Most retirement planning campaigns promoted by the majority of financial institutions are focused on answering the wrong questions. 

 

When managing investors in their 50s, advisers must be willing and able to confront their existing clients and investors with the facts about their circumstances and lay their options out on the table. From the age of 50, investors not only need carefully crafted plans and investment strategies that make them profits and also protect their assets. Managing the downside risk of your investments either in superannuation or non-super assets is more critical than ever from this period. You can reflect on the impact the current COVID 19 pandemic has had on all lives and think about how to defend and protect your current investment strategies as an over 50 investor. 

 

When choosing an adviser to help you with your retirement planning, it is of great importance to be working with the one with the right resources and relationships to help you achieve that. This is a role in which an ANIG WM adviser can be integral and supportive to your financial wellbeing. There are many options available to you, including separately managed accounts, self managed superannuation funds, property investment and more. An experienced ANIG WM financial adviser can provide tailored advice and point you in the right direction.

 

NB: Investors thinking about their retirement planning are often pointed towards calculators that project their expected retirement income. Whilst these provide indications, it is vital to read the disclaimers as such calculators are based on a single set of assumptions that do not necessarily reflect on market conditions and investor’s behaviour. For an objective start, please follow the government’s money smart Retirement Planning Calculators at the below links for example.

ANIG Wealth Management is a licensee and a diversified wealth management firm focused on managing and growing the wealth of non-institutional investors and retail clients. 

 

You have spent a lifetime working to secure your retirement. ANIG WM’s wealth creation, retirement planning, and tax and debt reduction solutions can help protect and grow your available resources (superannuation and non-super assets) and provide the confidence and peace of mind you seek from your advisers and wealth management firm. We share a common goal with all our advisers, and through our personalised and comprehensive investment and wealth management solutions, we are your single source of solution to all your retirement planning questions. 

 

Our point of difference?

 

Holistic – With wealth comes complexity, so our holistic approach to financial advice and investing begins from understanding your set immediate and long-term objectives. Our processes are to ensure we are strategising to deal with your unique and ever-evolving circumstances for your immediate and long-term peace of mind.

 

Direct ownership – Owning our AFS license allows us to independently think about our strategies and clients’ wellbeing without any institutional agendas. We can reduce/cut unnecessary costs, and our clients/advisers are well-positioned to be investing direct using their preferred asset classes of equities, fixed interest, and direct property-based investments. 

 

Customisation – We have a flexible approach to portfolio construction. Your portfolios are customised to your set security level and unique investment risk profile to provide you the confidence you seek and peace of mind. 

 

Accessibility – You will be under the management of your adviser/AR/CAR. You will have direct access to your adviser/AR/CAR and also your investment managers. We provide 24/7 access to your portfolio, so you can always be evaluating our performance. 

 

Tax-effectiveness – We focus on the after-tax returns to stem or reduce your cash outflows and promote wealth preservation. With investors opened to sound advice, we are comfortable using investment vehicles like Superannuation, SMAs, SMSF, Family Trust, and other tax-effective vehicles to reduce the tax impact on your investment returns and future capital gains

 

Exclusivity – Given we are a non-aligned firm, we can apply a diverse range of investment solutions, and you will have access to exclusive investment opportunities that would otherwise not be available to you in a product-based market.

The age at which an individual can access superannuation savings is your Preservation age. You must meet a condition of release to access super. Preservation age is 60 for individuals born after 1964. The current Age Pension eligibility age is 67 for individuals born from 1 January 1957.

 

Click here and work out ‘when you can access you super and Age Pension’ with the federal government and ASIC’s Moneysmart Super and Pension age Calculator

 

For investors in their 50s looking to work for the next 5 to 10 years or longer, we believe clean adjustments and investment strategies can be added to your lives to improve your overall financial wellbeing in the last phase of your working lives. 

 

Most companies would like you to focus on your preservation age and qualifying for the Age Pension mostly because their retirement planning advice are aligned to products they sell. If their advice is only based on maxing out your concessional contributions (employer contribution) or selling off non-super assets (shares, properties or other) and putting the proceeds into super then they may also direct your attention to focus on qualifying for the Age Pension with projections on when your retirement savings could dry up. There are diverse opportunities available, and you should be asking the right questions to the right advisers.

