Retirement Planning

The most common mistake I see as a financial planner is the strategy that people employ to reduce the mortgage on their house. It is natural to want to live in a house that you own and be debt free. After all once you repay the debt you don’t have any more monthly loan repayments.

However, the most common way that people go about this is to try and pay back the debt as quickly as possible from their wages. This is unfortunately the hardest way to go about doing this given the nature of how our tax structure works.

Lets also take a look at your monthly budget. Your loan repayments, be they principal or interest are only a small part of your expenditure requirements. The rest is made up of food, clothing, ever increasing electricity bills, running cars and all of other our activities that we need or enjoy.

This being the case the notion of financial security depends on 2 things; being able to own your house debt free but also being able to have enough passive income to cover your living requirements. Therefore, if we are focusing purely on the paying off your house debt then we are only addressing part of the problem. This is why I see people who think they are ready to retire and they proclaim "we own our house” only to be bitterly disappointed when they realise they cannot afford to stop working as they still need to earn an income to fund their lifestyle.

What is required

You need to come up with a holistic strategy that will encompass all of your goals that you need to achieve. With the help of our expertise in taxation and finance we can then help you design a strategy that will achieve all of these goals in the quickest possible fashion. This is really a case of working smarter not harder, don’t struggle on the steps for 30 years when we can take an elevator and dramatically reduce the time but also improve the outcome.

Rob Coyte | Monday, September 05, 2011
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The budget delivered last night from Mr Swan was pretty uneventful and will not be remembered beyond lunchtime today.

There wasn’t much in it for superannuation and financial services, as all the big ticket announcements had already been released last week with the Henry Tax Review.

In summary;

1. Gradually increasing the Superannuation Guarantee rate to 12% from the current 9%.
2. $500 super contribution tax rebate for low income earners.

Summary of Key 2010 Budget Announcements

The key proposals announced in the Budget include:

• The maximum co-contribution matching rate and payment amount will remain at 100% and $1,000 respectively with indexation being frozen on the applicable limits.
• Individuals will only need to include 50% of interest income of up to $1,000 from certain investments in their tax return.
• Tax payers will have the option to claim a standard deduction of $500 in 2012/13, increasing to $1,000 in 2013/14.
• The benchmark interest rate for capital protected products will retrospectively be the indicator rate plus 100 basis points.
• Super funds paying terminal medical condition benefits will be eligible to claim a deduction.
• The Commissioner will be able to exercise discretion in relation to excess contributions tax before an assessment is issued.
• If you want a more detailed analysis please refer to Client's Area of our website.

 

Rob Coyte | Wednesday, May 12, 2010
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