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Tips for retirement planning from 1 July 2017

Is super really the be all and end all?

Personally, for myself, the answer is yes, because every few years politicians seem to either try to make superannuation easier for the everyday person, or more complex to drive a further wedge between the role of the accountant and financial planner. So, as a financial planner, these constant changes mean that I will not be lacking in work for the next 30 odd years, and so superannuation is the be all and end all for funding my career.

 

However, as a layperson, the answer will often depend on your age. For those less than 10 years out from retirement, the focus shifts heavily from assets outside of superannuation to getting those assets inside superannuation. There are two reasons for this. The first is that, in general, accessibility to the funds is less of a problem as the client is more or less setup and their expenses (aka...children) have decreased. The second is that we can be about 80% sure that the powers that be won't be changing the rules too drastically, and that any changes that are made, we should be able to cope with.

 

What I find interesting is that there seems to be a lot of hand wringing and teeth gnashing that younger people, those with more than 10 years until retirement, don't want to contribute more to superannuation than the stock standard 9.5%. My question is, why should they?

 

I spend a considerable amount of time with my younger clients emphasising and encouraging them to forward plan their budget so that as their income increases, their expenditure stays the same and they can build for their future. This often requires a steady hand, with deliberate and well thought out decisions using stable, legislated tax systems.

 

So, rather than more changes to help the Government balance their books (much like the ones coming in on July 1, 2017), the politicians could provide some consistency and surety in the superannuation system, rather than gimmicks one year and austerity the next. Perhaps then, we could attract the economy's younger cohort to the superannuation party.

 

Find Erin* at Achieveit Financial Planning or call for an appointment on 07 4638 5011.

 

*Authorised Representative of Securitor Financial Group Ltd ABN 48 009 189 495 AFSL 240687.

 

This is general information only and does not consider your personal circumstances. You should not act on any recommendation without obtaining professional advice specific to your circumstances. We recommend you speak to a financial adviser before acting on any of the information you read on this website.

Home care services, now the clients choice

The little understood stepping stone to Aged Care, Home Care Services, seem to be something that many older Australians have, but very few understand. At this point in time, the client's Home Care Service contract, which provides personal services, support services, and clinical care, is held by the provider.

 

This means that if you are in want of Home Care Services, then you need to go on a provider's waiting list, and if you are currently receiving home care, it is nearly impossible to resolve any service issues that you may have by changing providers. This is all changing, as of the 27th of February 2017.

 

By the end of February, a new client will go into a national queue that is administered by My Aged Care, and will allow those clients who are a higher priority to be fast tracked. Once you reach the top of the list, you are given the details of your Home Care package, as well as a unique referral code. This gives provider choice to the client, as they have 56 days from the date of their assignment letter, to enter an agreement with a provider.

 

Another positive step that the Government is taking is by removing the "Band" system when determining Home Care package eligibility. This will allow the ACAT assessors to do their jobs more efficiently by allocating the specific level of care, based on the individual's needs.

 

A concern that I have, as an industry observer living close to rural areas, is that the national queue system is designed to allocate on a first in basis. Will this necessarily work in those smaller, far flung communities that don't necessarily have multiple providers to choose from? If there is only a single provider in the area, are they reliant on the processing speed of My Aged Care, and how will this threaten the provider's financial viability?

 

Shifting the monopoly of services away from the providers and into the hands of the client makes sense. If the client does not find the service satisfactory, which is, in my experience, a surprisingly common complaint, then they can move. However, as we in Australia have seen with the Pink Batts scandal, introducing competition into Government funded areas does not always go to plan.

 

As a society, we seem to be very pro-active in establishing safe environments for our young because they are vulnerable, but do not seem to extend the same care to our elderly, who are also vulnerable. I am hopeful that My Aged Care are all over the potential pitfall of maverick operators, because even in highly regulated, spot lighted industries such as Child Care, we still seem to have the occasional scandal erupt with providers not meeting quality care standards.

