How to retire successfully is an Authorised Representative of RI Advice Group Pty Ltd

How to retire successfully is an Authorised Representative of RI Advice Group Pty Ltd

How to retire successfully is an Authorised Representative of RI Advice Group Pty Ltd

How to retire successfully is an Authorised Representative of RI Advice Group Pty Ltd My Name Financial

How to retire successfully is an Authorised Representative of RI Advice Group Pty Ltd JV logo

Disclaimer Important Notice RI Advice Group Pty Ltd, ABN , holds Australian Financial Services Licence Number and is licensed to provide financial product advice and deal in financial products such as: deposit and payment products, derivatives, life products, managed investment schemes including investor directed portfolio services, securities, superannuation, Retirement Savings Accounts. The information presented in this seminar is of a general nature only and neither represents nor is intended to be specific advice on any particular matter. RI Advice Group strongly suggests that no person should act specifically on the basis of the information contained herein but should obtain appropriate professional advice based on their own circumstances. The information presented in this seminar is current as at 21 st September Past performance is no guarantee of future performance.

Agenda Introduction – your dream retirement Challenges and considerations Retirement income opportunities Boosting superannuation Investing for the long-term The value of advice RI Advice Group

Retirement, your next step For most retirement is considered a goal, an aspiration, a reward for a lifetime of hard work

9 Three elements of retirement Living: Day-to-day, like keeping a roof over your head, a car on the road, food, bills, car, insurance, etc. Life Balance: The things you want to do, like a hobby, giving back to the community, further education, relationships, health or other past-time Lifestyle: Major lifestyle pursuits, such as overseas trips, home renovations, new car/boat. Be prepared

Plan for your dream retirement What kind of lifestyle do you want to lead? How much income will you need every year? Will you outlive your savings? How will you invest for retirement? How will market volatility affect your plans? How will you receive an income in retirement?

What does your dream retirement look like?

Travel overseas?

Take a road trip?

Make home renovations?

Spend more time with your grandchildren?

You know what you want … but where are you now? On track Can help you: Keep on track Get ahead Shortfall Can help you: Get on track Strategies to get to there Where are you today? Where do you want to be?

Be prepared Source: Australian Bureau of Statistics. - Deaths, Australia, 2013

How long a life should we plan for?  Life expectancy data changes as you attain older ages  A couple age 65 today has a 50% chance one will live past 90  A couple age 70 today has a 25% chance one will live past 95

19 How much income do I want? Modest ➜ No eating out ➜ Clothes from discount chains ➜ Entertaining at home ➜ No private health insurance ➜ Cheap holidays in Australia Comfortable ➜ Eating out occasionally ➜ Clothes from department stores ➜ Entertain at home fortnightly ➜ private health insurance ➜ overseas holidays every five years Lifestyle Estimated required income (per couple) $33,664* pa $58,128* pa Estimated required lump sum (per couple) $512,000 ** $885,000 ** *The Association of Superannuation Funds of Australia (ASFA) –Retirement Standards Research, June 2014: Retirement living costs **Estimated lump sum, in today’s dollars – not including any Centrelink age pension entitlements. Assumes 7 per cent pa eturn (that is reinvested) on account balance of account-based income stream. Annual income from the account-based income stream indexed by 3 per cent a year, and runs out at the age of 87. If you live beyond 87, then individual relies only on the Age Pension.. Any changes in the assumptions will change the result. This is for illustrative purposes only. Figures are not guaranteed in any way. Investment performance may go up and down. Source: ASIC’s MoneySmart ‘retirement planner’ calculator

Retirement funding Where’s the money coming from? For many approaching retirement, compulsory superannuation may not be enough Age pension may not be enough - Max. for singles $22,212 pa* - Max. for couples $33,488 pa* Need a mix of sources – e.g. super, voluntary savings, other investments AGE PENSION COMPULSORY SUPER VOLUNTARY SAVINGS Traditional retirement system based on 3 pillars Source: Guide to Australian Government Payments, 20 September to 31 December 2014 *Includes Pension and Clean Energy Supplement. Some age pensioners may be assessed under transitional rules

