Helping your Family

If you or a family member is heading for retirement, this information will help.

Will you have enough super to retire and live the lifestyle you aspire to?

With the average life expectancy of Australians being 82.5 years, how long will their savings last? Recent ‘Super Shortage’ research indicated that a retirement age of 65 years could create a super shortage of 12.5 years for Australians to live the retirement lifestyle they aspire to from 65 years.

Will you find yourself asset rich but cash poor in your retirement?

There are many options to consider when planning your future retirement cash flow. HOW will you fund your ideal retirement lifestyle? WHEN do you make changes?

Just one retirement strategy is downsizing, but…

Is it time to downsize?

One of the biggest decisions for many retirees is whether to stay in the family home or purchase smaller or ‘retiree’ accommodation. It may be your most significant decision both financially and emotionally.

Ultimately, downsizing from your family home should provide you with a whole new way of life that is better than the one you left behind. With careful planning and a clear understanding of your future goals you will be well on the way to making it your best move yet!

Is the government’s ‘downsizing into superannuation’ for you?

From 1 July 2018, the Australian government allowed homeowners aged 65 years and over to downsize their family home and invest up to $300,000 of the surplus into their super (eligibility criteria apply).

It was announced by the government as part of reforms to reduce the pressure on housing affordability. It may also come as a relief and a welcomed strategy for many retirees, particularly those on the east coast who may have reaped the rewards of equity growth over the past decades.

About the downsizer measure

The downsizer contribution:

• Is not a non-concessional contribution and will not count towards your contributions caps

• Can still be made even if you have a total super balance greater than $1.6M

• Will not affect your total super balance until your total super is re-calculated to include all your contributions including downsizer contributions at the end of the financial year

• Will also count towards your transfer balance cap, currently set at $1.6M

• Is only applied for the sale of one home. You can’t access it again for the sale of a second home

• Must be made within 90 days of receiving the proceeds of sale, which is usually at the date of settlement

• Is not tax deductible and will be taken into account for determining eligibility for the age pension

If you sell your home, are eligible and choose to make a downsizer contribution, there is no requirement for you to purchase another home.

There are other eligibility criteria to meet and each individual’s circumstances must be assessed for suitability.

The ATO website explains all eligibility requirements. Or contact us and we can put you in contact with a specialist to help you.

Time will tell if this downsizing contribution into superannuation will be an attractive option for retirees.

As your finance specialist we welcome the opportunity to discuss your future plans or those of your parents!

Through our own knowledge and that of our networks, we can help you live your dream retirement lifestyle.

DID YOU SAY $1M TO EDUCATE MY CHILDREN?

You thought babies were expensive? Predictions show the cost of private education could be as high as a family home…

For most people, when starting to plan for a family, we usually consider the cost of babies and child care.

Cast your mind forward to when that baby is at primary and secondary school. Do you know how much he or she will cost to educate?

The cost of education has soared 61% in the past decade and is growing faster than average wages at 34%.

In fact, for a child born in 2018, the estimated cost for primary and secondary education is estimated at $66,320 in the public system and $475,342 for the private system per child.

If you have three children, the cost of educating them in our capital cities’ private education could top $1.6M – the same cost of some family homes!

Even conservative estimates from the Australian Institute of Family Studies show a couple with two children can expect to spend over $40,000 for 13 years of education .

Regardless of where you live and if you use public, faith-based or private education, school fees continue to be a major expense.
Many parents fail to appreciate the many additional expenses associated with funding a child’s education.

• Extracurricular activities

• School excursions

• Uniforms • Camps

• Technology (bring your own computer). iPads are required at some primary schools as young as year 3 and laptops at high school!

• School fundraising

• Travel expenses

Over the years, having worked with many clients who have children and have had to adjust to additional costs, we have at times observed the following:

• Mortgage payments reduce

• Personal debts and/or credit cards build up

• Refinancing options are limited due to lower servicing levels

• Investment plans placed on hold

Investments are typically the first item we see families put on hold while their children are young.

How can we change this?

Hidden savings from life after day care

For many, ‘big school’ also means no more childcare fees.

The usual average weekly cost of formal care for 16 hours per week in 2017 was $110.50 per week after subsidies. If your child is one of the almost 50%4 who attend care this could mean significant extra cash to redirect into contributing to education expenses.

The start of school is also an opportunity for a lot of parents to increase their hours of work or return to the workforce on a part or full time basis. This can also have a substantial effect on family income and lifestyle.

How do you best use these hidden savings?

Our other observations are that these hidden savings are typically absorbed into everyday living. We forget that we have actually been managing ‘without’ for a while. When we stop paying day care fees, our retail shopping goes up, or that holiday is booked and/or we buy that new car we’ve been waiting for.

These hidden savings can contribute to many things that will help you with your plight for affording your children’s 13 years of education:

• Investing

• Paying off credit cards and other debt

• Paying down your mortgage (leaving you with more equity to invest)

Depending on your individual circumstances, we may be able to assist you to structure your finances and savings accounts to not only fulfil your home buying and investing goals, but ALSO help cover your children’s future education costs.

And let’s not start talking about university…

If your children’s future education costs concern you, why not call us for a chat?
You may be surprised how, by redirecting some hidden savings, we might actually get you on track with your family’s education costs and investment dreams.

Can you afford your lifestyle career?

Be financially prepared for success

The changing nature of technology, consumer behaviour and corporate policies has influenced an increase in parttime and work-for-yourself opportunities.