 

Find Erin* at Achieveit Financial Planning or call for an appointment on 07 4638 5011.

 

*Authorised Representative of Securitor Financial Group Ltd ABN 48 009 189 495 AFSL 240687.

 

This is general information only and does not consider your personal circumstances. You should not act on any recommendation without obtaining professional advice specific to your circumstances. We recommend you speak to a financial adviser before acting on any of the information you read on this website.

How much do you value the ability to make your own life choices?

The Christmas period is a time when families gather together for extended periods of time. It is a busy time for everyone and will often lead to January being a busy time in the Aged Care sector as the family realise that Mum, or Dad, is no longer as spritely as they once were.

 

It can be confronting for family members and terrifying for those who are suddenly being badgered by concerned relatives. As a family member, it is important to keep in mind that when you are discussing Aged Care options, you are actually asking for someone to leave behind their everyday comforts, sell their memories and move into an unknown situation. The conversation should be treated with the same sensitivity that you would afford your children if you were moving, mid-term, to a different country.

 

The important thing to emphasise is that by having this conversation earlier, rather than later, you are allowing your parent to have input into their own life decisions. Nobody wants to face their own, or their loved ones, decline but, eventually, we will all end up here. Planning for the inevitable provides the priceless gift of choice. There are many options available, and choosing the right strategy as our loved ones get older will provide a rewarding lifestyle choice for your parent, and peace of mind for the family.

 

Find Erin* at Achieveit Financial Planning or call for an appointment on 07 4638 5011.

*Authorised Representative of Securitor Financial Group Ltd ABN 48 009 189 495 AFSL 240687.

 

This is general information only and does not consider your personal circumstances. You should not act on any recommendation without obtaining professional advice specific to your circumstances. We recommend you speak to a financial adviser before acting on any of the information you read on this website.

2016 - Invigorating or disappointing?

Yes! Work is back. Hopefully everyone is feeling rested and ready to hit the ground running? Personally, I couldn't wait to get back into the office, as evidenced by a few sneaky emails that I sent off over our "stand down" period.

 

We've all had the chance to reconnect with our loved ones, sleep in a little bit, and reflect on how our year went. Reading the newsfeeds, it seems that the end of 2016 was overwhelmingly about reflection at all levels. And with reflection comes comparison. Are we in a better place than this time last year? Did we tick off all of our goals that we wanted to achieve? Are we moving forward in life?

 

Most clients that I see have a few goals that they want to achieve (holiday, new car, education for the children etc.) during the year. What many don't realise is that the reason that they haven't managed to take their family to Hawaii, is that there is a tendency to treat each year on its own, a finite timeline, rather than as a continuum. Decisions are made to meet the wants and needs for this year, not building on the positive results of last year, or taking into account the unmet goals from the year before.

 

This can lead to frustration as life is never as simple as getting from point A to point B; there is always something that comes up (braces, anyone?) that will change the path that you had committed yourself to mentally. Look at what you did achieve, even faced with adversity. So, we didn't manage to go to Hawaii for a family holiday, but wasn't Straddie amazing this year? Reflect on what made it difficult to meet your wants and needs and strategise on how it can be avoided in the future.

 

Build on everything that you achieved in 2016, no matter how small it was, and look forward with a positive attitude. Every year is just an extension of the last, and sometimes you need to take a couple of steps back to really start moving forward.

 

Find Erin* at Achieveit Financial Planning or call for an appointment on 07 4638 5011.

 

*Authorised Representative of Securitor Financial Group Ltd ABN 48 009 189 495 AFSL 240687.

 

This is general information only and does not consider your personal circumstances. You should not act on any recommendation without obtaining professional advice specific to your circumstances. We recommend you speak to a financial adviser before acting on any of the information you read on this website.