You know what you want … lets get there together We can help you: Work out how much savings you’ll need to fund your retirement goals Maximise retirement savings Implement super strategies like salary sacrifice, Government co-contribution and transition to Retirement Invest for long-term growth Choose the right income stream to suit your retirement income needs Ways to supplement your income in retirement

Your financial strategy: 1.How to achieve your goal a.Investing in growth investments b.Topping up your superannuation c.Transitioning to retirement 2.When you retire a.How you will generate your retirement income stream b.Are you eligible for government income support to supplement your income? 3.Plan for the unexpected Be prepared

Getting to retirement Achieving your retirement goal – investing in growth assets –You need sufficient growth to stay ahead of tax and inflation –Shares can provide capital growth and income

24 The effects of inflation 1980: $3,698 How much would you pay today? Over $20,000

Impact of tax and inflation Maria $10,000 available to invest Chooses 1-year term deposit paying 5% interest pa Marginal tax rate 49% Inflation 2.5% Value at end of year 1 Investment$10,000 Interest received$500 Less tax paid($245) Net value at end of year$10,255 Less impact of inflation($250) Real value at end of year$10,005

26 Growth Shares Property Super/Rollovers Insurance Bonds Unit Trusts Income Bank Term Deposits Debentures Annuities/Super Pension Allocated Pensions/Annuities Property Securities The right combination will depend on your personal circumstances How will your financial plan look

Invest in growth assets $500,000 $400,000 $300,000 $250,000 $200,000 $150,000 $100,000 $50,000 $0 6% net return over 20 years 8 % net return over 20 years $145,382 $153,060 $466,096 $320,714 Helen Christian Helen invested her super in a conservative option returning 6% At the suggestion of his adviser Christian invested in a slightly less conservative option that returned 8% Source: Colonial First State, 2010

Shares can provide capital growth and income Source: Colonial First State Popular sides 2011

Asset class performance over 20 years ** * * * Timeframe: 01/01/83 – 30/06/14 Data: Australian shares - S&P/ASX 300 Accum. Index, International Shares - MSCI World (ex Aus) in $A, Listed Property Trusts - S&P/ASX 300 Prop Trust, Australian Fixed Interest: Commonwealth Bank Bond Index (Pre Sept 89) / UBSA Composite Bond All Maturities Index (Post Sept 89), Global Fixed Interest: Barclays Capital Global Aggregate Index Hedged $A. Cash: 11 am Cash Rate (Pre Apr 87) / UBS Bank Bill Index (Post Apr 87). Source: RBA, Datastream, ANZ Global Wealth.

Getting the right mix Diversification is important. Choosing the right assets will depend on your personal situation. Income Unit trusts Bank Term deposits Debentures Pensions/ Annuities Property securities Growth Shares Property Super/ Rollovers Insurance bonds

31 Quote “The sharemarket is the transfer of wealth from the impatient to the patient” -Warren Buffet

Keep a long-term view Source: Data to 31 October IRESS Chart shows the value of $10,000 invested on 31/12/79, S&P/ASX All Ordinaries Accumulation Index. Past Performance is no indication of future performance.

Use dollar cost averaging to smooth returns - illustration Movement in the unit price of a managed fund over a 10 month period Historic Source: ING, 2009

Case study: dollar cost averaging - illustration InvestorTotal units purchased Value of shares at month 10 InvestedProfits made on investment Danni104,154$102,071$100,000$ 2,071 Eric98,039$96,078$100,000$ -3,922 Source: ING. Return is indicative only.

When is the right time to retire? In research released in January 2014, a commonly reported reason for people ceasing their last job was reaching retirement age/ preservation age; where they have the eligibility to draw form their superannuation or pension. (44% of men and 30% of women.) Source: ABS, Retirement and Retirement Intentions, Australia, July 2012 to June 2013

Which path will your retirement follow? Data: $500,000 invested in a diversified, multi-sector balanced portfolio comprising 25% Australian shares, 25% International shares, 30% International bonds and 20% Australian bonds rebalanced annually. Historic retirements commence in 1875 and every 2nd and 5th year thereafter until last commencing in Each portfolio funds an initial 5% drawdown in year one, thereafter an amount adjusted by actual historic inflation for that year to maintain real purchasing power. Inc 1.8% fees. Source: Wealth benchmarksTM In 60% of cases retirement savings ran out in less than 30 years.