 

Be involved and help us to help you with the right advice and investment solutions that can help you maintain confidence when planning for your retirement.  

No, there is no set age for one to retire in Australia. Retirement is the point in life where work becomes a lifestyle choice. It is the point you reach where you’re no longer reliant on trading your time and skills for income. At this point, investors can supplement lifestyle costs with income from alternative sources such as superannuation or other investments. To be eligible to access super savings, investors need to meet a condition of release like hitting their preservation age. Retirement age in Australia is usually predicated on your preservation age and generally will be over age 60 for most moving forward. 


The shape of everyone’s retirement to us is obtaining a roof over your head, being free from all debts and having sufficient assets including super generating you a passive income. When that happens doesn’t necessarily depend on age but rather when you feel confident and secure about your overall financial position. 

You’ve earned in total $2,400,000 if we assume you started full-time work at age 30 and, you’ve earned on average $120,000 combined income up until the age 50

 

How much have you paid in tax?

 

This suggests approximately $34,000 per year in taxation which adds up to $680,000 for 20 years

 

How much went into mortgage and interest repayment?

 

Let’s assume you own a home acquired in the year 2000 with a mortgage at an average 5% interest that you focused on paying it off in 20 years on a Principal and Interest repayment term. Apply the examples illustrated in the table.  

 

Purchase Price

Original Loan

Rate

Mortgage Cost – 20 Yrs

Interest Paid – 20 Yrs

$300,000

$240,000

5%

$380,000

$140,000

$400,000

$300,000

5%

$475,000

$175,000

$760,000

$600,000

5%

$950,000

$350,000

 

How much went into superannuation savings? 

 

$136,800 if we assume a contribution rate of 9.5% for the last 20 years. This assumed you only relied on your employer’s contribution. 

 

How much was left for lifestyle, family, children’s education, and other expenses?

 

The figure is $1,203,200 or $1,108,200 or $633,200 respectively if you’ve spent up to $300,000 or $400,000 or $760,000 in acquiring a house. This means you’ve spent in a year about $60,160 or $55,410 or $31,660 respectively on lifestyle, family, children and education, and other expenses over the past 20 years.

  

So, if career and family commitments took all of your attention and you have been unable to focus on your overall financial wellbeing, this could be the shape of your life at the moment. Inclusive returns, your superannuation balance might be below $300,000. For this reason, what we may consider is to look into utilising some of the resources you have in assets and maximise that with specific and targeted investment strategies. Anything other than this could lead you to rely on the Age Pension, which is something we like to treat as the last option if our investors have exhausted all possible alternatives that could potentially help improve their balance sheet.  

If you’ve read our response to ‘where did the money go’ question, at this point you’ve worked out how much you’ve paid in taxation over the past 20 years of your working life if the $680,000 used in the illustration does not relate to you.

A self-managed super fund (SMSF) is a tax vehicle that allows investors to invest in a tax-effective environment. The highest tax applied to an SMSF is 15%. Capital gains tax (CGT) is capped at 10% for assets held over 12 months. What SMSF can offer investors is the benefit of a lower tax structure with flexibility and total control of their superannuation assets by ensuring you have exposure to the major asset classes of fixed interest, shares, and property-based investment. In the right situation, an SMSF allows you to hold direct real estate investment.

Investors can run a pension within an SMSF structure, making the vehicle quite suitable as a long-term financial planning tool. With about 5 to 15 years left until retirement, an SMSF can offer investors with exceptional possibilities that are otherwise not achievable with a traditional super fund if they have the right mix of ingredients. The services of a qualified adviser are important and can play a key role in guiding you to understand what the vehicle is, how that could potentially benefit you, and also your trustee obligations and ensure your SMSF remains compliant. 

Contact ANIG Wealth Management and see how we can help.

That depends whether the investor like the concept of property and would appreciate the opportunity to pay less tax on the rental income and capital gains associated with a property investment. 

