One of the key challenges for people approaching retirement is adequately preparing for it. The other big challenge is gaining greater confidence in how their finances might look once retired.
Getting the right advice helps enormously with this, and likewise beginning the planning process earlier rather than later will reap rewards.
What are the stats?
A recent survey conducted by Vanguard of more than 5,500 people aged 55-75, across Australia, US, UK and Canada, showed that many reported that they experienced an increased level of satisfaction with their financial position upon retirement.
One contributor to this result was the higher incidence of people within the first 10 years of retirement seeking financial advice, compared with those still up to 10 years away.
Even amongst those who had access to some form of financial advice during the lead up to retiring, some still experienced regret about how well they prepared.
People’s biggest regrets
The biggest regrets of recent retirees included:
- Not saving enough
- Not starting the planning process early enough
- Not spending enough time planning for it
- Not learning enough about superannuation – in Australia,
According to Australian Bureau of Statistics (ABS) figures, goods and services spending grew by 21 per cent in 2015-16 over the 2009-10 figure for households with a reference person between 55-64. In the same period, households headed by someone over 65 years of age saw a spending increase of 22 per cent.
So, what are they spending their money on?
The below infographic demonstrates some interesting findings from the ABS data as summarised by nestegg.com.au.
Money know-how can come from anyone, young or old. When it comes to financial wisdom, author and speaker Kylie Travers has taken her lead from the previous generation.
Get serious about saving
You can’t avoid it. To get on top of your finances you need to save and to save means you have to have financial discipline. Kylie was taught by her parents and grandparents that if you want to look forward to a better financial future, you need to take a serious approach to saving.
“My parents raised me to save money, set big goals, work hard and think about the future,” says Kylie. “They were both very open about money and my Dad gave me a copy of “The Richest Man in Babylon” by George S. Clason to read when I was just 12. So I learnt early about what you could do with money if you were prepared to save. My parents invested in shares and property and that helped me realise how much more freedom you have with other sources of income,
The Australian market had a fair month in August. Mark takes us through the performance across the board to prepare us for what’s to come.
The Australian market had a fair month in August, with the ASX 200 Accumulation Index posting a 0.71% return for the month, which annualises out to around 8.5% which is within a few points of our expected long term returns. The commodities price was the action sector with Energy shares (+6.07%) delivered the biggest gains.
The rolling one year historic returns for the ASX200 Accumulation index is now 9.79%, rolling off some good periods in FY 2017 which saw a great return of 14.09%. Sentiment on Australia remains patchy. Banks, our largest sector have plenty of sceptics due to the high capital city house prices, and highly leveraged consumers. Our other big sector being materials, seems captive to sentiment about what China will do next.
Looking globally, the MSCI World Index gained 0.85% in AUD terms during August,
As you know, the superannuation reform announced in the 2016 Federal Budget has been largely implemented. We have busy working with our clients to address all their concerns and working with them to ensure that no rock is left unturned when it comes to their personal circumstance. In regards to the $1.6 million transfer balance cap, there has been an update that we would like to share with you. There are some adverse tax consequences that need to be avoided.
The update on transfer balance cap
If the total value of a superannuation fund member’s pensions exceeded $1.6 million on 1 July 2017, they may face adverse tax consequences. However, there is a transitional provision that permits a minor excess over $1.6 million to be ignored, subject to certain conditions being met.
Basically, this will be satisfied if the value of their pension interests on 1 July 2017 exceeded $1.6 million by no more than $100,000 (i.e.,
A few months ago, we reached out and asked our clients to share their view on offshoring and how it influences their decision to work with professional services businesses like ours. We then put together a press release to voice their opinion to the industry releasing the results from the survey via Superfund Wholesale. The below responses were featured in over 15 different publications including Canstar, Cairns Post, Townsville Bulletin, Gold Coast Bulletin, Courier Mail, Daily Telegraph, Herald Sun, NT News, Perth Now and News.com.au.
Together, we were able to spark a much needed debate on offshoring. Raising concerns surrounding disclosure to clients as well as support for government agencies to be more involved through industry regulation.
We would like to thank our clients for taking the time to complete the survey and helping us make a difference to the industry and wider community.
We have summarised key results from the survey in an easy to read infographic. Check it out!
Capital gains withholding, a new threshold
From 1 July 2017, where a foreign resident disposes of Australian real property with a market value of $750,000 or above, the purchaser will be required to withhold 12.5% of the purchase price and pay it to the ATO unless the seller provides a variation (this is referred to as ‘foreign resident capital gains withholding’).
However, Australian resident vendors who dispose of Australian real property with a market value of $750,000 or above will need to apply for a clearance certificate from the ATO to ensure amounts are not withheld from their sale proceeds.
Therefore, all transactions involving real property with a market value of $750,000 or above will need the vendor and purchaser to consider if a clearance certificate is required.
The following is from the ATO’s website:
- Australian resident vendors can avoid the 12.5% withholding by providing one of the following to the purchaser prior to settlement:
- for Australian real property,
The property market, you will probably know that we don’t often comment on residential property. Due to it being such a heterogeneous asset class (the opposite to homogenous) there are pockets performing differently everywhere. However, given that most of us will have some exposure, we have included some observations from SQM Research to update you on the broader market.
Source: SQM Research
Perth and Darwin prices are the only ones showing year on year falls. We recall only 2 years ago being offered apartments in booming Darwin to ‘sell’ to our clients. Our scepticism and avoidance of conflicts of interest kept us well away from that disaster.
Over the month of June, Sydney prices are showing a small decline, though year on year was strong. Melbourne too was a standout, with even bigger gains than Sydney. Hobart off a low base showed strong gains as well.
While we are not local market experts in each suburb,
After a big sell-off in May, (-4.01%) the S&P/ASX200 Accumulation index managed a small gain of 0.17% for the month of June.
That was better though than Global markets, where the MSCI World index (in Aust Dollars) lost 2.54% for the month.
Bond markets sold off during June as interest rates rose, and the A-REIT sector (real-estate trusts) also had a fall, losing 4.51% over the month.
In spite of those falls, stepping back a bit to look at the whole year shows a much brighter picture of returns. The table below looks at the major liquid asset classes over the last ten years.
There are a few notable points here. The one, three and five year returns for Australian and International shares have been very positive overall. Yet, when looking at the 10 year numbers, the returns from those assets are below the Fixed Interest returns. And, when looking at fixed income returns we see that the returns this year have been low,
The Australian Federal Budget 2017: Getting into property and getting out of property, things from left field & investment in infrastructure.
Wow, has this budget got a deal for you!
You always want what you haven’t got. When you’re young you are thinking about schemes to get your access to your super money to buy a house and when you’re old you’re looking for ways to get it back into super. Trust us, we have dealt with clients at both ends of that spectrum.
We all know these new budget measures will do nothing for actual house price affordability in Melbourne and Sydney! That will be left to the dual devices of eventual oversupply and interest rates that will rise (one day). But it is an interesting feature of the budget nonetheless.
So, how does it work. Let’s focus on the first home buyers.
First Home Buyers
Our early read on the proposal looks like this:
From 1 July 2017,