Prepare for life

+ wealth + security

Fabulous 50s:
fighting fit, having fun, facing the future

Life in your 50s can be great. You have made a dent in that huge mortgage, the kids have probably grown up and are not dependent on you, your career may be at its peak, so what is next financially?

In this issue....
1. Fabulous 50s
2. Super Health
3. Insurance - Fundamental to
business success
4. Financial Top 6
New Feature - Book Review

With recent losses in retirement funds and a drop in home values, many people in their 50s are concerned about the future. There are the threats of high debt levels, sudden illness, disability or layoffs, not to mention the phenomenon of “boomerang kids” returning to the nest. Experts agree if there’s ever a time to start saving for your retirement it’s now.
So if you haven’t already, you need to start your planning. Up until now you may have been reactive in your lifestyle, with mortgage payments and work pressures being the biggest worries. Have you started thinking about how and where you want to live for the next 30 or more years? Do you want to stay where you are? Downsize? Do you have a life-long desire to move to the beach or bush, or travel the world?

Your financial adviser can help set you on the right path as you face these questions, by recommending a strategy that will meet your needs and fulfill your plans for your desired retirement. A financial adviser can provide guidance in the following areas:

• Tax-effective superannuation strategies
• Investment advice, including shares, tailored for your needs
• The financial implications of changing jobs, redundancy and early retirement
• The most effective way to invest an inheritance
• Centrelink and retirement planning strategies
• Making sure you have adequate insurance to protect your family
• Daily finances (Are you spending on things you don’t even use, are there ways you could scale back?)
• Wills and estate planning.

You might find that you are not as close to your ideal retirement lifestyle as you would like. Don’t panic! This happens to a lot of people but it is never too late to make a change. You still have a chance to save more and make up for lost time.
Everyone’s financial needs and goals are different and it’s worthwhile to seek professional financial advice before you make important financial decisions. Your financial adviser can provide you with strategies to help make your ideal retirement lifestyle a reality.
Start making your ‘wish list’, then get in touch with your Professional Investment Services financial adviser.
Source | IOOF

Super Health

Thanks to better health and treatment for disease, we are all living longer and as a result will have many more years in retirement which means we need more savings and more superannuation.
Superannuation is a reliable means of accumulating savings for retirement, but are you making the most of the opportunities available? Are you on track to build up enough money in your super in time for your retirement?
While the cost of living continues to rise at a fast pace, taking the necessary steps to be financially prepared for your retirement is vital.
The national figures for the ASFA Retirement Standard (December 2010 quarter) show an alarming difference between a modest lifestyle ($21,218 for a single and $30,708 for a couple) and a comfortable lifestyle ($39,393 for a single and $53,879 for a couple) compared to the Age Pension (around $19,000 for a single and $28,600 for a couple).
Here are some ideas for starters.

Salary Sacrifice

A salary sacrifice strategy involves having part of your pre-tax salary paid into your superannuation fund by your employer rather than you receiving it as income. This strategy not only increases your pre-tax contributions to super, but reduces the amount of tax you pay as you benefit from only 15% contributions tax rather than your marginal rate
of tax.
If your income is on the cusp of the tax thresholds, implementing a salary sacrifice strategy could also drop you down into the lower tax bracket, meaning you will pay even less in tax.
However, when choosing this strategy, you need to remember that there are limits; pre-tax contributions to super are limited to $25,000 per person per annum (or $50,000 for those 50 years old and over) and this includes your nine per cent Superannuation Guarantee contributions. Remember too that once contributed into your super, you won’t be able to access the money until you retire, on or after the age of 55.

Government’s Super Co-contribution

If you earn more than $37,000 a year, superannuation is the most tax-effective environment in which to grow your wealth. Although the government has reduced the amounts that can be contributed to superannuation, the limits are still generous.
By making personal (or after tax) contributions to your super you could qualify for the government’s super co-contribution. If your salary (assessable income, plus any fringe benefits and reportable employer superannuation contributions) is less than $61,920 and you contribute up to $1,000 the government’s super co-contribution could add up to an extra $1,000 to your super each year.