 

If an investor would like to pay up to 15% tax on rental income and potentially zero (0) tax on the rental income when they retire, or to pay up to 10% capped CGT to potentially zero capital gains tax in retirement for a property held over 12 months, then a property in super can be a good idea. For property investors, our observation is that they prefer to use borrowed funds with superannuation savings for property investment. The borrowed funds can also be thought of as an injection of capital separate to their own or employer contributions to achieve their desired retirement outcome. 

 

For investors with no appetite for property investments, they have the option to experience our investment advice process, our investment strategies and advice recommendations with access to 80 Plus Investment Managers, 1000 Plus Managed Funds, 350 Plus Professionally Managed Portfolio and Over 20,000 Shares and ETFs across 23 global exchanges including the ASX. Note that the same tax considerations that apply to property are applicable to these investments. 

 

There are no limitations on what we do. Investors will always be advised based on their attitude towards investment risk, their set circumstances, lifestyle and financial goals, and other important factors that are identified in your advice process. 

 

Talk to ANIG WM and ask how we can help. 

The Association of Superannuation Funds of Australia (ASFA) estimates that a modest retirement lifestyle for Australians aged 65 and own their home outright and are in relatively good health could live off the following amount of money each week and year in retirement: 

 

Modest Lifestyle  

Modest Lifestyle

 

Comfortable Lifestyle

Single

$28,220 per year or $543 per week

 

$44,183 per year or $850 per week

Couple

$40,719 per year or $783 per week

 

$40,560 per year or $1,201 per week

Figures were based on Budgets for various households and living standards for those aged around 65 (March quarter 2020, national). Please click here and access the full Budget Report provided by the ASFA.

The ASFA also suggests that the lump sum superannuation balances required to achieve comfortable retirement based on the assumption that the retiree(s) will draw down all their capital, and also receive a part Age Pension. 

 

  

Superannuation savings Required at retirement

 

Comfortable
lifestyle for a Couple

$640,000

 

Comfortable
lifestyle for a Single

$545,000

 

Our observation is most investors or retirees will need to be generating about 60% to 70% of their pre-retirement income to be able to live a comfortable lifestyle in retirement. This means for a couple or single investor on a combined or individual after-tax income of $120,000 will need to be generating between $72,000 – $84,000 of passive income tax-free. 

 

ANIG WM assumes the investor is no longer paying for a mortgage that can take up to 28% of income and also your children may no longer be dependent as child cost could consume up to 30% of income or more for those who may sent their kids to private schools.

 

This is because if you are used to earning a certain standard of income over 20 to 35 years of your working life, individuals get accustomed to certain habits and lifestyles that can be hard to break. So, if you are planning to maintain a similar lifestyle in retirement and to slowly dial down as you age then we believe the 60% to 70% is more reasonable.

Downsizing is the idea of freeing up capital (or equity) tied up in a house that is draining your cash flow or winding down an asset that has become costly to maintain by the homeowner or investor. It is something that shouldn’t be ignored.

When it becomes apparent that you will be unable to pay off the home loan before your set retirement age or there is a debt-free home but insufficient investable assets, that is the time to start considering downsizing. 

 

Before you begin to do anything, you should first look into what other options are available to you through investing with some of the equity tied up in your home. The home equity can help make significant improvements in investing. You can contribute some into super or even setting up a self-managed super fund for investing. You can use it to invest in your preferred assets such as property, shares, ETFs, managed funds, and other assets or a combination of all. The point here is that you have diverse options. 

 

Unfortunately, most investors prioritise lifestyle choices and defer downsizing to a later stage. Our role at ANIG is to guide your decision-making process by following these simple steps with evidence. First, we’ll review your interest repayment and your cost for retaining the asset for the intended period the investor is looking to hold the asset. We check that with the potential future value of the asset. We then compare the savings from downsizing and apply them to investing and, then present the investors with the results to aid your decision-making process.  

There are times where redrawing from home equity and injecting its capital in the form of a non-concessional contribution (NCC) to super can be appropriate. However, the downside to this strategy is that the capital injected into super although is to serve for investment purpose, the interest on the loan amount drawn from your home and contributed into super will not be tax-deductible to your marginal tax rate. As such, cash flow becomes very critical to this strategy. 

