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Love song dedications are out the window and you’re wondering how you’ll move forward, not to mention divide your money, possessions and debts. But what about what you’ve saved in super? Breaking up is hard to do. It can be an emotional rollercoaster, with lots to consider – Do you have to move? Who’ll get the furniture? What are the kids going to do? Where will your pets end up? One of the bigger challenges is splitting your money, other assets, belongings and debts, whether they’re owned separately or together. And what might come as a surprise is this may include what you’ve both saved in super! So, if you’re wondering if what’s yours is now potentially theirs, here’s what you need to know. Do you have to split your super if you go separate ways?  All your assets and debts come into the equation when it’s time to divide things up, and that applies whether you’re married or in a de facto relationship. However, you may not have to divide your super if you can divide other assets and debts to reach a fair agreement. How do you find out the value of your partner’s super? It’s worth knowing how much you and your partner have in super, and keep in mind that nearly one in four people in Australia have two or more super accounts. You can get this information by completing the form in the court’s Super Information Kit at https://www.fcfcoa.gov.au/fl/forms/superannuation-kit. What’s the process if you do want to divide super? There are a few ways super can be split between you. You may have a formal super agreement in place already, or you might put one in place, as part of a broader financial agreement when you break up. If you don’t have a binding financial agreement (or prenup) in place but have agreed how you’d like super split, an Application for Consent Orders can be filed in court. The alternative, if you can’t agree, is applying for court orders, where a hearing will decide how super will be divided between the two of you. There’s generally a time limit you need to do this in. If you decide to put off how you’ll split your super for whatever reason, you could set up a flagging agreement which means the super fund can’t pay out the super until the flag has been lifted. How do you get the money? Super is treated differently to other assets as there are rules around when it can be accessed. That means the agreed amount may be paid into your super account or your partner’s. If someone has already retired, they might be able to access the money as a super benefit straight away. Are there costs involved if you do split super? On top of potential legal fees, financial advice fees and court costs, there may be other things you need to pay for when splitting super. The super funds involved may charge for things like information applications, super splits and anything involving flagging agreements. Where can you go for help? There are complicated rules to navigate, so it may be worth getting legal advice and talking to your financial adviser, particularly if discussions aren’t going as smoothly as you’d hoped. Source: Colonial First State

We all think things will turn out better for ‘us’ than ‘them’. Such optimism can serve us well in life, but when it comes to money, balancing bias with facts is a much safer option. When it comes to your retirement there are four main risks that can impact your income: Longevity risk As you don’t know how long you will live, there is a chance that you could outlive your income or that you will have to rely solely on the Age Pension that may be insufficient to cover your basic living costs. Inflation risk Even small increases each year to the cost of living can, over time, have a significant impact on how far your money will go. Without the right strategies in place, increases in inflation over time could mean your retirement income will no longer cover your living costs. Market risk Exposure to investments such as shares and property comes with the risk of market volatility. When investments earn negative returns, your retirement savings are falling in value. It’s important to consider how best to minimise the impact on your savings from market volatility during a 20-30 year plus retirement period. Sequencing risk Poor returns on investments when your savings are at their peak may significantly impact just how long those savings will last. In retirement, timing is everything. If the order and timing of your investment returns is unfavourable, it could result in your retirement income running out sooner than expected. So, how can you reduce risks in retirement? One option is a lifetime annuity. Lifetime annuities give you an additional layer of protection in retirement and can act as a safety net giving you income for life, regardless of how long you live. Annuities works by complementing your other investments, together with the Age Pension (if you’re eligible). A lifetime annuity provides a foundation that you can depend upon to cover your basic living costs. Whilst they are designed to be held for life, there are withdrawal periods where you may access a lump sum if necessary. Everyone’s financial situation is different – so it’s a good idea to seek professional advice. Contact your financial adviser to determine whether an annuity is right for you. Source: Challenger

