Would Lawrence & John or you like an extra an extra $54,945 or even $208,388??

We have just viewed a very good webinar presented by Warren.

Amongst the very many good ideas we viewed was what Lawrence & John & maybe you could do in the next week. i.e. June 30 or EOFY

If they invested 100,000 over 10 years @ 10% net interest then this table was presented.

Taxx Bracket	Cookie Jar
46.5% no debt or Medicare levy	441,143
30% most are	672,749
15%  as it super	990,597
0 if overseas say & not in Greedy 20	1,378,584

Or as John has 20 years then

Taxx Bracket	Cookie Jar
46.5%	841,920
30%	1,618, 000
15%	2,925,766
0%	5,282,753

 *No doubt this doesn’t take into account any costs such as the 3,000p.a. to run a SMSF which we don’t like anyway or fund managers fees or other. It is an illustration of the 8^th wonder of the world compound interest.* we haven’t checked the numbers in the interest of you getting the point & maybe a taxx saving in next week.

 Now Lawrence & John  don’t have $100,000 sitting around.

But they both could invest 10,000  as they have been earning plenty in FWA & offshore that they have a spare 10,000. [F = Far.]

So they could put up to the allowable deductible or concessional 25,000 into their super in the next week if they act today.

This will increase to $30,000 or more depending on legislation passing around July 1^st. In fact we have clients putting much more in as non deductible amounts.

Lawrence has only had his SGC of $14,000 into It & John  being self employed & fixated with a house deposit has put in zero.

Which is more important at our age?

The $1 ,000, 000 house or the $50,000 p.a. from a 1,000,000 cookie jar?

As Rich Dad Poor Dad writes a house is not an asset as it doesn’t produce an income.

In fact as we have found over the last 3 weekends it is a liability as it costs time & money & enthusiasm & tools to paint just the steel beams.

This is also your opportunity NOW  to add to your cookie jar in the next week.

Many do have the means, be it redraw accounts or Warren mentioned  credit cards for a moment.

Of course if they  were to do  that extreme  then the interest is not deductible as the income goes back into their or your super.

The webinar had plenty of ideas but this week is the time to act.

As Warren said ‘Failure is following the Norm.’

‘If we were in your position what would we do so that you are better off in three years time.’

As Brad & Michael have done this week you are welcome to call us today  on 07 3848 1088 or email us or visit our websites

John McAuliffe

If they were to retire as at 1 July 2014 they would have sufficient

assets to meet their living expenses ($42,000) coupled with age pension entitlements until over age 100

Linda replies

Hi John

Very interested to hear the plan and how it could be achieved

And previously

Are the smileys a good sign?????

 Yes it comes down to the numbers & the emotions when are you going to retire?

 

Linda is not 65 & yet to reach age pension age so that means for her that she can’t get the pension.

However her husband can as over 65.

We are arguing that because of prospective changes to calculating how much age pension you might be granted then it may be smart to retire before the end of the 2014.

The prospective changes mean that your super when in pension form will be subject to the harsher asset test as well as the income test.

Simply the test which means the government pays you least means that is what is granted to you.

Let’s give a simple e.g. of $350,000 only in financial investments &  outside the home.

How the income test works

Financial assets are deemed to earn income, while there are different assessment rules for other types of income.

Couple combined, illness separated (couple combined)

Fortnightly income	up to $276	over $276
Reduction in payment	none – full payment	50 cents for each dollar over $276 (combined)

if you are a member of a couple:

• if at least 1 of you is getting a pension, the first $77,400  of your and your partner's financial investments is deemed to earn income at 2% per annum and any amount over that is deemed to earn income at 3.5% per annum,

i.e. in our example  deemed to earn $11,089 p.a. or $426.50p.f.

& so the reduction in pension is $75.25 p.f.

However under the assets  test limits for allowances and full pensions

Family situation	For home-owners assets must be less than
Couple (combined)	$279,000

  The full pension is reduced by $1.50 p.f  for each $1,000 exceeding  this

 i.e.  in our example of $350,000 full pension reduced by $106.50.

However if actioned before 1^st January 2015 & if in receipt of a certain government benefits then there are ‘grandfather’ rules.

Linda had some concerns.

·         Does that mean we should reduce our salary sacrificing currently to the maximum that they can?

·         Should we start giving away called gifting to our son & grandchildren?

·         What about the health card as Linda currently spends 120p.m. on medication?

·         How will we be able to afford our health insurance?

Do you want to & can you live only on the pension?

i.e.

Pension rates (per fortnight)	Single	Couple each	Couple combined
Maximum basic rate	$766.00	$577.40	$1,154.80

Yes you could but

 ‘The latest quarterly ASFA retirement standard report - published by the Association of Superannuation Funds of Australia and released this month - estimates that a “comfortable” standard of living would cost a single person $42,254 a year or a couple, $57,817.

By contrast, the researchers calculate that a “modest” standard of living would cost a single person $23,283 a year or a couple, $33,509. ‘

There are other ideas worth considering

• ·         gifting which means you can give away 30,000 over a 5 year period.
• ·         Funeral bonds as they become exempt assets & solve a problem that funeral cover attempts to solve.
• ·         Constructing  your portfolio so that some of it may better qualify under Centrelink assets & income tests.

 As we said to Harry yesterday

‘If we were in your position what would we do so that you are better of in three years time’.

In Linda’s case she is better off to retire today & also make use of the long service leave they both have.  To emphasise this

I have attached the  retirement planning correspondence and modelling results as discussed.  Based on their current assets if they were to retire as at 1 July 2014 they would have sufficient assets to meet their living expenses ($42,000) coupled with age pension entitlements until over age 100.  I have also attached more in-depth landscape document with cashflow and asset values over time.  Please note that these calculations will vary based on future draw downs as well as any further assets/income which would need to be assessed for Centrelink purposes that have not been included in these calculations. 

  Linda it is time to visit the caravan & camping show & to learn how to back the caravan.

We also argue that asset values will fall from now & January 2015 as part pensioners find in particular that their rental property doesn’t provide adequate Net returns & penalises them under the asset test.

If you wish then call us on 07 3848 1088 or email us or visit our websites.

John McAuliffe