Consolidating your Super

If you have changed jobs over your working life, it’s likely that you have more than one super fund. If that’s the case, you are most likely paying more than one set of fees, eroding your super savings. Consolidating your funds will save you from paying multiple fees and charges. And, you’ll only have one super account to keep a track of! Before consolidating, check with your financial adviser.
Are you one of the many Australians with unclaimed dollars in super funds? Not sure how to find your funds? Your PIS financial adviser can help you uncover your lost super and consolidate it into one maximised account. After all, it is yours.
Take the time to visit your financial planner to discuss a strategy to help make the most of the options available to you.

If you are Self-Employed

The co-contribution is also available to people who are self-employed.
To be eligible, you must make a personal contribution without claiming a tax deduction for it. The tax office will work out your co-contribution from information on your tax return and details of contributions provided by your super fund.
You must earn at least ten per cent of your total income from employment, running a business or a combination of both.
Source | IOOF

Insurance- fundamental to business success

Through the death of her business partner and friend, Sue saw first-hand the importance of a risk adviser and adequate, relevant insurance for a business.
Sue knows better than most the value of having the complete range of business insurance in place. As partner in an accounting firm with her long-time mentor and friend, Paul Gillett, Sue was aware of every nuance and consequence of policies – in fact, she spent most days discussing the importance to clients.
But like everybody’s situation, the reality for Sue and Paul was a lot more complex, and just like most people, it came down to “getting around to it” and an aversion to paperwork.
Sue had approached a local risk adviser as a potential referral source for their accounting clients who needed guidance on insurance cover.
“He said he wanted to assess our personal situations first,” explains Sue. “He found that what we had was not adequate.
So he rewrote all our insurance, taking in to account our new structure, and redid the policies for our partnership and our business insurance.”
Not long after that, Paul was diagnosed with sheath nerve cancer. A biopsy was taken and despite the odds, just 5%, Paul found out it was malignant. During his chemotherapy and a series of operations on scar tissue around the tendons in his wrist, Paul kept up his work with clients. “He was very dedicated,” says Sue. “Paul was conscious of pulling his weight and it was good for him to stay involved.”
Despite treatment, the cancer came back more aggressively. The only option was to remove Paul’s right arm.
Sue and the rest of the office staff held the fort while Paul underwent intensive radiotherapy and chemotherapy.
“We were attending an upcoming professional conference, held in Hawaii, where we were being recognised with a distinguished award. Paul was so proud. He wouldn’t be able to go, and I was reluctant to go by myself. He insisted we still go to Hawaii, and in the meantime, unbeknownst to me, Paul was admitted to hospital.”
While Sue and her husband were attending the conference, Paul passed away. They immediately returned. While still in shock, Sue had to gather up the policies, documentation and claims paperwork and as the dust settled, a few home truths emerged.
“The mistake we made,” says Sue, “was not getting ‘key person cover’ on both of us. This would have paid down if either of us was off work, and we needed to employ somebody for that time. It would have taken care of the financial stress.”
“There were so many things we had neglected. We delayed getting around to the appropriate insurance and agreements because we had to tailor them to our specific needs, add our own clauses to the basic documents that were supplied. It was unpleasant to deal with, even though the reality was, Paul was ill.”
Sue’s advice is simple: “Have your agreements formulated by a competent legal firm with expertise in your field, as well as your insurance completed by a risk adviser. This underpins business success.
“Get your accountants involved for business valuations. Make sure balance sheet items are adequately covered by insurance. When it comes to agreements, make sure each partner can sign for the other in the event of death – a Power of Attorney clause. Keep a copy of signed transfer forms on file.
“Make sure you have all the details of loans between parties and vendor finance arrangements and how they will be dealt with in the event of the death or total permanent disability of one of the partners.
“Always ensure the business is adequately covered,” recommends Sue. “For the sake of a couple of hundred dollars a month, you have peace of mind and if you need to claim, half a million dollars.
“If we don’t do it as professionals in the industry, how can we expect our clients, with their own busy lives to prioritise it? We need to be business development advocates as well as focusing on wealth creation, and we need to be proactive and care about our clients’ businesses, and their lives.” The complete story of Sue and Paul will appear in issue 4 of Imagine Your Lifestyle. www.imagineyourlifestyle.com.au. Jeni Bone | Editor Imagine Magazine
{ we need to be
proactive and care
about our clients’
businesses, and
their lives }