Maximising super contributions for your spouse is a smart financial move that can benefit both your partner and your family’s long-term financial security. By actively contributing to your spouse’s super account, you not only help them build a more substantial retirement nest egg, but also enjoy potential tax benefits in the process. However, it’s essential to understand the eligibility criteria, contribution limits, and potential implications on other aspects of your retirement plan and estate planning. Key takeaways: Eligibility criteria around the age of your spouse, level of income and contribution caps. The key benefits of spouse contributions, including tax offsets and enhanced financial security. The steps involved in making spouse super contributions. Super plays a pivotal role in securing your financial future. While contributing to your own super fund is essential, there’s an often overlooked strategy that can significantly boost your retirement savings: making super contributions for your spouse. Maximising super contributions for your spouse can lead to significant benefits, including tax advantages and a more comfortable retirement for you both. Here, we’ll explore the benefits of contributing to your spouse’s super account, the eligibility criteria, and some key considerations for you when looking to enhance your retirement savings through spouse super contributions. Understanding spouse super contributions Super spouse contributions is simply the process of adding funds to your spouse’s super account. This financial strategy can be particularly beneficial for couples who have different income levels or where one partner takes on more responsibility for household and family matters. By contributing to your spouse’s super, you can help them grow their retirement savings, which can ultimately be beneficial to you both. Eligibility criteria for spouse super contributions Before diving into the benefits, it’s important to understand the eligibility criteria for making spouse super contributions in Australia: Spouse’s age – Your spouse must be under the age of 75. Spouse’s income – The receiving spouse’s income (including assessable income, reportable fringe benefits and reportable employer super contributions) must be less than $40,000 per year for you to claim the full tax offset of $540. A partial offset may apply if their income is between $30,000 and $40,000. Contributions cap – Ensure that your contributions do not exceed your spouse’s non-concessional contributions cap which may be $0 up to $330,000 depending on her total super balance last 30 June. Exceeding this cap can result in a tax liability. Benefits of spouse super contributions Now, let’s explore the advantages of making super contributions for your spouse: Tax benefits – One of the primary advantages of spouse super contributions is the potential for tax benefits. If your spouse’s income is below the threshold, you can claim a tax offset of up to 18% of the contributions you make (capped at $540 each financial year), which can help reduce your overall tax liability. Boosting retirement savings – By contributing to your spouse’s super account, you are actively helping them grow their retirement savings. This can be especially valuable if your spouse has taken time off work to raise children or for any other reason, as it ensures they continue to accumulate superannuation benefits. Equalising retirement savings – Spouse super contributions can help bridge the retirement savings gap between partners who have disparate incomes. This ensures that both partners enjoy a comfortable retirement lifestyle, reducing financial stress in later years. Long-term financial security – Contributing to your spouse’s super account is an investment in your collective financial future. It can provide peace of mind knowing that you both have substantial retirement savings to rely on when you stop working. Key considerations for spouse super contributions While spouse super contributions offer several benefits, there are some important considerations to keep in mind: Contribution limits – Be mindful of the annual contribution caps to avoid unnecessary tax penalties. As of the 2023-24 financial year, the annual cap is $110,000. However, depending upon your spouse’s total super balance last 30 June, this may be $0 up to $330,000. Age restrictions – Spouse contributions are not allowed if your spouse is over 75 years old. Super fund choice – Consider your spouse’s super fund’s fees, investment options and insurance cover to make an informed choice. Impact on other benefits – Making significant contributions to your spouse’s super may potentially impact their eligibility for government benefits like the Age Pension. Consider consulting a financial adviser to find the right balance. Tax implications – While you may receive a tax offset for spouse contributions, it’s essential to understand how these contributions affect your overall tax situation. A tax professional can provide you with personalised advice. How to make spouse super contributions Making spouse super contributions is a fairly straightforward process. Here are the steps to get started: Check eligibility – Ensure that your spouse meets the eligibility criteria, as outlined above. Select contribution amount – Determine how much you want to contribute to your spouse’s super account, keeping in mind your spouse’s contribution caps. Contact the super fund – Get in touch with your spouse’s superannuation fund and inquire about their process for receiving contributions from a spouse. Make the contribution – Once you have the necessary information from the super fund, make the contribution either through a bank transfer, electronic funds transfer, or other payment methods accepted by the fund. You could also set up payments at regular intervals, rather than a lump sum, if you’d prefer. Keep records – Maintain accurate records of the contributions made, including the dates and amounts. This documentation will be required for tax purposes. Claim the tax offset – When lodging your tax return, enter the total amount of spouse contributions you made to claim the spouse super contributions tax offset, if eligible. Source: MLC  

