Have you planned for succession and/or retirement?
For many individuals and business owners, the idea of retiring seems too far way to be deemed important. It’s something that can be dealt with later. If not, then the proceeds of the business should see them through. The reality is that life is ever changing and an illness alone can cause you to be unable to work and put a major financial strain on the business and family.
Planning for your retirement should be dealt with at lease five years in advance. Examine who will take over the running of the business, who will own it and what will happen to the businesses investments and properties. Sort out your super and put the right protections in place. Most importantly seek an accountant or financial advisors assistance to put the right plans, around things such as superannuation contributions, in place for you and your family.
There are many advantages to transitioning to retirement through your superannuation fund, however you need to consider if this type of income stream will be right for your needs and if it will fit in with your current superannuation plans. Do you own any rental property?
There are a number of steps you need to examine before transitioning into retirement. Check the type of superannuation fund you are under, design your retirement strategy, look closely at your superannuation contributions, consider your income needs and understand the tax implications.
Your transition to retirement strategy can be used to save tax and bump up your super before you retire.
Have you reviewed your superannuation contributions?
Retiring in comfort may be what we all aspire to, yet with employer superannuation contributions at 9.5% you may not have enough to maintain a comfortable lifestyle, especially considering that as a population we are living for longer and our cost of living is ever increasing. Take a look at your finances as a whole and check, moving forward, which is the best way to go for you and your family.
Some extra ways to boost your super can be obtained by salary sacrifice, after tax super contributions, low income super contributions and self employment super contributions. These are a great way to boost your super ensuring a comfortable retirement.
Have you used your maximum super contribution allowances?
Superannuation and your contributions over your working life is a key factor to your lifestyle upon retirement. It is compulsory for employers to make super contributions (super guarantee or SG) whilst you too can also contribute extra to your super at any time. There are however limits on how much extra you can contribute before you start having to pay extra tax. These limits can change from time to time.
There are different caps (limits) depending on the type of contributions made. Concessional contributions are those made into super before tax and include such things as super guarantee from your employers, salary sacrifice and some personal contributions if you’re self employed. Once in your fund they’re taxed at 15%. Non concessional contributions are generally those made after tax has been paid on them and include such things as personal contributions made from after tax pay and contributions from a spouse made on your behalf.
Do you have a recent projection of pension benefits?
Around two thirds of the Australian population today rely on government pensions or allowances as their main source of income in the retirement years. Seeking advice from your Financial Advisor allows you to fully understand, calculate and project benefits for your personal retirement.
How much and which pension you are eligible for depends on how much income you generate or are deemed to generate (the income test) from other sources and the net worth of your assets (the assets test) not including your current home.
The assets test calculates the value of your assets, even those held overseas which are converted, value wise, into the Australian dollar. The income test is based off money received through employment, earnings from investments, salary sacrifice and money from outside Australia. Projecting the future takes the worry out of retirement.
Is your retirement income sufficient to retire on?
The key to having control over the age you retire and the amount you have to retire on is as simple as planning. Making the most of tax breaks, projecting for the pension, savings and investments are all key to a comfortable retirement.
Many people misjudge how much money they will need to retire on, so the sooner you start, the healthier financial position you are likely to be in later on in life and the greater the chance of it looking the way you dreamed it.
‘Clients come first’ at our firm, as does your financial future. Give us a call today!
TJD Accounting Services