News

Grow your retirement income
In retirement, every dollar counts and it is worth exploring different strategies to grow your retirement income. Here’s how do it…

Use your super wisely
If you’re about to retire or are in retirement, it can be tempting to take your superannuation as a lump sum payment. However, this means taking money out of a tax-friendly environment and potentially placing it in investments that could attract tax at higher rates.
An alternative is to use your super savings to purchase a retirement income stream called an ‘account based pension’ or allocated pension. The earnings of an account based pension are tax-free and you enjoy a regular source of cash in much the same way your wage or salary was paid during your working days.

Review your super investment mix
If you choose to leave your super savings in the superannuation environment, it is important to review the way your super is invested at least annually. It can be tempting to switch all your super to low-risk investments but without some exposure to higher risk ‘growth’ assets like shares and/or property, your super savings might not benefit from potential capital growth.

Consider age pension entitlements
Depending on your assets and income, you may be entitled to receive a full or part payment of the age pension. Even a small part payment could see you entitled to a range of concessions including discounts on council rates and other benefits.
If you are a home owner, your family home could be your most valuable asset – worth more than even your superannuation. Your home equity can provide a potential source of funds in retirement, and you may not have to sell up or move in order to benefit from that equity. 

Think about using home equity
Your financial adviser can discuss possible options to access home equity in retirement.

Source: BT
 

Pulse checking your finances

Your financial health is key to the health of your wellbeing, relationships, work and home life. 
It’s important to have a regular checkup of your financial position to ensure you’re on track and to confirm your money is where you think it is, your investments are performing as they should, and debts are regularly serviced and not growing.

A financial plan will generally work around three basic savings accounts:
•    A buffer account which would ideally allow for three to six months of expenses.
•    A short term savings account for large expenses such as a holiday, renovation, home deposit and school fees. 
•    A long term account where you save for big ticket items like property. 

And then there’s your superannuation account. 

Each time you do a pulse check, check each of these accounts to ensure they are still working towards your goals. At the same time, it’s important to review your outgoings to make sure you’re moving forward and not falling behind. 

When to check 
Now is a particularly important time for pulse checking. Currently, around 5 per cent of mortgage holders in Australia are spending more than they earn on repayments and other living expenses, according to the Reserve Bank. 
People have been meeting their shortfall through savings made during the pandemic, but overall their reserves are now falling below the six-month buffer.
You should conduct a pulse check at least once a year. This is where you review your budget – what you’re spending and earning. 
Consider if you have underestimated or overestimated your spending – and adjust it accordingly.
It’s an awareness piece. Really look at the information and investments like super – is it what you were expecting, has anything changed in the way you want it invested?
Ask yourself: how are you meeting your financial goals? Is your plan on track? How are your long term savings growing? 
This is also a good time to review if anything has changed in your life – new relationship, new job, children, moving house, death in the family or divorce. If any of these have changed then you need to review your full plan and account for those life changes, including updating any beneficiaries.
The pulse check should also include making sure your super contributions from your employer have been paid into your super fund account. Companies often pay quarterly so it’s important to make sure nothing is missed. If there are any issues here, it’s best to know as soon as possible. We’ve all heard horror stories of companies going broke and not paying staff entitlements like super. It’s your money, you’ve worked hard for it and earned it – don’t lose it. 
Retirees tend to have a good idea of what’s going on with their finances but people in the accumulation stage need to consciously keep a plan and budget. 
The more organised you are and the better your habits, the better your chance of financial success. 
People need to have a pulse check at least annually, but probably every six months just to check how the plan is going.
For example, someone might have an emergency fund of $40,000 which is sufficient if it remains there. But when it starts going down for purchases that might not be emergencies, there needs to be a conversation – is this a genuine emergency or is the spending no longer following the plan?
There also needs to be a check in that you and your partner are on the same page.

Overspending can happen to anyone
Over time, it can be high earners that are not good with savings, so if you fall into this category, make sure it doesn’t get out of hand.
A pulse check is important for everyone at every stage of life and making sure you have it scheduled regularly is important because it’s when you leave things unchecked that a previously strong financial position can retreat.