Did you know, you could take advantage of potential tax benefits inside super to save for your first home? It’s been called the Australian Dream by many – owning a home. However, saving for a deposit on one can sometimes be challenging. For this reason, the government started the First Home Super Saver (FHSS) Scheme on 1 July 2018 to help aspiring homeowners save towards a deposit on their first property. A number of prospective buyers have taken advantage of the scheme to help reach their goal of home ownership, with the Australian Taxation Office (ATO) revealing $415 million had been accessed under the scheme since it begun^. If you’re wondering if the FHSS Scheme could be a path to you owning your first home, read on to find out about potential advantages and how it might work for you. How does the FHSS Scheme work? Under the scheme, you can save for your first home by adding additional money to your super account in the form of voluntary contributions. This includes some types of concessional (before-tax) contributions and some non-concessional (after-tax) contributions. If you’re eligible, you can later withdraw this money, including associated earnings, less tax, to put towards a deposit on your first home. What types of contributions count toward the scheme? Salary sacrifice contributions, which you might set up with your employer, on top of any compulsory contributions they might pay you, if you’re eligible. Tax-deductible contributions, which are made using after-tax dollars, for instance with the money in your bank account, which you then claim a tax deduction for at tax time. Personal contributions, which you make using after-tax dollars, but don’t claim a tax deduction for. Super contributions that don’t count Compulsory employer contributions, which your employer may be required to pay you under the Government’s Superannuation Guarantee. Spouse contributions that a partner may be paying into your super for you. Is there a limit on how much can be withdrawn? You can apply to withdraw eligible voluntary contributions you’ve made since 1 July 2017, up to a maximum of $15,000 per financial year and $50,000 in total per person. Partners can also combine their own eligible contributions towards the purchase of the same property. What can the money be used for? Eligible first home buyers can use money withdrawn under the scheme to put toward residential property, or land, provided a contract to build the home is entered into within the set timeframes. Houseboats and motorhomes are not included. What are the savings benefits? A key advantage of the scheme is that the earnings on the money you contribute to your super fund are taxed at up to 15%. This may be lower than the tax rate you’d pay on earnings received outside of super, which are generally subject to your personal marginal tax rate. Check out the table below to see how tax on super compares to individual income tax rates for Australian tax residents for the 2023-24 financial year. Taxable income Marginal tax rate Max tax on earnings inside super $18,201 – $45,000 19%* 15% $45,001 – $120,000 32.5%* 15% $120,001 – $180,000 37%* 15% $180,001 and over 45%* 15% * Plus up to 2% Medicare levy where applicable. Another important advantage is that if you make salary sacrifice or tax-deductible contributions to super, those contributions will be taxed at 15% rather than your marginal tax rate, which could result in a significant tax saving, depending on your situation. There are also generally tax concessions when the contributions are withdrawn. What tax is payable when the money is withdrawn? When you withdraw amounts that were contributed under a salary sacrifice arrangement or as part of a tax-deductible contribution, you’ll have tax withheld from the money you receive. This money (including any associated earnings) will be taxed at your marginal tax rate (like your employment income), but with a 30% tax offset, which reduces the tax you pay. If you’ve made personal contributions under the scheme that you’ve not claimed a tax deduction for, no tax will be payable on these amounts when they are withdrawn from super. Another thing to keep in mind when it comes to tax on super are general contributions caps, as penalties apply if you go over these limits. What other eligibility criteria applies? You must be 18 or older to make a withdrawal under the scheme. You can’t have owned property in Australia before. You must live in the property for at least six months within the first 12 months after buying. You must not have previously made a withdrawal request under the scheme. What happens when it’s time to withdraw the money? Here’s what you’ll generally need to do: Get a FHSS determination from the ATO to find out how much you can withdraw. You can request unlimited determinations, but can only make one withdrawal request. Buy a home or enter into a contract to build a home within 12 months of the withdrawal. Extensions may apply. If the purchase doesn’t go ahead, within the allowable timeframes, the money may either be put back into super or will incur further tax of up to 20%. Where else can first home buyers find information? Additional rules may apply, so do your research before making any decisions. You can visit the ATO website for further details on the FHSS Scheme. You may also want to check your state or territory’s First Home Owner Grant information to see what else you may be eligible for. Source: ATO First Home Super Saver Scheme data Source: CFS

