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

Do you want rewards & discounts for your life insurance?

Yes it is true & many In South Africa take out their life insurance purely for the rewards available in the programme.

Let’s look at the rewards that are available for you.

There are 4 levels Bronze, Silver, Gold & Platinum & all you have to do is ‘take up healthy activities.’

If you aim for gold you need only to earn a very easy 20,000 points.

And the rewards are

• ·         20% discount Qantas  for Gold & 35% discount for platinum. What assumptions are made when pricing flights in the Savings Calculator?
•        The tool uses average ticket prices of $2000 for international flights and $400 for domestic flights.           Business and 1st Class tickets do not attract any discounts.
• ·         A $50 Myer gift card after earning an easy 5000 points.
•  
• ·         With Hoyt's Up to 5 e-cine discount  vouchers if member of Hoyt's Rewards also.
•           What about the movie tickets?            The savings have been calculated on the basis of the lowest price (restricted)  tickets as  compared to regular unrestricted tickets.
• ·         20% off Spar discounts if gold twice p.a.

You earn points by

• ·         A health review
• ·         A mental health assessment
• ·         A health check @ Chemmart
• ·         Advanced health checks such as mammograms , pap smears & colon cancer screening
• ·         Fitness & nutrition assessments
• ·         Dental assessments
• ·         Outdoor activities from walking to marathons.

Now for your discounts

• ·         Save up to 30% at Aussie Farmers Direct.  You also earn points
• ·         Save up to 30% on a dietician initial consultation.
• ·         Save 30% on Weight Watchers programs.  [not the joining fee sorry]
• ·         25% of Fitbit & 30% off fitbug to track your progress.
• ·         35% off a polar heart rate monitor & also earn points
• ·         Fitness partners include Virgin active clubs, Anytime Fitness, Fernwood & Step into Life who provide different discounts for you.
• ·         Save 30% on Allen Carr Easyway to Stop smoking .
•  
•  
•  And what benefits of having a personally tailored insurance plan gives you apart from ‘peace of mind’.

The upfront discount on premiums  is 7.5% for Lump Sum e.g. life, TPD & Crisis cover and 0% for IP and Business Expenses. 

What is the cash-back benefit and how does it work?

Cashback is paid to the premium payer (for Lump sum insurance premium paid only) at the end of every 5 year premium paying period. The amount ‘banked’ each year is determined by the member’s status at the end of every year.

Cash-back every 5th year  from 2% for Bronze, 4% silver,   8% for gold &  10% for Platinum.

*Note that Cashback will not be paid to a member if their  Protection policy is no longer in-force at any 5 year anniversary.us Bronze Silver Gold P

That is a summary of the

um

What is the price of all this package?

Simply membership is $10 p.m &also  a life policy of only $1per day or more which is a reason why it has been so popular in South Africa.

Of course you have to be healthy enough to obtain cover. If you are not then  here is a very good reason to become healthier.

We have only summarised this outstanding offer to you. There is a 18 page FAQ & a life policy Product Disclosure Statement PDS that provides you with the detail.

‘If we were in your position what we do so that you are better off in 3 years time.’

Contact us on 07 3848 1088 or email us or visit our websites.

John McAuliffe

When do you start paying down the mortgage?

Will it just happen when there is always the choice between lifestyle & wants & that better word need.

Really that’s the decision that you have whether it is you for the family or Joe for the country.

Joe would be like some of the males we see i.e. scrimping on the small stuff & then spending big on the toys & cigars.

E.g. 12b on jet fighters or 20B on a health research fund which can be better done by anyone other than government.

We just tuned into viewing Bill English [Joe’s equivalent NZ treasurer] lauding New Zealand’s government return to a 372M surplus.

Apart from demonstrating that they have taxed too much he spoke of ‘ careful stewardship’ of the public’s money’ and ‘responsible management’. 

His concerns were  the uncertainty of New Zealand’s two major trading party’s China & yes Australia.

New Zealand can now afford free doctor’s visits for children & allow more for social security.

You have options when there is less debt & you can use your savings.

Why are the bank share prices so high in Australia?

It’s simply because of the huge debts that family & businesses have & let’s not forget the 50B on credit cards.

We viewed a WA share broker putting a sell on Westpac this week ‘as no one remembers what a bear market in bank shares is like’.

Yes WBC has moved from $14 per share to $35 since GFC.

You & Joe have the same choice.

Joe has made changes to his spending habits in the budget.

If you want several summaries of the budget then just ask us. 

However the big one to us is the assessing of the value of your super asset when it is in pension phase.

Until the end of this year your own super in pension has been accessed on its income alone through a income test only.

Now the assets behind your super pension will also be tested to the same deeming rules that have applied to other financial investments.

The assets test is more stringent.

We read today that that will mean  $80 less per week is the difference pension changes will make in a decade according to the council on aging. 

Or from the Australian  May 15, 2014 12:00AM

Significant’ aged pension changes target recipients

TONY Abbott’s changes to the age pension are dramatically removed from “fiddling around the edges” and will affect the scope of the payments for decades, cutting swathes of would-be recipients out of the picture.

The seniors whack in the budget included eventually raising the pension age to 70 in 2035, freezing indexation thresholds on the assets and income test for the payment and rewinding the size of investment returns seniors can get before this affects the pension rate.