Financial Top 6

Now that EOFY is over, below are six discussion topics that you may like to pursue with your financial adviser.
Planning how to pay for your children’s education – take a look at the fee schedules of the schools you’re interested in and then work out a plan for affording them at every stage of their education.
Mortgage and debt structuring, cash flow – mortgage repayments typically eat a lot of cash flow. Getting the right structure in place for your debts and cash accounts can make a big difference to your cash flow and also to your wealth creation in the longterm.
Age care planning – for your parents, grandparents or for yourself! You’re never too young to plan for the future! There are a lot of tips and traps in this confusing area, and it’s better to be prepared for these before it’s time to move into an aged care facility.
Employee share plan schemes – there have been some changes to the tax legislation, so before you get caught out, consult your adviser about how they could affect you. Australian Financial System – if you have recently moved to Australia, there are living away from home allowances, and other benefits, as well as pension and superannuation issues that you can access. Or if you’ve moved back to Australia from overseas, some options may be available.
Insurance review – when your circumstances change, with marriage, property/or debts, new job, children, you need to make sure your cover and beneficiaries are updated.

Tips provided by Jeff Thurecht, Evalesco Financial Services Pty Ltd
Jeff Thurecht authorised representative 250830
Professional Investment Services Pty Ltd
ABN 11 704 608 558 | AFSL 234951

Good Read

The Big Tilt Bernard Salt

What happens when the boomers bust and the Xers and Ys inherit the earth? It’s only a matter of time until “Boomergeddon” – the end of the mighty reign of the Baby Boomer generation, members of which will be turning 65 this year and eligible for the pension.
In his latest book best-selling author, columnist and business advisor Bernard Salt scopes the big question of the “invisible faultline” (or tilt point) where boomers exit the workforce at a faster rate than Ys enter the workforce. The “Big Tilt” as Salt calls it will change consumer spending (greater emphasis on ‘value’ through, say, internet retailing), create new social behaviours (downshifting where boomers extract equity from big city property) and present challenges to the skills and tax base of the nation since there are not enough workers to replace the boomers and not enough tax to fund the retirement that boomers have come to expect.
Even if you don’t agree with Bernard Salt’s ideas about where Australia is headed you will be won over by the warmth, wit and genuine insight of his writing. The Big Tilt: What Happens when Boomers Bust and Xers and Ys Inherit the Earth is a compelling and entertaining read..
Available now, Hardie Grant Books, RRP $19.95

WIN: One of THREE copies of The Big Tilt to give away. To be in the running, visit www.profinvest.com.au/goodread and submit your contact details, including postal address and the name of your accountant or financial adviser. Terms and conditions apply.
Winners will be notified via email of their success!
CONGRATULATIONS: To the winners of
Dale Carnegie’s ‘Stand Up and Deliver’
Chris McCarthy, Bec Bazely, Jenny Kemp, Brooke
Smith, Tony Spies and David Shuker!!

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DISCLAIMER
The information contained in this document is of a general nature only and does not take into account your particular objectives, financial situation or needs. Accordingly the information should not be used, relied upon or treated as a substitute for specific financial advice. While all care has been taken in the preparation of this material, no warranty is given in respect of the information provided and accordingly neither Professional Investment Services nor its employees or agents shall be liable on any ground whatsoever with respect to decisions or actions taken as a result of you acting upon such information.
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