 

With this strategy, ANIG WM advisers assess the upside and ensure the redraw amount is set at a lower or reasonable LVR. Where we identify insufficient surplus cash flow to support this strategy, we advise against it. Ultimately, this strategy is focused on paying off the loan within the investment timeline. 

 

One of the reasons where this strategy becomes appropriate is that you will be investing in a lower tax environment (15%) as compared to whatever your marginal tax rate may be. Also, CGT is capped at 10% within superannuation. Aside from an investor losing out on tax credits on interest repayment this strategy could be attractive to most investors. 

Deciding whether to retain your house or not is more of a financial and lifestyle versus emotional decision question. 

Investors with sufficient resources (a debt-free home, investment assets and large superannuation balances and cashflow surplus) can make a lifestyle decision to retain the house. We assume such investors need simple low-risk strategies to protect and preserve their asset base for the long term.

For investors with insufficient resources, some may be willing to endure the pain by making financial concessions to be able to pass on some inheritance to their families. If that is the objective, then retaining the house is a reasonable decision. However, that shouldn’t stop you from accessing the equity to improve your finances by investing. 

 

Other investors deemed living in a house that is worth something and struggling to make ends meet as an unreasonable choice. If that is the case, then it is worth looking into alternative solutions. It may include downsizing or accessing the equity for another home you could be moving into in the future and other investments. What is critical to your decision is time and, speaking to an adviser could help you make the right decision that can save you time and money. 

 

Your ANIG WM advisers can play a key role in simplifying this decision-making process with education and some potential solutions.

A superannuation re-contribution strategy is a tax mitigation strategy that converts the taxable component of your superannuation benefits into a tax-free component. This strategy is most effective for estate planning as it ultimately results in a significant reduction or potentially no tax payable when a super benefit is passed onto the beneficiaries following the member’s death. This strategy involves a lump sum withdrawal of superannuation benefits often tax-free on the withdrawal and re-contributing the total funds into superannuation in the form of a non-concessional contribution. 

A re-contribution strategy is generally a no brainer and most beneficial to investors aged 60 and above as they are able to withdraw their superannuation benefit tax-free regardless of the tax components. Currently, an individual can contribute $100,000 per annum or up to $300,000 over a three-year period using the bring-forward rule. 

This strategy can also be an effective strategy for investors aged between 55 to 59, however, they are subject to incur some taxes on the withdrawal.

The ATO estimates as at 30 June 2019 that there was $20.8 billion in lost and unclaimed super across Australia.

 

Also, ASIC estimates there is around $1 billion of lost and unclaimed money to be claimed from bank accounts, shares, investments, and life insurance policies they are holding and waiting to be claimed by the owners. 

 

These are funds forgotten or being overlooked by its owners or beneficiaries and likely are incurring fees. It can be due to any reason, such as death, sickness or simply the owners are time poor. ANIG WM can help you with this process and help you find, review, and consolidate these funds to help support your wealth creation objectives.

 

Click the below link for more information on:

Lost and unclaimed super by postcode

Passing away without a Will (die intestate) is a situation that can cause more grief to most families at an already difficult time. A will can ensure you have your affairs structured that your wishes are met and assets are distributed to the right beneficiaries. To die intestate can potentially cause an inappropriate or disproportionate distribution of assets. The services of an estate planning solicitor are of high importance. Wills must be comprehensive. As such, the ideal situation is not found in an online, 10 minutes to complete, ‘will- kit’ Will. In most cases, such Wills do not necessarily deal with the complications associated with estate planning and very often are inappropriate. 

A binding nomination is an important part of superannuation as super does not form part of an estate. To ensure that the right person receives the superannuation benefits you need to ensure a binding nomination is set up.

With an SMSF with more than one (1) member, the assets in the SMSF will automatically be transferred to the living partner making it an effective estate planning tool. When the living partner also passes, that is a CGT event where the SMSF is to be closed. The assets can be sold and come out in cash or in-specie transferred out of the SMSF. 

As your personal circumstances change over time, it is advisable to have wills updated every 5 to 10 years. For a binding nomination, it is appropriate to have them updated every three years. 

Talk to us and ask all your questions. 
Retirement planning advice