Source: Money and Life
 

Five signs you may need a financial adviser

1.    You don't have time
When you’re juggling your job with your personal and family life, it can be challenging to carve out time in your schedule to really sit down with your finances. As a result, it’s easy to feel that they are slipping out of your control.
You find yourself putting off big financial decisions because they feel overwhelming, drawing time and energy away from work, family and relationships. A financial adviser can work with you by researching your options and advising on a course of action that help you work toward your goals, instead of putting them off.

2.    You find investments confusing
With so many investment products on the market, how can you be sure you’re getting a good return for the risk that’s involved? If you’re trying to make sense of it all by yourself, a financial adviser can clarify the concepts for you, with in depth knowledge around investments and markets.
They’ll help you review your current situation and goals and get an understanding of your appetite for risk. Then they’ll work with you to create an achievable plan and match you with quality investment solutions that suit your circumstances. And even better, they can identify investment opportunities that you might not have otherwise found out about.

3.    You've been through a major life event
Financial and personal lives are complex and interconnected – when a major life event occurs, it has a ripple effect across your finances. For example, when you get married or move in with a partner, you might want to merge finances and redefine your shared financial goals.
From buying a home and starting a family to changing jobs or retiring, a financial adviser can help you before, during and after. They’ll help you understand the financial implications, then work on building or adjusting your financial plan to ensure you stay on track.

4.    You're about to make an important purchase
While you make financial choices like these every single day, there may be times in your life when you are presented with a more significant decision. For example, you may come into an inheritance, or receive a bonus at work or a redundancy payout. In these cases, there is a strong temptation to splurge the cash.
It can be hard to know the best way to make the most of this money: should you pay off your mortgage, boost your super or invest it for the future? That’s where a financial adviser comes in. They’ll walk you through your options and what they mean for your situation, so you can feel confident in making the best possible financial decision.

5.    You're feeling stressed about money
One major reason why people choose to work with financial advisers is for the peace of mind it gives them and their families – particularly if they’re experiencing financial stress. Financial stress can happen to anyone, no matter their age or background. It can have a profound and lasting impact on your health and relationships.
An adviser can help you analyse your finances and figure out where you can make changes to improve your financial situation. They can also help you consider important questions, like how you and your loved ones would cope financially if you were unable to work for a while due to an accident or illness.
They can make sure you have a financial safety net in place and proactively help you prepare for major life events that could impact your finances and goals.
With a strong financial plan, you can recover from a small setback that risks derailing your finances.

Source: Colonial First State

The impact of lifestyle on life insurance premiums

Life insurance premiums are calculated based on a number of factors, such as your age, gender, health at the time of application, smoking status, occupation, lifestyle and hobbies. Your health can play one of the biggest roles in determining your premiums, so having a healthy lifestyle can have both personal and financial benefits.

Do you smoke or drink?
Smoking cigarettes, vaping and drinking alcohol are risk factors to your health, which is why insurers will generally ask how much you drink and smoke. Non-smokers generally pay lower premiums than smokers, and excessive alcohol consumption may attract higher premiums. Given up smoking or drinking since you took out your policy? Let your financial adviser know so they can review your policy, you might be able to reduce your premiums.

Eat well and exercise regularly
Regular exercise and a healthy diet have many benefits for our overall health, which is why it’s also viewed favourably by insurers. Some insurers offer discounts to customers who are enjoying a healthy lifestyle, get regular health checks and manage healthy body mass index (BMI) levels.

Manage pre-existing health conditions
Depending on your policy, pre-existing health conditions could result in exclusions applied to your policy or higher premiums to cover the risk. Treating your condition effectively, including making any lifestyle changes your doctor suggests, can have positive effects on your health and on the cost of your premiums. If a pre-existing condition has been successfully treated and no longer requires ongoing tests or hasn’t needed treatment for a specified period of time, your insurer may consider offering cover without any exclusions. 

Have dangerous hobbies?
High-risk activities, such as skydiving, motorsports or skiing, or occupations that require regularly operating heavy machinery or working at heights, may attract higher premiums because of the increased risk. 
Being healthy is its own reward – you’re likely to live longer and feel better – but when it comes to life insurance there can be financial benefits too.

Source: TAL