While the bright lights of flexibility, choice and creating your own success is very appealing, it is not without its risks – personally, professionally and financially.

According to a report by the Reserve Bank of Australia (RBA), one-third of total employment in Australia is part-time (less than 35 hours a week).

Furthermore, 97% of all businesses are small and 62% of those are nonemploying (sole traders). Before you downsize or go solo, consider the financial consequences – better still, prepare first!

How much will a career change cost you?

The cost will vary depending on your circumstances and how vast the change will be. Some considerations are:

Salary – this is the obvious one. How much will you be earning?

Super – reduced hours and income also mean reduced superannuation contributions and accruals. Accumulatively over time this can make a big impact on your retirement nest egg.

Additionally, for those working for themselves:

Benefits – Will you lose benefits from your current employer? For example any bonuses due, accrued sick leave, salary sacrificed items (mortgage, car leases), phone plan, subsidised gym memberships or day care and additional super if your current employer offers it.

Annual leave and public holiday pay– Working for yourself means exactly that – if you don’t work, you don’t get paid!

Possibility of irregular income – Irregularity of income may impact your cash flow, bills and loan repayments – and possibly your future lending options.

Changes in employment will be assessed by lenders and potentially hinder your future lending potential – whether it’s a new role with probationary periods to see out or working for yourself as a small businesses owner.

Of course as with most things in life, you take the good with the bad. There are many benefits to lifestyle careers.

What can you do financially BEFORE you make the change?

1. Avoid debt before the change

Minimising your debts BEFORE you make a career change will give you more financial breathing space and less financial stress in the future.

2. Save for an emergency fund

You don’t want to leave yourself short if any urgent or unexpected costs arise with life’s ups and downs.

3. Budget for your future

The more you save and budget for before a change, the easier and less stressful life will be.

The key to a successful career transition is setting a clear budget, timeline and strategy to achieve your goals.

We can help you set that strategy. Contact us to discuss your current financial situation, loans and savings to work out the best options for you to make a successful career transition.

Are you really cyber safe?

7 steps to keep you and your business safe from cyber threats

Both consumers and businesses, now more than ever, need to be aware and vigilant in managing their online security.

Despite consumer awareness of cyber security, many don’t take the necessary steps to protect their personal information.

In fact, a McAfee survey of 6,400 people globally found only 37% of consumers had signed up for identity theft protection and 28% had no plans to sign up to this service.

Consumer online concerns

For consumers, there are concerns around bank and credit card accounts, social media fraudulent posts and credit monitoring.

Of course the concerns extend to children who are now virtually glued to their tablets and smart phones.

The McAfee survey data is alarming. Almost one third of parents do not monitor their children’s connected device usage and 33% don’t know the risks well enough to explain the dangers.

Starting the cyber safety talk with children early is imperative.

Many households have multiple devices connected at any one time, but there are solutions to protect your data and your wireless home network.

The concern is just as real, if not more, for businesses.

2018 became the year of enforceable personal data guidelines at home and abroad.

For businesses, cyber security is a crucial part of overall business risk management policies and procedures particularly in an ever increasing mobile work force.

Notifiable Data Breaches (NDB) scheme

It is even more important for businesses with the recent enforceable Notifiable Data Breaches (NDB) scheme under the Privacy Act 1988.

The NDB, introduced in February 2018, applies to Australian agencies and organisations and requires them to take steps to secure certain categories of personal information.

If you are concerned that your personal information may have been involved in a data breach, there are guidelines available from the Australian Government Office of the Australian Information Commissioner.

How to stay protected

Everyone who has a computer account, either for business, personal or both, is a potential target. It is important to be alert and assume ill intent until proven otherwise.

The best form of action is to help yourself by using some of our tips.

Thanks to Robert McAdam, Chief Executive Officer of CXO Security, here are 7 steps to keep yourself and/or your business safe online.

1. Beware of phishing emails Do not reply to, follow links or open attachments from any unexpected or suspicious emails – even if it’s from someone or a business you recognise. Cybercriminals often use the display name of major brands as a phishing tactic. If in doubt, check the source first and make sure the sender is genuine.

2. Stay safe on public WiFi Always check that the WiFi network you are connecting to is from a legitimate source. This can be hard or next to impossible for many non-technical folks. Consequently the preferred method of access is to use your own mobile data.

3. Be selective with social media Be careful about what you share on social media. Information about you, your family, friends and workplace can be used to socially engineer a phishing attack or you could be ‘giving away’ customer information.

4. Ensure robust password security Be sure to use different passwords for different accounts. Passwords need to be as long as possible and contain a combination of upper and lower case letters, numbers, symbols and be at least 12 characters long. Password managers can help.

5. Keep your home network secure When working from home, ensure your home network is kept secure. • When finished with the network connection, disconnect from the WiFi network – especially if it’s a shared machine at home. • Do not share keys or passwords with anyone (flat mate, neighbours etc). • Lock your screen after 15 minutes of non-use. No matter where you are working from, make sure you lock your computer screen when it is not in use or when you are away from it.

6. Safeguard your mobile security If you want to access work emails and information on your mobile phone, ensure your device has a pin, pattern or password. Try to use 3G or 4G internet access where possible to avoid unsecured WiFi networks.

7. Be aware of what you are plugging in Before plugging a USB memory stick or other removable media into your device, think about where it has come from. Only use encrypted media and ensure it has come from a trusted source. Viruses and malware can easily be spread this way.

It is important for consumers and business owners alike to ensure good cyber safety practices to protect personal data and safeguard against fraudulent activity.