Life after work

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Life after work
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ltltAdviser Namegtgt ltltPractice Namegtgt
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Important information

• This presentation has been prepared to provide
  you with general information only. It is not
  intended to take the place of professional advice
  and you should not take action on specific issues
  in reliance on this information.
• In preparing this information, we did not take
  into account the investment objectives, financial
  situation or particular needs of any particular
  person. Before making an investment decision
  (with or without the assistance of an adviser),
  you need to consider whether this information is
  appropriate to your needs, objectives and
  circumstances.

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Todays agenda

• The big picture - where are you now?
• Rethinking your approach to saving for retirement
• Working a little longer
• Assistance from the government
• Cutting fees on your super
• Retirement income
• How much do you really need in retirement?
• Getting help

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The big picture - where are you now?
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The big picture - where are you now?

• Australian population breakdown
• Longer life expectancy
• Trend towards earlier retirement
• Higher expectations of retirement

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The big picture - where are you now?

• Wealth per head of Australians in 2001
• Baby boomers - wealthiest segment but still have
  more years of saving opportunity ahead

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The big picture - where are you now?

• Cost for Australians to achieve either
• How much do you need to save to lead a
  comfortable lifestyle in retirement?

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Rethink your approach to saving for retirement
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Rethink your approach to saving for retirement

• With smart savings strategies, it is possible to
  achieve your retirement savings target without
  sacrificing your lifestyle today
• Key examples include
• working a little longer - one of the most
  effective ways to boost your savings for
  retirement
• taking advantage of government assistance
• cutting fees on your super
• making the right investment choices
• starting your savings plan sooner - to
  potentially benefit from the effects of
  compounding interest

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Working a little longer
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Working a little longer

• Working just a few years longer is one of the
  most effective ways to boost your savings for
  retirement

Scenario A
Scenario B
DIFFERENCE
Current age
55
55
OVER
Retirement age
60
62
50,000
Current retirement savings
200,000
200,000
Gross salary
60,000
60,000
Income required in retirement
35,000pa
35,000pa
303,640
357,182
Amount saved on retirement
Assumptions 5 annual contribution increase.
6.5 rate of return pre-retirement, 5 rate of
return post-retirement. 3 annual inflation rate.
0 yearly personal contribution. 9 SG
contribution
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Working a little longer

• Money keeps compounding when the value of your
  savings is at its peak
• By staying in the workforce you are not drawing
  on your savings
• There is less time over which your savings need
  to stretch

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Assistance from the government
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10 ways the government can assist you with
retirement

• 1. Invest in super
• tax breaks on contributions and investment
  earnings
• 2. Contribute super for a spouse
• you may become entitled to a rebate on your
  personal income tax
• 3. Borrow to invest and claim tax deductions on
  interest expense
• interest on money borrowed to fund an investment
  is generally tax deductible
• 4. Invest in shares that pay franked dividends
• this can reduce tax payable on dividends, and
  franking credits can be used to reduce
  tax payable on other income

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10 ways the government can assist you with
retirement

• 5. Pay off the family home
• you do not have to pay capital gains tax on your
  primary residence
• every dollar invested can give you a tax-free
  return on the sale of your home
• 6. Get private health insurance
• 30 tax rebate on the cost of private health
  insurance premiums
• 7. Convert super to an income stream, dont take
  a lump sum
• potential tax benefits
• potential to avoid lump sum tax and receive
  tax-free income

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10 ways the government can assist you with
retirement

• 8. Check your eligibility for the age pension
• income and assets test
• males must be 65 years or over
• age for females depends on date of birth
• 9. Take advantage of the pension bonus scheme
• available for Australians who defer claiming an
  age pension
• 10.Earn an income in retirement - take advantage
  of high
• tax-free thresholds
• income tax-free thresholds

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Cutting fees on your super
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Cutting fees on your super

• If youve changed jobs over the years, there is a
  good chance that you have old super accounts from
  previous employers
• Multiple accounts multiple fees
• Generally, consolidating your super accounts
  reduces the amount of fees and charges you would
  otherwise pay on multiple super accounts
• A dollar saved on fees is generally another
  dollar thats invested
• Get your copy of the Super Consolidation Made
  Easy form

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Retirement income
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Retirement income

• Lump sum costs
• Converting super into the income that replaces
  your regular pay cheque
• Annuities - you use your super payout to buy the
  annuity, for which the government gives you a tax
  break. Annuities pay a fixed sum at regular
  intervals
• Allocated pension - you can vary the amount of
  income you receive, within certain limits set by
  the Tax Office. If you die, the unused funds go
  to your nominated dependants as a lump sum or as
  a reversionary pension. The flip side of this,
  however, is that the allocated pension only lasts
  as long as your funds do

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How much do you really need in retirement?
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How much do you really need in retirement?

• 1. Work out your income needs
• create a budget of income and expenses - it may
  give you the information to take control of your
  money, may show you ways to achieve this, and
  could assist your financial planner to give
  helpful advice
• 2. Project how much you need to accumulate to
  produce
• the required annual income every year from
  retirement
• until you die
• 3. Set realistic targets - do you need to work a
  little longer?
• 4. Establish savings goals
• 5. Revisit and review your goals regularly

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Getting help
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Getting help

• The new AXA Freedom website features a range of
  calculators that can help you better understand
  your financial situation
• - Investor profile calculator
• - Budget planner
• - Super savings calculator
• Contact ltltAdviser Namegtgt on ltltTelephone numbergtgt
  for additional guidance