We estimate you will pay $310,678 income taxx over this period

We estimate you will pay $310,678 income taxx over this period.

 

·         Under the recommended strategy we estimate you would pay income tax of $270,387 a saving of $22,740. 

 

·         By implementing the new strategy your income tax will reduce from $34,350 to $28,382 this year and your position will improve.

 ·         Based on the information provided, the assumptions used and the current income tax rates the recommended strategy should increase your current position at retirement to providing a lump sum at 65 of $661,650

 

·         From our discussions using your spending habits of last year you estimated the cost of living in retirement would be $80,400 in today's dollars, which would equate to $101,848 based on the pre-retirement cost of living indexation.  Post retirement indexation of the cost of living has been assumed at 3 %.

 

These are excerpts from a report that we prepared for Douglas recently.

 Very briefly he is 57 & earns 100k with an extra income from a portfolio.

 He estimates he might work to age 65 & his house close to paid off.

 If his super is 341,000 today & grows to 661,650 when he is 65 then is that sufficient to allow him to maintain his Merck & his lifestyle?

 Not when his projected lifestyle will be 101,848 p.a.?

 

Douglas needs to do something & there are two simple strategies available to reduce his taxx & top up his retirement capital amount.

 

We can also do better than these above projections as when Douglas turns 60 he can do more of the same. He will need to do his biannual reviews with us to maximise his options as 661,550 won’t support his preferred lifestyle.

However there is no simple way to reduce his current spending lifestyle from 82K unless he has parameters which we & the government set him.

 Again it is a choice of spending today or deferring & saving so as to spend later.

 

We had three conversations with others recently & these conversations were all similar as they were all concerned with FIFO miners.

 

Their financial numbers were all the same as they were each earning 140k to 150k income this financial year.

 1.    Our hairdresser this week indicated that her husband had paid about 15,000 in taxx for the quarter of the year he had been working.

 How much is that for the year we had to ask?

 

About 50,000 she says

 
             No, your son would say 60,000..

 How much is that over the next 25 years if he keeps earning that income?

You can do that, can’t you???

 

Then we moved onto the size of the mortgage which after serious prompting is about 440,000?

 Will they pay off the house before he retires or is made redundant?

 

What was her accountant’s suggestion when he was showing her is new Audi?

  It was maybe buy a car.

 Our suggestion was to ‘sack the accountant’ as his fees are clearly to high & his answer wasnt good enough.?

 Our other suggestion was if she had some equity & a certain risk profile then maybe she could switch over time their debt into a taxx deduction.

 

How do you do that?

 

 Of course what if she jams her finger or worse how do they pay the meals & the mortgage?

 

 

2.    Mark we spoke to just as he was to board the plane.

 How much taxx was he going to pay this year?

What had he done about it?

He had bought a new car.

Is that wealth creation?

 We did give him a suggestion as he boarded as he is a client as he has made some steps in protecting the downside for his family.

 

Will they pay off the house before he retires or is made redundant?

 

3.    Another called us as he enjoyed what we wrote.

He also was on the same high income. He plans to buy a cheap house as he lives west of here but close enough to lunch here.

He has had challenges in the past with business partners & still has a 40k debt with the taxx office.

Surely that should motivate him enough to do some EOFY planning so that he is in a better financial position in three years time.

 

He had meet some so called adviser who suggested she could organise finance with only a 15% deposit. That is better that 5% or 10% but still requires mortgage insurance.

 It doesn’t  minimise his taxx or maximise his earning or protect his family.

 

We repeated our 5 house buying rules from a previous new letter.

 

What does he need to do so that in three years time he is in a better financial position?

 

Then we read this weekend.

 

 QUITE literally they are at the coalface -- 55,000 coal workers in Australia fear not only for their jobs but for their towns.

 

These three & the other 55,000 may well regret not maximising their income whilst they had the opportunity.

 They certainly could have paid down their debt with some discipline, minimised government waste & build up liquid reserves for later.

 

 As we have indicated to all & in previous newsletters our parameters are

 ·         What would we do for you if we were in the same financial position as you?

·         How can we do this efficiently to minimise waste to others lifestyle?

 

We are not aligned to anyone but you & just as Greg tunes up our car every 5000 KM, isn’t it time you tuned up your finances? It costs NOT to.

 

  How much government waste will you pay over a lifetime & are you prepared for a redundancy?

 You are welcome to call us on 07 3848 1088 or email or visit our websites  

  How do we motivate you  enough to do some EOFY planning today so that you are in a better financial position in three years time.

 

          John McAuliffe