BBQ's with mates and ladies who lunch

The superannuation space is constantly changing, and there are a lot of resources available for those of us who have industry or retail superannuation funds. As a matter of fact, now that the Government has dropped its punitive taxation penalties for over contributing, the superannuation space is a lot more user friendly. Sure, as an average Joe, you might not know all of the ins and outs associated with re-contribution strategies, or spouse splits, but you don't need to be afraid of superannuation. Unless, of course, you trample blindly into the Self Managed Superannuation Fund (SMSF) space, in which case you should be afraid...very afraid.

 

As of the 01st of July 2016, your accountant is required to be licensed to recommend the establishment of a SMSF. The purpose of this new licensing regime is to crack down on the establishment of SMSFs that are inappropriate for the client. This may mean that the client does not have the funds to make it worth the client's while, or it may mean that the client hasn't got the ability to deal with the compliance issues that surround being a trustee of a SMSF. Now, I'm not saying that all accountants are shady (and a financial planner is as only as good as their software, says my Uncle Kevin...the accountant), but now the industry has standardised parameters to ensure that the client is well educated before making this decision. And the scenario outlined below will show why it's so important.

 

A client of mine was at a ladies lunch the other day, and overheard a conversation regarding purchasing jewellery using funds from super. Luckily, for all that she likes to push the boundaries, she contacted me to confirm that this is actually the case. Now, a SMSF is on the cards for this particular client, but not for another five or so years, so she was quite excited about this prospect. After a bit of digging, it was admitted that she had approached the conversing ladies and found out that the jewellery in question was actually the one being worn. "How old was she?" I asked, "In her 50s" the client replied. "Right", I said, "This is the way it works".

 

Other than the fact that collectibles (art, jewellery etc.) are in themselves a very speculative asset class (cue disapproving financial planner face), you cannot purchase assets with superannuation funds, which are legally restricted for your retirement, and then wear them before you retire. As the trustee of a SMSF, you are liable for non-compliance, and one of those many potential breaches is the failure to keep SMSF money separate from personal assets. This means that the collectibles must be stored away from the personal place of residence (I would suggest a bank vault leased to the SMSF), and cannot be loaned to related parties. The penalty for this, is 20 penalty units, which at $180 per unit, is $3,600 for each individual breach.

 

"But, how would they know that you had worn the jewellery?", the client asked, slightly less excited than she was earlier. "The better question", I replied, "is how do they know you have not?" It is not up to the ATO to prove that you are in breach, it is up to the trustee to prove that they are not. And, after reviewing your auditor notes, if the ATO suspect that you may be in breach they will take a very close look at what is going on. If Facebook shows that you have worn the jewels to multiple events, then that is multiple breaches, which means multiple fines. Which the trustee pays out of their personal pocket, not from the SMSF.

 

Luckily, this client has a good relationship with her planner and could be put back on the straight and narrow, and, I would assume, her accountant (under the new regime) would have done the same rather than facilitating the client's request.

 

The moral of the story is, if you are at a BBQ with mates, or happen to overhear some ladies at lunch, please make sure you speak to a qualified professional before acting on it. After all, we all know what happens in those stories that are too good to be true.

Find Erin* at Achieveit Financial Planning or call for an appointment on 07 4638 5011.

*Authorised Representative of Securitor Financial Group Ltd ABN 48 009 189 495 AFSL 240687.

This is general information only and does not consider your personal circumstances. You should not act on any recommendation without obtaining professional advice specific to your circumstances. We recommend you speak to a financial adviser before acting on any of the information you read on this website.

 

Life is not all rainbows and butterflies

As planners, we sometimes need to step up to the plate and accept that things can go badly for our clients in the worst possible way. Protecting your family is a cornerstone of a sound financial plan, and although this subject is high profile, it pulls on the heart strings, and we hear about it all the time on our Facebook newsfeed, many Financial Planners don't bring it up when it could have made a very real difference to their client's life plan. So, let's talk about Child Trauma cover.