Just Maybe paying down the mortgage & not adding to your super until later might be good for you.

There are many who at our age through life’s journey have not paid down their mortgage or even their credit cards.

We have never understood why the government allows you a lump sum taxx free from your super once you retire.

Hence it would not surprise us if that loophole is closed in the future.

 i.e. increase the ‘preservation age’.

Don’t assume you can pay off your mortgage from your super or partake in Australians’ great 2^nd dream travel on the canals in Europe or the grey nomad route.

As Ron suggested today ‘Reward yourself today’.

However ‘careful stewardship’ of your finances is what you expect from Joe & yourself today.

As we said to Ryan this week

‘we work for you so that you are in a better position in three years time’.

Joe’s changes not only affect future pension entitlements, they also may  affect the health card & other state concessions.

You may want to look at other health & financial options especially if the pension is to age 70.

There are often two solutions to a problem as we were reminded when doing some Naplan maths coaching this week.

As Chris & Ray & Mark & Ryan  others did this week call us on 07 3848 1088 or email us or contact us through our websites today.

‘The pieces in the jigsaw may fit in’.

John McAuliffe

Twelve reasons to talk to us before June 30

Do you really want to fund 12B for fighter jets or fund another’s Lifestyle?

There is probably no better time to visit us  than right now prior to the end of the Taxx year.

If you want to minimise taxx or tune up your financial affairs then now is the time for action.

The window of opportunity closes with finality on that date! The benefits are there for you.

Which of these situations and opportunities can you utilise to maximise so that 'you are better off in three years time.'?

1.    Transition to retirement

You need to Know that there are advantages to  ensure a smooth transition to retirement.

E.g. reducing your mortgage or credit card debt today.

This is very relevant for all who are over 55 today as the rules will change on the 1^st January regarding pension tests.

As you pay zero taxx inside a pension fund when compared to super taxx on earning of 15 % it is also a smart tune up.

Remember we deliver personally to you the tactical and strategic advice that can be in the form of education, deciding on which product and on  its implementation.

2. Aggregating your superannuation into one fund

The number of people with multiple super funds is quite amazing. Helping you gather all your super bits and pieces into one simple to administer fund needs to be done sometime .

Why not do it with a non aligned adviser who will  have other useful suggestions for you.

We have Amy who spent a week ‘going around in circles’ trying to do that herself.

3. The opportunity to get a tax deduction for Income Protection

June 30 focuses you on tax deductibility.

Income protection is one such issue that needs  to be addressed before you need it to help maintain your lifestyle.

Travelling on the free-way @ Easter make us very aware of the need for cover. One Blink is all it takes.

 “If  we  could also show you a way to get a tax deduction of $1,000.00 before June 30, would you be interested?”

However can you get the cover is another issue as we have had 5 declined recently which makes us wonder what would their claim be if they had of gone direct & paid premiums.

Direct companies decline 40% of all claims.

Get it while you can.

4. Reviewing your nomination of beneficiary under your industry super fund(s)

The number of incorrect and out of date nomination of beneficiary cases is astounding.

This needs to be done now & it is too important for those you care about to be wrong.

We had an example of one whose beneficiary was his late mother even though married with 2 children aged 4 & 6. Unbelievable.

5. Ascertaining the amount of money to be allotted to your super

 Now rather than post June 30 is the time to discuss your super contributions and the type of investments they want to enter into. The limits have changed on how much you can contribute into your super.

What will be  your  final or projected figures on retirement?

 Do we need a lesson on compound interest? ‘, 'the riddle of the lily pad.’?

6. Transferring your life cover into your super

There are various advantages and limitations on placing your life cover into your super.

Be very  aware of the pros and cons of each scenario.

Discuss this with us now. Let’s make the decision.

7. Have you had  any event changes such as new family members, deaths or divorces?

The changes to your family and business fiscal health gives you an excellent reason to call us on 07 3848 1088 for  a “review and comparison” of strategy, tactics and which product  for you too.

8. Are your Employer contributions to your super correct?

Do you actually know what your entitlements are?

9. There are new & better products in insurance.

The new products, improvements and alterations to existing contracts created by the companies are quite astounding.

If you don’t know about the changes then you might be missing out.

e.g. One company provides amongst others benefits a 7.5% discount if you attend a gym.

10. Have you had your General Insurance review?

General & medical insurance just keeps going up & is there a better way.

We certainly have ideas for you to consider. Others have.

11. You might review your salary packaging

Let’s start talking to you about the advantages and benefits of what you are eligible for.

 Why not find  a check-list of what can be packaged. Let’s make  an opportunity to review your situation.

12. Have  you  been made redundant?

If so then now is the time to see how you can have help on such things as parking your super, reviewing their protection needs or even alerting you to potential employment opportunities. [We did to Andrew this week suggest a 20K better move.]

Which of these  opportunities is of interest & relevance before the end of June.

Now make the commitment to call us now on 07 3848 1088 or email us or visit our websites to check out our menu for lunch.

Do you really want to fund 12B for fighter jets or fund another’s Lifestyle?

Remember

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

‘Consumers do not trust online advice and still prefer to meet their financial planner face to face.

A Financial Services Council (FSC) research into consumers' digital engagement with superannuation and wealth management found that only 13% of Australians sought financial advice online, while 26% did it off-line.’

John McAuliffe