Most of us, when we think about it, know what a comfortable retirement looks like. It probably includes travel to exotic places, time with family and doing things we have never done before, with enough money in the bank to not worry about finances.
According to The Association of Superannuation Funds of Australia’s (ASFA) latest report, Australian individual retirees who desire a ‘comfortable’ retirement will need to have saved a minimum of $545,000 by the time they are ready to retire at age 67. For couples, the figure is $640,000.
Since 2004, ASFA has been developing and updating this estimated retirement minimum, which is based on retirees’ spending requirements as well as in-depth statistics on consumer spending and earning trends, to help people prepare for life after work.
However, Tasmanians shouldn’t be unduly alarmed by this calculation. The fact is it is almost impossible to predict exactly how much money you will need for your retirement. There are many small variables that make each person’s retirement unique, not to mention superannuation and tax rules, as well family and personal health situations that could change as you approach the end of your working life.
The best way to determine how much you’ll need to thoroughly enjoy a comfortable retirement is to get in control of your financial situation and build a blueprint of what the perfect retirement looks like for you.
The first step is to understand your basic living expenses, and then everything else you spend money on. The next should be to consult an expert. A professional financial planner can help you truly understand your finances and, more importantly, what you need to do to achieve the retirement lifestyle you want and can reasonably afford.
Putting yourself in the best possible financial position is key in achieving your retirement dreams without having to rely on the Age Pension to subsidise your post-work life. Your superannuation is only one avenue towards achieving your retirement goals and there is already a cap on how much you can contribute in one year.
A financial planner will walk you through the different saving strategies available at different stages of your life, putting you in a favourable position when you inevitably decide to exchange the suit or high heels for a Hawaiian shirt and thongs.
So, what does all this mean for the average Australian entering retirement? While some may be surprised at the size of ASFA’s minimum nest egg, for many this will be achievable. ASFA’s minimum retirement amount for a ‘comfortable retirement’ includes provision for an annual holiday, and enough spending money to enjoy regular outings to your favourite restaurants, wear the latest fashion, improve your home and have private health insurance.
However, to make sure you are taking the right steps towards a comfortable retirement get the advice of an expert. In Tasmania, there are a range of professionals available who can give financial advice as you prepare for retirement. Call MyState Wealth Management today on 1300 651 600 to find out more.
Information is current as at 23 August 2017. This is general advice only, before making any decisions please speak with a MyState Wealth Management Financial Planner.
Ageing is a fact of life and with any luck, your parents will live long, healthy lives. However, you can’t count on this. The time may well come when your parents will need assistance beyond what you can provide. Aged care planning is crucial, not only for the health and wellbeing of your parents, but also for your financial situation now and in the future.
It is troubling that most Australian’s have not yet considered the financial implications of paying for aged care. According to a 2016 PureProfile study, a startling 72 percent of respondents with parents at an average age of 76 years old have not spoken with their parents about their future care or made any plans for this.
Against this backdrop the number of aged Australians who choose to receive government-funded home care is growing, and so too the need for home care advice.
What does Government subsidised home care involve?
The aim of Government subsidised home care is to provide eligible individuals who want to stay at home with a range of services to help them with their daily activities.
These include some more basic personal services, which help with showering/bathing, dressing and/or mobility, support services which help with housework, gardening, maintenance, transport etc. and more complex clinical care, which provides nursing, physiotherapy, dietary, hearing and vision services.
Home care packages are delivered on a Consumer Directed Care ( this means that the funding for the package now sits with the family , not a specified Home Care service provider) basis and vary from Level 1 (basic care) through to level 4 (high level care).
In February this year changes were made to improve the way home care services are delivered. These include a new national queue system, which enables people with greater needs to to gain faster access to a home care package. Packages have also been made available based on the relative needs and circumstances of individuals and the length of time they have been waiting. As a result the allocation of packages has become more consistent across the country.
Portability of home care packages
Before February home care packages were held by the service provider, but under the changes packages are now controlled by the care recipient, improving portability and allowing care recipients to change service providers and transfer any unspent funds (less any exit costs) to a new provider.
In cases where the care recipient will be leaving home care for any reason (including moving into residential aged care), any unspent amount (less any exit costs) will need to be paid back.
While the way home care funding is managed has changed, the need to plan ahead for home care and aged care generally has not. It is important that family members have discussions with aging parents about how they want to be cared for and how this will be paid for. The best way to prepare is to seek strategic advice from professionals who know how to help you and your family. Actively seeking specialist care advice while the capacity of your loved ones still allows for it will undoubtedly improve your chances of finding a positive and financially achievable outcome for all.
If you would like to find out more, call MyState Wealth Management on 1300 651 600 or visit mystate.com.au/wealth to find out about free information sessions.
Information is current as at 19 June 2017. This is general advice only, before making any decisions please speak with a MyState Wealth Management Financial Planner.
Downsizers and pensioners are federal budget winners
Older Australian homeowners who have sought to downsize in the past, but have been put off because they could not invest the proceeds into superannuation, may want to consider resurrecting their sale plans.
Motivated by a desire to boost housing supply, the Government has used the recent federal budget to reduce barriers to downsizing by enabling retirees who sell larger homes to reinvest capital into the tax-friendly superannuation system.
This incentivises more older Australians to unlock the value of over-sized housing assets to enjoy a comfortable retirement, while also increasing housing stock available for younger families and first home buyers. First home buyers will also be allowed to make voluntary superannuation contributions up to $15,000 per year and $30,000 in total to put towards a deposit.
How does it work?
As of 1 July 2018, Australians aged 65 and older will be able to make non-concessional (post tax) contributions to their superannuation accounts of up to $300,000 from the proceeds of the sale of their principal home, which they have owned for ten years or more. Both members of a couple can participate in the scheme, meaning a combined $600,000 can be contributed to superannuation from the sale of the one home.
These new contributions will be in addition to any other voluntary contributions homeowners are able to make under current contribution rules. The work test and $1.6 million balance test which ordinarily apply when making contributions, will not be applicable in these circumstances.
Pensioner cards returned
There is good news for older Australians who lost their Pensioner Concession Card on 1 January due to asset testing changes. The asset threshold above which older Australians were not eligible for pensions dropped from $793,750 to $542,500 for single homeowners and from about $1.1 million to $816,000 for couple homeowners. Many older people not only lost Centrelink pensions, they also lost accompanying Pensioner Concession Cards.
More than 90,000 of these people will now have their pensioner concession cards reinstated, and again have access to a range of state and national benefits, including:
If you would like to find out more regarding how any outcomes of the federal budget may impact you, call MyState Wealth Management on 1300 651 600 or visit mystate.com.au/wealth
Information is current as at 22 May 2017. We recommend you seek independent tax advice. This is general advice only, before making any decisions please speak with a MyState Wealth Management Financial Planner.