Pre Retirement Planning
Managing you cash flow means that you can achieve your goals through your financial road map, that Pennywise will establish with you.
So Where does your money go each month?
It can be easy to let money slip through your fingers. Setting up a budget and starting a regular savings plan will help you:
• Set and achieve your financial goals.
• Make the most of your money and enjoy the benefits of your hard work.
• Get into the savings habit so you can build wealth faster.
• Increase the amount of money you have by earning interest.
• Get peace of mind that you are being smart about your money.
Getting started
• Find a budget app to help you make and stick to your budget.
• Set up a regular savings plan so that money automatically comes out of your account each month.
• Watch your savings grow.
Pennywise Investments can help you:
• Set up a regular savings plan.
• Monitor you cash flow goals.
Being in debt is not always a bad thing! It can play an important role in helping us achieve our long term goals and objectives. Properly acquired and structured debt coupled with a robust cash flow management process can help to reduce “inefficient debt” quickly and replace it with “efficient debt”.
What’s inefficient debt?
Inefficient debt is used to buy goods, services and assets that don’t generate any income. This means you need to rely on your own income sources and assets to repay this debt. Also, the interest cost on this type of debt is not tax deductible.
Examples include home loans, credit cards and personal loans.
This type of debt can impact other wealth building opportunities. Generally speaking, it is better to reduce this type of debt as quickly as possible and try to repay those charging the highest interest rate first. There are a number of ways this can be done, such as consolidating your debts into the loan with the lowest interest rate.
What’s efficient debt?
Efficient debt is used to buy assets with the potential to grow in value and generate an income. They can benefit you in two ways:
• Find a budget app to help you make and stick to your budget.
• The income from the asset can be used to help repay the loan.
• The interest cost may be tax deductible, helping to minimise any tax.
This type of loan is often used to help build long-term wealth.
Examples include investment property loans, investment loans and business loans.
Pennywise Investments can help you:
• Paying off inefficient debt quicker.
• Plan with efficient debt.
Investing is an essential part of helping you create wealth. Over the long term, investments can generate great rewards.
Investing starts when you have surplus cash flow from your daily living expenses to invest. If you focus on staying on your financial road map with your household budget, you can soon find savings that can be invested to help build your future wealth.
One of the easiest ways to build your investment portfolio is to simply keep adding to it on a regular basis. With a regular investment plan you can start small and build your investment over time. And by putting money into an investment portfolio rather than a savings account you could earn a higher return.
For example, with an initial investment of $1,000, and by adding as little as just $100 a month, you can start a regular investment plan into a managed fund or superannuation. Assuming you earn an average of 7% each year on your investment, after 10 years your investment will have grown from $1,000 to $16,000.
Pennywise Investments can help you:
• Set up a regular investment plan.
• Provide guidance on where to invest your money.
Gearing simply means investing with borrowed money, allowing you to acquire assets other than those you would otherwise be able to own. This can be an effective way of building wealth over the longer term.
Even if you don't own your home, you can still invest in your financial future through a well-managed gearing strategy. Using the equity in your home, for example is a common strategy for investing in other assets such as shares or managed funds.
You’ve probably heard that gearing can reduce tax. It also allows you to hold assets that have the potential to grow in value over time. Remember, though, that while gearing can magnify your gains, it can also magnify your losses. As a result, it’s not for everyone.
Pennywise Investments can help you:
• Credit and Margin Loans for Investments.
• Reverse Mortgages for retirement funding.
Planning well for your retirement is absolutely essential to ensure your retirement goals are met. It’s about getting great advice in the years leading up to retirement to take advantage of the various strategies that Pennywise Investments creates for you in your financial roadmap during your pre-retirement period.
By following your road map, your goal of a happy and prosperous retirement can become that much closer to reality. Whether this means achieving financial independence at a certain point in life or retiring at a given age.
Our retirement planning advice will cover how much you need to retire on and if you are on track to meet your financial goals. Our highly qualified Retirement Planning Advisors will give careful consideration to the most tax effective retirement strategies and income stream solutions, as well as providing the flexibility you need in the lead up to retirement.
