50’S and beyond

This time is all about strategy when it comes to your finances. You need to be doing the right things at the right time, so listen up if this is your age category and feel free to let me know if you have any questions. Time is of the essence!

1. De-risk – As you get closer to retirement, you need to have a look at your investment portfolio and your super account and think about how aggressive your investment options are.

Reducing the risk in your portfolio may be something to consider. In theory you may want access to that money soon, and knowing how much is there will help with your preparations for retirement.

Markets go up and down, it’s what they do, there is no getting around that. It would be terrible if the markets go down just as you wanted to access your account. Preparing for this in the years leading up to retirement should be a priority.

2. Generosity killed the cat – If you want to gift some of your money to your family then you need to consider doing this prior to 5 years before you retire. When centrelink assesses your eligibility for the age pension, they will take into account any of the monetary gifts you have given to family members in the 5 years prior to your retirement. So, whilst you may not have the money anymore, centrelink will treat you as though you do, and potentially reduce the amount of pension you are entitled to.

3. Do you still need your life insurance? – You should assess whether you still need this, but you may need to see someone about this to assess your situation. If you cancel it now, it is harder to get it back, so take serious consideration into this.

If however you have managed to pay down your debts and rely less on your income, then reducing this insurance down could be beneficial and free up some extra money for you.

4. Downsizing the home – Do you still need that big old house? The family has likely fled into the world making lives of their own. You may want to retain the family home as an investment or sell. It is important to remember that Capital Gains Tax (CGT) is not payable on your primary residence, so it’s best to take this into account when deciding what to do with the family home.

If you revert this into an investment property, you may be slugged with a CGT bill later down the track when you do sell it.

5. Transition to Retirement Strategy – This is a specific strategy used for people aged 55 and over as you are entering the age where you can get access to your super fund. This strategy enables you to access some of your super, whilst still working, and contributing a higher amount back into super. Why would you do this? You can essentially retain the same take home pay, increase your super balance, and reduce the tax you pay. Win/win/win!

6. Get the structure right – What is and isn’t available to you in the future regarding government payments can sometimes come down to the way in which you structure your assets. Owning assets personally, through super or through a trust can have a direct effect on what you get paid from the government. The earlier you address this prior to retirement, the better.

7. What income do you need? – Be prepared to budget. You will need to know how much you have to retire with and know how to make it last. The age pension is barely enough to scrape by so hopefully by now you have accumulated a substantial sum in your super fund. Once you hit age 60, you are able to access your super tax free, so think about whether you want a pension or the whole kit and kaboodle.

Whilst you may just want to get your hands on the cold hard cash, you need to consider the long term strategy with these funds, including centrelink and making the money last the distance.

Well this is the last post that will wrap up my financial tips during the ages, and I hope that I have helped cover off on the main things to be thinking where ever you are in your life.

As always, let me know if you have any specific questions, otherwise I’ll go back to my usual mystery posts next week.

– This post is from our resident senior financial planner, Cara Brett. Check out her details in our about us page.

Posted in: Financial Planning and Cara Brett