Janine and Robert* are in their late fifties and they came to see us a year or so ago, concerned that they were inadequately prepared for retirement. They had some assets in superannuation, and Janine was working part time and Robert full time. Their combined income was $160,000 p.a. and they still had $200,000 to pay off their home mortgage.
Both were hoping to ease back from work in the coming years, but they also hoped to be in a position to travel overseas regularly to visit their daughter who was married with a child and living in the US.
They wanted to live their life in retirement in the same manner that they have lived throughout their lives. That is, they wanted to be able to eat out weekly, to have a holiday every year (with an overseas trip at least every three years, particularly to visit their daughter.) They also wanted to do some much-needed renovations to their home and to be able to update their car every five years or so.
A retirement planning case study
We recommended that Janine and Robert commence a program to salary sacrifice, so that they could continue to live on the same income, but to divert more ‘before tax dollars’ to their super fund. This tactic saves them $15,000 p.a. in tax, which is available to reduce their home mortgage.
We also set up a Transition to Retirement strategy that saves them $6,000 p.a., which created more funds to devote to super.
We maintained the underlying investments they held in their super funds because they were quite sound, but we restructured how they are owned. We arranged that they hold their investments directly, which reduces fees and assigns tax benefits directly to Janine and Robert (rather than being spread across all investors as can be the case with a managed fund).
Janine and Robert have been able to make the renovations to their home including a kitchen replacement, and have the peace of mind of knowing that their financial strategy has improved their situation by more than $21,000 p.a. This boost to their wealth has enabled them to grow their super faster, to reduce their mortgage and to know that they will have the means to travel when they wish to.
5 Financial helps people from all stages of life to improve their financial well being. You can read more case studies about how we’ve helped on our Case Studies page.
Do you know someone who could benefit from our advice?
Jason and the advisory team at 5 Financial are happy to meet for a casual, no-pressure conversation with those you would like to recommend to us. We offer an initial consultation at no charge, where we can briefly assess a person’s situation and work out what changes they may be able to make to advance their situation.
We’re always very direct. If we believe we can make substantial improvements to their arrangements, we’ll let them know. On the other hand, if we believe that our fees are likely to exceed any improvements we could suggest, then there would be no point for them to work with us – and we can recommend an alternative provider for them.
The benefit that our clients get from dealing with us has a lot to do with the revisions we can make to how their financial affairs are structured. We find that clients who derive the most benefit from this are those with a combined household income of $150K p.a. or more.
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Please contact us if you would like to know more about referring a friend, family member or colleague to 5 Financial.
*Names changed to protect privacy.