determine how much you are entitled to when you lodge your tax return, and if you are eligible, the government will then pay the co-contribution directly to your fund. You don’t need to do anything more than make the original contribution from after-tax savings. Hack 4. Benefit from spouse contributions Review whether you can benefit from making additional contributions to your partner’s super. If you do make contributions to your partner’s super and they are on a low income or not working, you may be able to claim a tax offset of up to $540 a year. Hack 5. Contribute any long-term savings to super There are rules concerning how much you can contribute to super, and when, but any savings put into superannuation will be held within a tax benign environment. While your fund is in accumulation mode, these assets’ income and capital growth are taxed at 15%, rather than your marginal tax rate. Once you start receiving an income stream, these assets are held within a tax-free environment, making your superannuation your own personal tax haven. Hack 6. Seek professional guidance Of course, there are a raft of rules around superannuation that you must be aware of. To maximise your retirement nest egg, be sure to seek expert advice from a financial adviser or qualified accountant. While it is never too early to start making additional contributions to super, it is also never too late. Even small steps towards the end of your working life can and will make a difference to the way you live in retirement. Contact us today to get started. The information provided in this article is general in nature only and does not constitute personal financial advice.

Post Christmas Sales – A Survival Guide

20 December, 202314 December, 2023 Updated on14 December, 2023 Budgeting, Education, Finance

We’ve all experienced it… the undeniable allure of post-Christmas sales. No sooner has Christmas wrapped up for the year than the frenzy of Boxing Day Sales descends upon us. Every store window beckons, and our inboxes overflow with promises of unbeatable discounts. But before you indulge in some festive leftovers and make a beeline for the air-conditioned wonderland of sales, let’s take a moment to pause and ponder… Is that shiny, discounted gadget truly a necessity? Do those new outfits genuinely add value to your wardrobe? Or might there be a wiser way to allocate your hard-earned money? The Allure and Reality of Post-Christmas Sales The holiday season often leaves our wallets feeling lighter than usual. Australia’s festive spending reached an eye-watering $74.5 billion in 2022, marking an 8.6% increase from the previous year, according to the Australian Retailers Association. And Boxing Day? A whopping $1.23 billion was spent in just 24 hours! These figures aren’t just numbers; they paint a picture of our collective weakness for a good holiday sale. But here’s the other side of the coin: while sales can offer genuine bargains, they also come with pitfalls. The risk of accumulating more debt is a very real reality for many shoppers, especially with credit cards already stretched thin from holiday shopping. And let’s face it, impulse purchases can often lead to buyer’s remorse and an overstuffed home. The Merits of Post-Christmas Sales While the post-Christmas sales period often comes with warnings of overspending, it’s not all doom and gloom. When approached with a well-thought-out strategy, these sales can be a great opportunity to secure essential items—be it electronics, clothing, or household goods—at a fraction of their original prices. But how can one truly benefit without falling into the common traps? The key lies in being discerning. With a bit of planning and restraint, the post-Christmas sales can be both enjoyable and economically rewarding. Smart Money Moves Beyond Sales It’s easy to forget about your bigger picture goals when there are neon signs screaming discounts of 50% OFF or more! But remember, every dollar spent is a dollar less saved… or put towards those bigger picture goals. Before you fall prey to the post-Christmas sales, consider these alternatives: Save for a Rainy Day: Life is unpredictable. Having a safety net can make all the difference. Debt Reduction: Free yourself from the burden of debt, by paying down your credit cards and/or any loans you have. Invest: Think stocks, bonds, or other avenues to grow your wealth. (Hello Financial Freedom!) Financial Goals: Would you rather a new outfit? Or to be one step closer to that dream holiday, new car, or first home? Post-Christmas sales can be both a treasure trove and a minefield. The choice is yours. This festive season don’t succumb blindly to the allure of holiday sale discounts. Instead, either purchase your “need to have” items (remember, be discerning here!), or skip the sales completely and opt to put the money towards your financial goals! Here’s to spending wisely, and a financially savvy new year! The information provided in this article is general in nature only and does not constitute personal financial advice. 

What does a good financial adviser do?

9 June, 20212 June, 2021 Updated on2 June, 2021 Aged Care, Budgeting, Economy, Finance, Insurance, Investing, Retirement, Superannuation

Some people may think that a financial adviser’s role is to forecast the direction of the share market from month to month and invest clients’ money accordingly. This is not the reality, of course. Investments are only one small part of what your financial adviser can provide for you. Consider for a moment the number of websites, newsprint and broadcast time dedicated to financial topics these days. Australians seem to have an insatiable appetite for understanding finance. Whether it’s the latest share market activity, economic news or the constantly changing tax and superannuation rules, a licenced financial adviser can help answer your burning questions and save you the hassle of finding it yourself. Usually, the benefit you receive from a financial adviser can be spelt out in dollar terms. It might be the income tax you have saved by re-structuring your salary, or a new concession from the Australian Tax Office (ATO) or Centrelink that you didn’t know you could get. The finance section of your newspaper or online magazine probably includes a regular “advice” or “Q & A” column. By law, these columns must warn readers that the advice does not consider your personal situation or needs, and you should consider its appropriateness before acting. In setting your financial strategy, a good financial adviser will take the time to get to know you and your circumstances. This means that everything recommended to you—the investment portfolio, super contribution strategies, savings plans and insurance advice—is tailored to your personal needs, goals, and tolerance to risk. As the years go by, your financial strategies will need adjusting due to changes in the broader environment or something closer to home. Whatever the case, your adviser is there to help you make the most of the good times and the bad. And a regular financial review doesn’t always mean major changes, but at least you’ll know that you’re on the right track – and not having to do it alone. Quality, knowledgeable advice is critical, and wherever you are on your financial path, now is always the best time to talk to us. The information provided in this article is general in nature only and does not constitute personal financial advice.

What will you do with your tax refund?

29 July, 202017 September, 2021 Updated on17 September, 2021 Tax

Thousands of Australians receive tax refunds every year. Some refunds won’t even cover the cost of a pizza to celebrate, however many are quite substantial. If you’re one of the lucky ones, what will you do with your tax windfall? If you go out and spend it, all you’re doing is giving part of it back to the government in the form of GST. Sure, it’s nice to splurge once in a while but there are other places you can stash your cash and reap a longer term benefit. Consider these options: a) Superannuation contributions Your superannuation fund will surpass any other investment vehicle simply due to the law of compounding… and your contributions are taxed at only 15%. Whilst superannuation funds remain the most tax-effective haven and thus the best way to grow your investments, the downside is that once your money is contributed it’s usually not accessible until you retire. b) Regular investment plan Consider investing the lump sum and setting up a regular savings investment plan to build it up. This will help you meet future objectives such as a new home, education or new car. While a certain amount of money in the bank is helpful for emergencies, now could be the time to consider a longer term plan with assets such as property or shares. You can invest in a managed fund with an initial deposit of $1,000 and make monthly contributions. While such investments are subject to fluctuations in value, you will see them grow over time. c) Reduce your mortgage By paying it straight into your mortgage, you immediately acquire more equity in your home and reduce the interest. Having more equity in your home also means that you can re-borrow that money again for investment, gearing, or to purchase other assets. So that’s an option that could keep on working for you. The moral of this story is to have a plan and then apply it. Work out where your tax refund will work best for you then talk your decisions through with your licensed financial planner. The information provided in this article is general in nature only and does not constitute personal financial advice.

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