No matter your income level or financial goals, everyone can benefit from developing strong money management skills. Here are five rules of money management that can help build a solid foundation for financial wellbeing. Key takeaways: Having a savings plan and an appropriate level of insurance cover can help insulate you from financial stress. Tracking expenses gives a complete picture of where savings can be made, helping reach your financial goals more quickly. Avoid accumulating debt where possible, but where it’s necessary, prioritise paying off debts with the highest interest rates. Continuously improve financial literacy by reading books, attending seminars and following reputable financial websites. Knowledge is power! Just like physical fitness, achieving financial fitness requires discipline, knowledge and effort. But don’t worry, because once you have those skills in your armoury, the path to financial freedom will start to unfurl before your eyes. No matter your income level or financial goals, everyone can benefit from developing strong money management skills. Here are five rules of money management that can help you build a solid foundation for your financial wellbeing: Create a budget and save regularly Establish a budget that outlines your income, expenses and savings goals. Stick to this plan and track your spending to ensure you’re living within your means. Make saving a priority by setting aside a portion of your income each month. Aim to save at least 10 percent (and ideally 20 percent) of your earnings for both short-term emergencies and long-term goals. That’s not to say you should be overly frugal either. If you are so disciplined with your spending that you leave little or no budget for fun activities, it is unlikely that you will maintain that habit for a prolonged period, so don’t forget to treat yourself and your loved ones. Pay yourself first and minimise debt When wages are received, try to allocate a portion to savings before paying bills or spending on discretionary items. This helps prioritise your financial future and can become so habitual that you’ll hardly notice the money going, but you can be pleasantly surprised at how quickly your savings grow. Most of us need to take on debt at some point in our lives, particularly for big ticket items such as a house or a new car, but try to avoid accumulating high-interest debt whenever possible. Try paying off existing debts systematically, starting with those with the highest interest rates. Use credit responsibly and only when necessary. Invest for the future and establish an emergency fund Consider investing. Some investments include shares, bonds and real estate. Selecting an investment will depend on your financial situation and risk tolerance. Don’t just focus on short-term outcomes. Long-term goals, such as retirement, should also be given due prominence and consideration in your investment strategy. Seek professional investment advice if required. Another key aspect to consider when investing for your future is to make sure you’re covered in the event of a major setback. Ensuring you have adequate insurance coverage for things such as health care, home, motor, life and income safeguards should your finances take a hit when unexpected events occur. Consider building an emergency fund that covers up to six months’ worth of living expenses. This fund can provide a safety net during unexpected financial setbacks, such as a prolonged period of unemployment or illness. Track your expenses and avoid impulse spending Consider keeping a record of all your expenses to gain insight into your spending habits. Identify areas where you can make adjustments to save money, such as shopping around for better insurance deals, having more home cooked meals rather than expensive takeaways, or holidaying in your own country rather than overseas. Before making a purchase, consider asking yourself whether it aligns with your financial goals. Implementing a waiting period for significant purchases helps you to avoid impulsive buying. Keep abreast of all things financial and set realistic investment goals Stay informed about personal finance topics, investment strategies, and money management techniques. Education equals personal empowerment. Continuously improve your financial literacy by reading books, attending seminars and following reputable financial websites. The more you know, the better financial decisions you can make. Consider defining specific, measurable, attainable, relevant, and time-bound (SMART) financial goals. Break them down into actionable steps to stay motivated and achieve success. So, take charge of your finances, embrace smart spending habits and enjoy watching your financial dreams transform into a rewarding reality. Source: MLC

Interest rate cycles can be different Students of economics are taught that monetary policy works with long and variable lags, up to 12-18 months. We had assumed that in the current cycle, the economy in 2023 would have been more negatively impacted from the rate hikes which began in May 2022. However, in the current cycle, rate hikes have taken longer than usual to impact the economy. This is elongating the monetary policy tightening cycle. One of the main reasons for this is that we have had a record number of households fixing their mortgage rates in recent years at ultra-low interest rates and a large chunk of households are still rolling off these fixed rates, providing a cushion to rising interest rates. After fixed rates bottomed at around 2.0% in early 2021, fixed rate lending reached a peak of around 46% of total new housing lending (see the chart below), well above its pre-COVID normal of 10-15%. With most fixed rate loans held for 3 years or less, these loans are now rolling off onto variable interest rates that around 3 times higher than the prior fixed rate loan. On the RBA’s estimates, by the end of this year, we will be around 60% of the way through the fixed to variable rate roll off. So, the impact of rising interest rates will still be impacting indebted households in 2024. Source: ABS, AMP The pass through of rate hikes to variable mortgage rates has also been lower than usual because of the heightened competition between lenders. As at September (when we have the latest data), the cash rate had risen by 4.0% but the pass through to variable interest rates was 3.3%. Usually, the pass through of rate changes to variable interest rates is closer. Consumer incomes are not the only source of support for spending Australian consumers have managed to weather rate hikes better than we expected. While retail spending slowed over 2023 and retail volumes were negative from December 2022 – August 2023, spending on services for personal care, recreation and holiday travel has remained solid. Fixed rate lending has helped consumers weather