WILL THE SUPER REFORMS HURT?

From 1 July 2017, a range of super reforms announced in the 2016 Federal Budget will take effect.

For most people, the impact of these changes will be positive or neutral.

Super remains a very attractive place to save for retirement. And there may be opportunities to grow your super and retire with more.

If your income is below $250,000 (for 2017/18), while you build up your super, pre-tax contributions and investment earnings will generally continue to be taxed at the low rate of up to a maximum of 15%, not your marginal tax rate of up to 49%. 

Also, when you retire, you can still transfer a generous amount into a superannuation pension, where no tax is paid on investment earnings and payments are generally tax-free at age 60 and over.

Next steps...

Once you have read through this guide, you should consider making an appointment with your financial adviser. They can assess the impact the super reforms could have for you, as well as review your retirement savings plans and the strategies you are using. 

Beyond that, as we head towards the end of another financial year, now is a great time to see if there is anything else you could be doing to tax-effectively build and protect your wealth.

If you don’t have an adviser, you call us (Westmount Financial) on 9382 8885 to arrange an appointment. 

View a basic, 'at a glance' guide here.

Rick Maggi

Where are we now?

It’s now a decade since the first problems with US sub-prime mortgages started to appear and nearly eight years since share markets hit their global financial crisis lows. From those lows in 2009 lows US shares are up 239%, global shares are up 167% and Australian shares are up 80% (held back by relatively higher interest rates, the absence of money printing, the plunge in commodity prices from their 2011 highs and the high $A).

An obvious question is how close the next downturn is, which ultimately relates to where we are in the investment cycle. 

Read more here

06/11/15: Seriously, let's talk about your retirement...

It's all about income

A record number of Australians are entering retirement and the majority have no idea how they’ll pay for it.

Over half of Australians don’t believe their superannuation fund will provide enough income for a comfortable retirement, forcing them to either work longer or find additional income sources, according to a new report by the Financial Services Council and ING DIRECT.

The report found 55 per cent of Australians believe they’ll need to work longer and draw on other assets such as property to fund their retirement. One in nine Australians are counting on an inheritance.

The report also found that workers of all ages were open to the idea of working beyond their planned retirement age in order to build enough wealth to pay for retirement, mindful that mental and physical health and access to employment were potential impediments.

It’s clear from the report’s findings that the majority of Australians don’t have any certainty or confidence when it comes to retirement and they need to start planning a lot earlier.

For many Australians, it simply won’t be possible to work well into their 70s nor do they have other assets or a wealthy benefactor to fall back on. Even those fortunate enough to have wealthy relatives can’t bank on an inheritance given Australians are now living longer than ever which increases the risk of potential benefactors exhausting most of their wealth before they die.

This conundrum highlights the importance of saving and planning for retirement early. It also highlights the need for financial advisers to help more people prepare for, and transition to, retirement.

A professional adviser can help clients work out how much income they’ll need to meet their retirement needs and goals, and put a plan in place which will maximise the chance of them achieving their goals with minimal risk.

The amount of income people need in retirement is highly individual and depends on factors such as their lifestyle and expectations. The report found around half of workers believe $500,000 is enough to fund a comfortable retirement. A further 39 per cent estimate that they need $1 million or more to achieve their retirement goals.

By comparison, the Association of Superannuation Funds of Australia (ASFA) estimates the lump sum needed to support a comfortable retirement is $640,000 for a couple and $545,000 for a single person, assuming they own their own home and receive a part Age Pension.

An encouraging takeout from the report was that consumers, particularly baby boomers, were increasingly engaged with their superannuation and keen to take control of their wealth. Baby boomers were also the most likely group to have received professional financial advice.

If you need to take another look at your retirement or superannuation, call Westmount or your current adviser, before the holiday season takes hold.

Beginning 2016 with a clear picture and an achievable retirement action plan will make for a more relaxing break and an energised start to the new year.

Rick Maggi Westmount Financial Clear Focus. Better Solutions.

This update is published by Westmount Financial/Westmount Securities Pty Ltd (ABN 42 090 595 289/AFSL 225715). It is intended to provide general information only and does not take into account any particular person’s objectives, financial situation or needs. Because of this, you should, before acting on any information in this document, speak to us and/or a taxation/finance professional.