From the experts:
By law, all super contributions are locked away or 'preserved' until you reach your preservation age. Your preservation age is based on your date of birth. Once you reach your preservation age, you can begin drawing a pre-retirement pension. You will need to check with your super fund as not all funds offer pre-retirement pensions.
What you need to know
Once you reach your 'preservation age', you may be able to draw pre-retirement pension – a regular income stream drawn from your super savings.
With a pre-retirement pension you can put in place a transition to retirement strategy to help you ease into retirement and boost your super in a tax effective way:
• You could reduce the number of hours you work and supplement your income with payments from your pre-retirement pension. This would give you more time to do the things you want, while maintaining your lifestyle.
• Or you could continue working full-time but take advantage of the potential tax concessions on offer to boost your super balance. For example, you might keep working full-time while drawing a pre-retirement pension from your super balance. You could then salary sacrifice to super the same amount, or more. This would maintain your after-tax income while reducing the tax you pay.
Pennywise Investments can help you:
• Plan for your retirement.
• Put in place a transition to retirement strategy.
• Maximise Centrelink payments through tailored planning techniques.
• Maximise the benefits of your superannuation concessions.
• Organise your affairs to minimise tax by working with your accountant to take advantage of the latest tax strategies.
Superannuation (or super) is a fund specifically designed to help you save and invest for your retirement. It’s restricted as you generally can’t withdraw from super until you retire or reach your preservation age (that’s the intention, although there are special conditions of release).
What is Superannuation?
Super funds are set up as trust funds. This means a trustee is appointed to manage the fund on behalf, and for the benefit, of its members. Super receives special tax treatment compared to your other money. When it comes to investing over the long term, there aren’t many better tax-effective ways to save for your retirement.
Lower taxes and more investment options – such as local and international shares, property and fixed interest investments – offer your super more potential to grow.
Advantages of Super
Super opens your money to the world of investment markets and you can choose how it is invested.
Money in super is taxed in different ways to your other investments. It’s designed to reward you for investing for the long term.
Super offers competitive insurance. Your insurance premiums, which are part of your super contributions, may be paid from your pre-tax salary, which is a tax-effective way to enjoy the protection you and your family need.
What are the Benefits?
• Earnings in super are taxed at up to 15% (and generally only 10% if the asset has been held for over 12 months), which is lower than most people’s marginal tax rate. If you start a pension at retirement then the tax on earnings in super reduces to nil.
• If you withdraw after age 60 your money is tax free.
• You can withdraw your super balance (the benefit) when you reach your preservation age. This varies depending on your birth date. By 2025 everyone will have a preservation age of 60.
• There are different tax treatments on lump sum payments depending on the size of the benefit and the age and service period of the member.
• Money invested after July 1999 is fully preserved, which means it can’t be accessed until you reach your preservation age.
More Flexibility
• Super is becoming more flexible with more strategies and ways to reach your retirement goals:
• The government’s co-contribution scheme is designed to help low to middle income earners get more into their super.
• Concessional contributions can be used to reduce your tax.
• A transition to retirement strategy means you can still work full time or part time after your preservation age and still contribute to your super.
Pennywise Investments can help you:
• Develop a definable retirement goal in line with your future lifestyle expectations
• With advice in regards to existing funds and established funds.
• Consolidate funds to provide ease of tracking and reduce overall fees.
• With a selection of investment options, including a full Superannuation Investment Strategy.
• With recommendations around salary sacrifice and non-concessional contributions to superannuation for asset protection, tax optimisation and wealth building.
Unit 1/14 Carey St, Bunbury WA 6230
Telephone: 08 9791 9113
Facsimile: 08 9791 9114
Email: pwi@pennywiseinvestments.com.au
P.O Box 1376, BUNBURY WA 6231
Information published on this website has been prepared for general information purposes only and not as specific advice to any particular person. Any advice contained in this document is General Advice and does not take into account any person’s particular investment objectives, financial situation and particular needs. Kingsace Pty Ltd ABN 82 083 163 697 t/a Pennywise Investments is a Corporate Authorised Representative of Infocus Securities Australia Pty Ltd ABN 47 097 797 049, who holds an AFSL and Australian Credit Licence No. 236523.
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