interest rate hikes but we also underestimated the impact from high accumulated savings. At their peak, consumer accumulated savings reached $237bn in September 2022 and have been run down to $187bn as at September 2023. While this still seems high, these savings are not evenly distributed. On our estimates, the bottom 40% of household groups (the groups most impacted by high interest rates and elevated inflation) are likely to have used up their additional savings by early 2024. In contrast, high income earners (who are in a better position to absorb higher interest rates) still appear to have very high levels of savings (see the chart below). Similar differences are also observed across different age groups, with older households (who are likely to have less debt) holding the bulk of accumulated savings. Some of these older groups or higher income earners may never run down their pre-pandemic savings. Source: ABS, AMP So, it appears that excess savings will be less of a support to consumers (especially for those with a mortgage) in 2024 compared to this year. The expected weakening in the labour market in 2024 (based on the slowing in leading indicators of employment growth like job ads) also means that consumer incomes will be under more pressure, leading additional consumers to exhaust any additional savings. On the RBA’s own estimates, 13% of variable rate households were already in a negative cash flow position in July (with mortgage and essential repayments outpacing income). And for fixed rate mortgage holders, around 18% of households will be in a negative cash flow position when they roll off their fixed rate. These estimates were done before the November 0.25% rate hike so would look even higher now. Soft and hard data can tell different stories “Soft” data usually refers to surveys while “hard” data are the real economic activity indicators. According to the surveys, consumer sentiment has been very poor in 2023, and remains around recessionary-like levels (see the chart below). And consumers continue to indicate that it is not a good time to buy a household item (see the chart below), around its lowest levels on record. Similarly, the Australian PMI survey which is a gauge of national activity has been weak through most of 2023. An index level of 50 means that activity is neutral and the PMI has been averaging below 50 this year, indicating that activity is contracting (see the chart below). Source: Bloomberg, AMP We had put some weight to these indicators and expected the signals from them to show up in the “hard” data of actual economic activity. However, spending outcomes have been much stronger than the surveys would imply. While this could indicate that indicators from surveys are not always converted into actual outcomes, sometimes the hard and soft data end up catching up to each other. We find it likelier that the real activity indicators will slow in 2024, rather than the survey data weakening even further from here. Government policies are important A catch up in Australian immigration after the COVID-19 pandemic was always likely but the extent of the increase in international arrivals has taken most commentators by surprise and we have written about it here. Annual overseas migration is running at over 500K/year (see the chart below) driven in particular by a rise temporary visas for skilled work and student visas. The surge in population has added to supply issues in the housing market, adding to rental growth and inflation. Largely as a result of higher immigration, we underestimated the extent to which home prices would rise in 2023 and thought inflation would start to slow at a faster pace in Australia.  However, it does look like we have reached peak levels of immigration, with a softer pace likely in 2024. Source: ABS, AMP   The past year has also shown that government policies … Read more

The Government has passed legislation to amend the tax cuts which apply from 1 July this year. The changes are explained below, along with some things you may wish to think about to help maximise your savings. What’s changing? The ‘Stage 3 tax cuts’ were already law and due to come into effect on 1 July 2024. The recent amendments to the scheduled tax cuts change some of the personal income tax rates, as well as the income brackets that certain tax rates apply to. The tax-free threshold (which is the amount of income that you can earn before tax is payable), will remain at $18,200. Compared to the original tax cuts, the changes: reduce the 19% tax rate to 16% reinstate the 37% tax bracket (which was going to be removed from 1 July), but increase the income band to which this applies from $120,000 to $135,000, and decrease the threshold above which the 45% tax rate applies, from $200,000 to $190,000. The following table compares the tax rates for the current financial year with both the original Stage 3 tax cuts, and the new rates which are now law. Current financial year Original Stage 3 changes New rates from 1 July 2024 Taxable income Tax rate Taxable income Tax rate Taxable income Tax rate Up to $18,200 Nil $0 – $18,200 Nil Up to $18,200 Nil $18,201 – $45,000 19% $18,201 – $45,000 19% $18,201 – $45,000 16% $45,001 – $120,000 32.5% $45,001 – $200,000 30% $45,001 – $135,000 30% $120,001 – $180,000 37% $45,001 – $200,000 30% $135,001 – $190,000 37% > $180,000 45% > $200,000 45% > $190,000 45% * Plus Medicare levy of 2%. These tax rates apply to Australian resident taxpayers. Different rates apply if you’re a working holidaymaker or you’re a non-resident for tax purposes. How will I receive the savings? The changes to the tax rates will reduce the amount of tax that’s withheld from certain payments made to you. For example, employers and superannuation providers who pay you an income stream will make adjustments to the amount of tax withheld from these payments. This will result in incremental tax savings throughout the year. You don’t need to make changes to the way