 

The idea behind Child Trauma cover is that you insure your child so that, in the event of Baby Johnny suffering a Children's Medical event, one of the parents can take the time to be with them through treatment.

 

One of the other big benefits with Child Trauma cover is that it has a continuation option to an adult policy with no medical underwriting. This means that if Mum gets breast cancer while Baby Jane is in her teens, but has a Child Trauma policy in place, then it will not have any effect on Baby Jane's policy. No breast cancer exclusion, even if Mum has found out that she is carrying the BRCA gene. Now that is pretty handy.

 

It is a macabre subject, but it is also something that I feel needs to be addressed. I fervently hope that the policy doesn't get used, but honestly, what parent is willing to take the risk? You have bills to pay, probably other mouths to feed, so you cannot take indefinite unpaid leave. But at the same time, you really don't want to send your child for treatment with anyone but yourself. Insurance doesn't solve all of our problems, but it does provide you with the ability to buy time to work through them.

 

Find Erin* at Achieveit Financial Planning or call for an appointment on 07 4638 5011.

 

*Authorised Representative of Securitor Financial Group Ltd ABN 48 009 189 495 AFSL 240687.

This is general information only and does not consider your personal circumstances. You should not act on any recommendation without obtaining professional advice specific to your circumstances. We recommend you speak to a financial adviser before acting on any of the information you read on this website.

Raising the financially independant female

I recently read an article regarding Disney Princesses and how exposure to these fictional characters can lower girl's body image in childhood. As a mother whose 3.8 year old daughter spent most of the weekend dressed up as Rapunzel from Tangled, or Elsa from Frozen, I have some awareness of the impact that this can have in developing my daughters tastes in life. As a Financial Planner, I have, anecdotally noticed this Disney effect with young, female clients, and, if truth be told, have even been a victim of this myself.

 

It seems to me, that there are a large proportion of young women who are waiting for "their Prince to come". It may not be deliberate, but whereas young men are encouraged to be the proactive provider (aka The Prince), and take control of their finances at a young age, young women seem to hold off making important financial decisions until The Prince comes along. For example, although young men will save and purchase their first home, organise their personal insurances and even start a regular investment plan, young women seem to be whiling away their time in their tower until The Prince can come and show them the way. As a matter of fact, I'm pretty sure that if it wasn't for the superannuation carrot, I wouldn't see any single women in their 20s come through my door. And we all know what a abysmal carrot superannuation is.

 

As a female, I find this stereotyping irritating, as a parent, I find it incredibly worrying, but as a financial planner, I am wracking my brain to think of a counter example. And the best I can come up with is that they are few and far between.

I have women in networking groups, I have female friends, and even the daughters of existing clients who all fall into this category. I talk ad nauseam about the importance of having goals and taking control of your financial future, and sometimes I even see a flicker of excitement about the idea of giving yourself options, but it very, very rarely seems to manifest in a young lady walking into our office. This wasted financial potential upsets me. Not in the quiet, reflective way. In that outraged, angry and outspoken way that I do so well.

Money may not buy you your happily ever after, but it sure does help the world go round. Having your own asset base does not make you less feminine. You shouldn't wait until you are married to purchase your first home. Creating options for your future self is not only a smart thing to do, but also an attractive thing to do. It gives you confidence because, as a friend of mine once said to her own daughter, "life is your journey. Some people are there for a long time, and some people are only there for a short time, but the only person taking your journey for the whole trip is you".

So, I urge all young, single women to stop waiting for The Prince or your Knight in Shining Armor, saddle up your own horse and ride into your own sunset. If you're the parent of a young woman in their 20s, then rather than sending them on a cruise for their 21st, pay their consultation fee and let them use the money to invest (sorry, ladies). Their future self with thank you.

By Erin Wright B.Int Bus Dip. FS(FP), Accredited Aged Care Specialist

Find Erin at Achieveit Financial Planning or call for an appointment on 07 4638 5011

Awesome fly through of the second range crossing!!