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WELCOME TO THE AUGUST 2009 ISSUE OF iNEWS!

Each month iNews brings you exciting and topical issues to help you stay informed and make the most out of life!
 

HOW TO MAXIMISE YOUR RETIREMENT INCOME

When you think about your retirement are you concerned that you may not have accumulated enough superannuation and other assets to enable you to be financially secure and afford a comfortable lifestyle in your retirement?

The sooner you start planning for your retirement the more likely you will be able to accumulate enough to be comfortable and financially secure.

No matter what stage of the wealth accumulation process you are at, whether you are in your thirties, forties or perhaps in your fifties and retirement is suddenly closer it is never too late to take advantage of a number of incentives and strategies that will boost your retirement savings.

There are a number of Government incentives and other strategies that are designed to encourage people to increase their retirement nest egg.

Consolidate your Superannuation to one fund

If you have had a number of jobs in the past, it is likely that you have money in more than one super fund. By consolidating a number of super accounts into one fund you will only be paying one set of fees. This could have a significant impact on your super balance on retirement. It will also be easier to monitor and manage your super.

If you have moved house since you have started working and have changed jobs it is possible that you may have a ‘lost super account’ somewhere. The Association of Superannuation Funds of Australia (ASFA) estimates that currently more than $13 billion is classified as ‘lost super’. So make sure your super is working for you.

Salary Sacrifice

You can pay up to 45% income tax depending on your level of income. However, when you sacrifice part of your salary into superannuation you only pay 15% tax on the amount contributed. This means that you could contribute more to your super, pay less tax and add a significant amount to your super balance on your eventual retirement.

Transition to Retirement

If you are aged 55 or older and are still working and you are able to buy an income retirement stream, a Transition to Retirement arrangement could prove to be a tax effective strategy for you.
This strategy could provide you with a tax effective retirement income stream while at the same time you contribute as much as you can to your superannuation (within Government limits) using pre-tax money from your employment income. You can then top up your income from a tax effective retirement income stream.
This enables you to significantly increase your income in retirement without reducing your pre-retirement cash flow.

Choose a Fund that May Earn a Better Return

A super fund that consistently outperforms other funds by as little as 1% per annum over the longer term can result in a significant increase to your super balance when you retire.
Many employees still fail to take advantage of Government changes that allow them to make contributions to the fund of their choice.

Take Advantage of the Government Co-contribution

The Government encourages people to save for their retirement by matching any after tax contributions to the amount of $1 for every dollar you contribute if you earn less than $30,342. The Government co-contribution reduces for every dollar you earn over $28,000 and ceases once you earn more than $60,342.

If your spouse is not earning you could also consider opening a super account for your spouse in order to take advantage of the Spouse Contribution Tax Offset. This concession can add a significant amount to your super when you retire if you are able to take advantage of it over a number of years.

Seek Professional Advice

The above are just some strategies that will enable you to increase your retirement income.

There are a variety of strategies available to boost your superannuation however you must adopt the strategies that are most appropriate to your circumstances. Contact your iPlan adviser on 13000 IPLAN (1300 047 526) or email us at info@iplan.net.au

What are the signs of an economic recovery?

With conflicting views as to whether the Australian economy is experiencing the first signs of an economic recovery, or whether this optimism is misplaced, it is now more important than ever for you to regularly monitor your financial position, including your investment portfolio.

The way to understand what is happening in the economy is by looking at those signs that may signal a sustained economic recovery.

It is interesting to look at some of the signs that point to a real recovery.

  1. Interest rates. While people generally don’t want higher interest rates, if the Reserve Bank of Australia changes its policy of cutting interest rates and moves the official interest rate up, this would be a sign that the RBA considers that an economic recovery is underway.
  2. The share market. When confidence returns to the share market and it maintains an upward trend, this is a sign that investors believe that recovery is likely. The share market is generally a forward indicator of expected economic activity.
  3. Unemployment falls and jobs become more secure. When certainty returns to the job market, people become more confident about their spending.
  4. Business investment increases. When businesses start investing again with confidence it has a major flow-on effect on the rest of the economy. Businesses will borrow money from banks or raise money from shareholders and they will employ more people. The whole economy benefits when employment increases.
  5. Cut back in Government stimulus spending. When the Government cuts back spending on stimulus policies such as extensions to the first home owners grant, stimulus package handouts, industry handouts and the creation of new public service jobs, this is a sign that the Government considers that these stimulus measures have had the desired effect. In addition the Government has already indicated that it is reviewing deposit guarantees to the banking system.
  6. New company floats. A true sign of an economic recovery is when investors have the confidence to invest in major new company floats on the stock exchange.
  7. Office block vacancy rates. The vacancy rate for CBD offices which is currently 8% is high compared to long term averages. Until it gets back below 6% there is evidence that the economy is operating below capacity.
  8. Is the Global Financial Crisis (GFC) over? We are faced with conflicting opinions. On the one hand it appears that Australia has come out of the GFC in better shape than expected. On the other hand there is still uncertainty as to how the USA and Europe are managing fallout from the GFC.
How does all this affect me as an investor?

There are increasingly positive signs for recovery in the Australian economy, however there is the possibility that volatility could continue for some time.

The fact is that nobody can accurately predict when the economy is at the bottom of the economic cycle and economic recoveries often occur before people realise that recovery is underway.

From an individual’s point of view you must ask yourself the following questions?

  • How does this affect my superannuation?
  • How does it affect my investment portfolio?
  • Do I have the most appropriate loan structures in place?
  • Am I in the right investment option in order to maximise my returns in a volatile market?
It is essential to take steps to smooth the effects of volatility in markets. That is why it is important for you to seek regular advice and monitor your financial goals with a qualified financial planner.

Call iPlan on 13000 IPLAN (1300 047 526) for a confidential discussion on what can be done to improve your position.

Living in 2009

YOU KNOW YOU ARE LIVING IN 2009 when...

1. You accidentally enter your password on the microwave.

2. You haven't played solitaire with real cards in years.

3. You have a list of 15 phone numbers to reach your family of 3.

4. You e-mail the person who works at the desk next to you.

5. Your reason for not staying in touch with friends and family is that they don't have e-mail addresses.

6. You pull up in your own driveway and use your mobile phone to see if anyone is home to help you carry in the groceries.

7. Every commercial on television has a web site at the bottom of the screen.

8. Leaving the house without your cell phone, which you didn't have the first 20 or 30 (or 60) years of your life, is now a cause for panic and you turn around to go and get it.

10. You get up in the morning and go on line before getting your coffee.

11. You start tilting your head sideways to smile. : )

12. You are too busy to notice there was no #9 on this list.

Your Question's Answered

Got a question you would like answered?

Please email your questions to info@iplan.net.au, or why not phone one of our financial advisers directly on 13000 IPLAN (1300 047 526).

iPlan Financial Services Australia Pty Ltd ACN: 106 591 833 as trustee for the iPlan Australia Trust ABN: 58 928 175 252 is a Corporate Authorised Representative of iPlan Financial Services P/L ABN 70 122 979 140 AFS Licence No. 311824

This Month
1) How to maximise your retirement income
2) What are the signs of an economic recovery?
3) Living in 2009
4) Your Questions Answered
5) Contact Us

 

 

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iPlan Financial Services makes no representation and gives no warranty as to the accuracy of the information in this document and accepts no liability for any errors, misprints or omission herein (whether negligent or otherwise). iPlan Financial Services shall not be liable for any loss or damage whatsoever arising as a result of any person acting or refraining from acting in reliance on any information contained therein. The above is for the intended audience only and contains only general information. Please seek professional advice before making any decisions.
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