that you complete your tax return. How much tax will I save? The amount of tax that may be saved at different levels of taxable income is summarised in the table below. You can also access a calculator on the Treasury website which estimates tax savings under the modified tax rates, compared to the tax payable in the current financial year. Taxable income Tax liability in 2023/24 Tax liability under from 1 July 2024 Tax saving $30,000 $1,942 $1,588 $354 $40,000 $4,367 $3,713 $654 $50,000 $7,467 $6,538 $929 $60,000 $11,067 $9,888 $1,179 $70,000 $14,617 $13,188 $1,429 $80,000 $18,067 $16,388 $1,679 $90,000 $21,517 $19,588 $1,929 $100,000 $24,967 $22,788 $2,179 $110,000 $28,417 $25,988 $2,429 $120,000 $31,867 $29,188 $2,679 $130,000 $35,767 $32,388 $3,379 $140,000 $39,667 $35,938 $3,729 $150,000 $43,567 $39,838 $3,729 $160,000 $47,467 $43,738 $3,729 $170,000 $51,367 $47,638 $3,729 $180,000 $55,267 $51,538 $3,729 $190,000 $59,967 $55,438 $4,529 $200,000 $64,667 $60,138 $4,529 # Calculations take into account the Low income tax offset and Medicare Levy. Source: The Government’s factsheet ‘Tax cuts to help Australians with the cost of living’ What should I be thinking about as a result of the changes? There’s no doubt that times are tough. With interest rate rises impacting loan repayments and other cost of living pressures, the tax savings may offer a great helping hand when it comes to meeting day to day expenses. However, there are strategies you may wish to think about and discuss with your financial planner, which could further boost the overall benefit of the savings. Make your super work harder for you One of the great things about superannuation is that there are so many ways to contribute, and even small contributions, such as those that attract a Government co-contribution, can make a big difference over time. Also, as your life and financial circumstances change, you can change your contributions strategy. That way, you can achieve what’s important to you and your family today, while still building your super nest egg. There are even some ways you can contribute to super, which may provide additional tax benefits. For example, if you’re eligible, you can make voluntary after-tax contributions to super and claim a tax-deduction for these amounts. These are known as ‘personal deductible contributions’. Or you can make super contributions for your low-income spouse and benefit from a tax offset to reduce the tax you pay. To learn more about some of the different ways you could contribute, speak with your financial adviser. It’s important to remember that once you contribute to super, you can’t access the funds until you meet a condition of release. This is usually when you retire, or meet other conditions which provide access to certain amounts, such as under the First Home Super Saver Scheme, or under financial hardship.     Consider the timing of your contributions Were you thinking of making extra super contributions before the end of this financial year? You should consider the impact the newly legislated tax rates may have on the potential tax benefits. For example, if your marginal tax rate is still going to decline in 2024/25, you may gain a greater benefit by making a personal deductible contribution before 30 June this year. Conversely, if your marginal tax rate won’t change in 2024/25, the tax benefit from making a personal deductible contribution will be the same this financial year and next. Thinking about selling assets? Consider the timing Are you thinking of selling assets that would create a capital gain? If your marginal tax rate is going to be lower in 2024/25, you may pay less capital gains tax (CGT) by selling after 1 July this year. But before you decide to defer any asset sale, it’s important to consider: market risk (the value of the asset could decline and … Read more

Key takeaways Strategies for fast tracking your retirement savings nest egg, such as debt elimination, additional super contributions and targeted investing. How part-time work and delaying receipt of the Age Pension can boost your retirement income. Retirement planning is one of those things that often gets pushed to the back burner. When you’re young, it’s easy to convince yourself that retirement is light years away and you’ve got plenty of time to figure it all out. But life has a habit of going by real fast and all of a sudden, you’re 55 (or thereabouts) and realise that retirement is just around the corner. If this sounds like you and you’re now thinking, “I’m in my 50s and I have no retirement plan. What do I do now?”, first of all, take a deep breath. It’s not too late to start planning for your retirement. Here, we’ll outline some steps you can take to secure your financial future. 1 – Assess your current financial situation The first step in addressing your retirement concerns is to take a good, hard look at your current financial situation. You need to know where you currently stand before you can make a plan for where you’re going. Gather all your financial statements, bank accounts, investment accounts and any debts you may have. Create a detailed budget to understand your monthly expenses and income. This will help you determine how much money you need to live comfortably in retirement. It might be a bit overwhelming at first but don’t worry; we’re in this together. 2 – Set clear retirement goals Now that you have a grasp on your financial situation, it’s time to think about what you want your retirement to look like. Do you want to travel the world, start a new hobby or simply enjoy some well earned relaxation? Having clear goals will not only motivate you to save but also give you a sense of purpose. It’s like having a roadmap for your retirement journey. Just remember that if you’re starting at 55, you might need to be a bit more realistic about your goals and adjust your expectations to match your savings. 3 – Start saving ASAP! You may not have started saving for retirement in your 20s or 30s but that doesn’t mean it’s too late to begin. Contributing extra money into your super offers tax advantages that can help your savings grow faster. Consider making catch-up contributions if you’re 50 or older and your super balance is below where it should be for someone of your age and income level. In fact, making extra contributions (within the cap limits, of course!) is a good idea whatever your age is. Topping up your super fund with additional personal contributions can make a significant difference to your retirement nest egg over the next 10 to 15 years. 4 – Work on debt reduction If you’re carrying a lot of debt, it can seriously hinder your ability to save for retirement. High-interest debt, like credit card balances, can eat away at your finances. Start by paying down your high-interest debts as quickly as possible. The sooner you get rid of those financial burdens, the more money you’ll have available to invest in your retirement accounts. 5 – Consider part-time work Retirement doesn’t have to mean you stop working altogether. If you’re 55 and haven’t saved much for retirement, you might need to consider part-time work during your retirement years. It’s a great way to supplement your income while still having some free time to enjoy the things you love. Part-time work may not decrease your monthly Age Pension payments when you reach Age Pension at 67. Plus, working can help keep you active and engaged in your community, which is excellent for your mental and physical health. 6 – Invest wisely Once you’ve started saving, it’s essential to invest your money wisely. At 55, you may have a lower risk tolerance than someone in their 30s. You may want to consider investments that are a bit more conservative, such as bonds or dividend-paying shares, to protect your savings. Diversify your portfolio to spread risk and aim for a balance that aligns with your retirement goals. It’s a good idea to consult with a financial adviser to make sure your investments are at the appropriate level for your age and financial objectives. 7 – Claiming the Age Pension At age 67 you may be eligible to claim the Age Pension. An amount of your fortnightly employment income is not assessable for Age Pension means testing. This means you may be able to continue part-time work before the employment income will reduce your Age Pension entitlement. 8 – Downsize and cut expenses If you haven’t saved as much as you’d like and your retirement goals are challenging to meet, it might be time to downsize your living situation and cut unnecessary expenses. Consider selling a larger home and moving into a smaller, more affordable one. Look for ways to trim your budget without sacrificing your quality of life. 9 – Seek professional advice Finally, don’t hesitate to seek professional financial advice. A certified financial planner can help you create a tailored retirement plan that considers your specific financial situation and goals. They can provide guidance on investment strategies, tax planning, and how to make the most out of your retirement savings. Summary If you’re 55 and have no retirement plan, it’s not the end of the world. While you might feel that time is not on your side, taking action now can still make a significant difference to your financial future. Assess your finances, set clear goals, save diligently, reduce debt and explore opportunities for additional income. With a well thought out plan and a little discipline and determination, you can enjoy a comfortable retirement despite starting a bit late in the game. Remember, it’s never too late to take charge of your financial future to make the very most out of your … Read more

Although it can feel uncomfortable, talking about money is a good thing. Get some help from the experts to start positive conversations and keep things on track. Making money talk work for you When was the last time you talked about money? You might struggle to remember. Your personal finances or debt position are hardly dinner party material but there are plenty of other reasons we don’t often talk about money. Where our money behaviours come from Our relationship to money is something that starts early. In fact, some research suggests that by age 7, our grasp of basic money concepts that influence our future money habits has already developed. But these habits can be changed to serve us better as we make our way through adult life. The benefits of money talk Whether you’re feeling good about your money situation or not, talking about money can feel really awkward. Comparison syndrome, envy, pity, shame or the tendency to brush uncomfortable topics under the carpet can prevent us from opening up, even to the people closest to us. For many, keeping our financial successes and failures private seems like the most natural thing to do. And that’s why it’s good to know there are big benefits to opening up about money. And as the saying goes, a problem shared is a problem halved. Sharing your feelings about money can not only improve your mental health, it can also have a positive effect on relationships. Being upfront, honest and on the same page about money can make your relationships stronger and prevent problems down the track. Finding your sounding board If the thought of chatting openly about money makes you squirm, a good first step is to create a space where you feel comfortable talking about your finances. Finding someone with whom you can have a dedicated conversation about your finances – and your feelings about money – can make all the difference. And for some people, talking to a stranger or a therapist might be easier than family or friends. It doesn’t matter who it is. What matters is that you’re making progress and getting the ball rolling. Once you’ve taken that first step, you may find yourself feeling that bit more comfortable bringing those conversations closer to home. Keeping it cool and casual with friends Money talk doesn’t have to be heavy or serious. There are ways to bring money out into the open in a social setting without making it a big deal. Those who care about you want you to do well. Sharing your financial goals with friends can keep you accountable, but it’s also a great way of enlisting supporters to cheer you on. So, if you’re saving for that house deposit, they’re more likely to come up with activities that don’t break the bank. For example, getting together for a BBQ instead of going out to lunch. Lessons from the “R U OK” movement There’s a lot to be learnt from the “R U OK” movement which is designed to bring mental health conversations to the forefront. Once a taboo topic, talking about mental health has become far more common and the same idea can be applied to money worries. The “R U OK” movement has reminded us about the importance of asking questions when we notice something isn’t quite right. If you know someone is struggling with money, asking helpful questions can make a big difference. And once you get those conversations going, you could find that the same level of support comes back to you. Bringing financial honesty to your relationship Financial honesty is fundamental to any successful relationship. Whether you’re at the start of a budding romance, or have settled down with a partner, having honest and transparent conversations about money is crucial. But it’s not always easy, especially if you’re used to keeping quiet about money matters. If talking about money is new to your relationship, setting up a space of no judgement is really important. You need to know you can talk about your credit card debt or unpaid bills in a caring and understanding environment. That might mean asking the question, “Am I OK to talk about this?” first. The sooner you and your partner have all your money ‘cards’ on the table, the sooner you can get on the same page about your priorities and goals for the future. Having a shared vision for your finances will only make your relationship stronger and having more regular money conversations can help. 3 tips to start a money conversation Whether you’re bringing up money matters with your partner or family, a few simple strategies can help. Set up a money meeting Catching your partner or family off guard with a serious conversation about money is never a good idea. If they don’t feel prepared or in the right head space, your good intentions could backfire. Giving plenty of notice about your ‘money meeting’ and choosing a good time to tackle such a big topic can set everyone up for success. Ideally you want to choose a time when you are both rested and relaxed. First thing in the morning when you’re rushing to get out the door or last thing at night might not be the best idea. The environment also can make a difference. Sitting in the park or going for a coffee might work better than your kitchen table, for example. Focus on the positives Money conversations are often loaded with emotional baggage. Rather than pointing the finger or playing the blame game, wouldn’t it be great to start off a money conversation with the things you love about them? Making someone feel valued and cared for may help them feel more comfortable to open up. Perhaps you like the way they discuss purchases big with you, or how they shop around for the best deal before making a purchase. Bring some ideas It feels good to know you have someone in your corner. Turning up to … Read more

If there’s one rule of thumb for investors to bear in mind, it’s that “if it looks too good to be true, it probably is”. Be aware The expression “a fool and his money are easily parted” is not as relevant today as it once was. These days, scams and fake investment schemes can be very sophisticated and difficult to tell apart from the real deal. That said, there are some key clues to look for to avoid losing your money to a scam. Indicators of a scam Take a look at the classic warning signs to know if you could be dealing with a scam. Unrealistic returns We all want to earn high returns but the fact is that most of us will “get rich slow” by spending less than we earn and steadily growing investments across the main asset classes of cash, fixed interest, property and shares. If you come across promises of returns that are extremely high – especially when coupled with declarations of low or no risk – you need to question how it is the returns can be so strong. Always remember the fundamental rule that risk equals return. The higher the return, the greater the risk you could lose part or all of your money. Generous tax breaks No one especially enjoys paying tax but a good investment should stand on its own merits, and any tax concessions are the icing on the cake – not the main drawcard. Quality shares and property, managed investments investing in these assets, and your superannuation may offer the potential for perfectly legitimate tax concessions. But any so-called investment that focuses on tax savings should be questioned. High pressure selling tactics Claims of “a limited time offer”, “an exclusive opportunity” or any other tactic designed to get you to make a quick decision should send the alarm bells ringing. High quality assets do not need to rely on high pressure sales pitches to attract investors. Protect your money with some golden rules Always treat cold call offers of an investment or invitations to invest out of the blue with a healthy dose of scepticism. Do not hand out details of your financial accounts or other personal identification details to anyone you don’t completely trust. This especially applies to emails you receive unexpectedly. If you feel you have been scammed, contact the police and your financial institutions immediately as the security of your accounts may have been compromised. Stay up to date with scams Scammers and con artists operate in the physical world and online too. Stay up to date with the latest financial scams by checking out the government’s Scamwatch website. Source: BT