Getting to retirement Achieving your retirement goal – top up your superannuation Boosting savings with salary sacrifice Government incentives – co-contribution

So plan for the long-term Use super to your advantage Invest in growth assets Keep a long-term view even in times of market volatility Use dollar cost averaging

Super is super Can be used to buy retirement income streams Can be used to buy pre-retirement income streams Help from Government to boost savings Tax free draw-downs after age 60 Earnings taxed at only 15 % Contributions taxed at only 15% Super

Topping up super: salary sacrifice Salary sacrifice – as at 1 July 2014* Making super contributions directly from your pre-tax salary You do not pay income tax on salary sacrifice contributions Check your employer will let you implement this arrangement Concessional contributions caps As At 1 July 2014 Over 50 Under 50 Age $35,000* $30,000* Contribution Cap

Salary sacrifice: If you earn $1,000 how much can you invest? Medicare levy included Tax rate

Scenario – Casey Casey is 45 years old and earns $150,000 p.a. (including 9.5% Super). ($136,987 salary + $13,013 superannuation guarantee) Casey would like to save $12,600 per annum for her retirement in 20 years’ time. Her employer allows her to salary sacrifice into super. Should she take advantage of this or invest her savings in a managed fund outside super? As the funds are not required for 20 years she wishes to invest her savings in shares.

Salary sacrifice into super vs savings outside super Salary Sacrifice into SuperSavings outside Super Gross salary$12,600 Less salary sacrifice$12,600$0 Taxable income$0$12,600 Tax including Medicare Levy$0$4,914 Super contribution$25,613$13,013 Contributions tax$3,842$1,952 Net amount invested$21,771$18,747 Investment value after 20 years Super $1,307,206 Super $692,095 Managed Fund $439,392 Total $1,131,487 Superannuation assumptions Earning rate 7.62% Salary sacrifice contributions indexed by AWOTE per annum Employer SG Going up by AWOTE Managed fund assumptions Earning rate7.62% ( 3.04% growth, 4.58% income, 21% franking) Contributions indexed by AWOTE per annum Entry fees ignored in both scenarios 2014/15 tax rates have been used.

Topping up with extra contributions Extra contributions Personal, from after-tax salary or other money Known as ‘non-concessional’ contributions Not taxed again when contributed into super May be entitled to Government co-contribution of up to $500 (if you earn less than $49,488) Limited to $180,000 pa Or, if under 65 on 1 July of relevant year, $540,000 total in a three year period

Getting to retirement Achieving your retirement goal – transition to retirement Delaying retirement, and boosting savings with salary sacrifice Reducing work hours, and supplementing your income with a transition to retirement income stream

What is Transition to Retirement? Allows working Australians access to their super Establishing a ‘Transition to Retirement’ pension with your existing super savings. Transition to Retirement pensions can allow you to: ✔ Income remains the same  Boost savings ✔ Income remains the same  Reduce working hours  Increase income ✔ Own home sooner

Accessing your super – preservation age Date of birth Age you may qualify to access your super Before 1 July Between 1 July 1960 and 30 June Between 1 July 1961 and 30 June Between 1 July 1962 and 30 June Between 1 July 1963 and 30 June After 30 June

Meet Eleanor Eleanor is 55 years old She earns $100,000 She has $220,000 in her super account Eleanor loves her work and is happy to work another ten years. By age 65 Eleanor’s retirement savings would grow to only $543,202 if she does nothing...

Eleanor's strategy Await update from Jeanette Implement a Transition to Retirement strategy, draw $16,000 from the pension and salary sacrifice $20,000 into super. The outcome... Her salary falls to $96,000 (before tax) while she supplements her income with pension payments. Elenor receives the same income after tax.

Eleanor’s income position - Year 1 Any earnings on her pension account are now tax free Without strategyWith strategy Salary package$100,000 Less salary sacrificeNil($20,000) Pension incomeNil$16,000 Taxable income$100,000$96,000 Net tax and Medicare levy$26,947$22,987 15% pension tax offsetNil$2,400 Net cash after tax$73,053$73,013

Eleanor’s retirement savings Retirement savings on reaching age 60 are tax-free... Without strategy If everything was left in super, Eleonor’s retirement savings would grow to $543,202. Retirement savings $543,202 With strategy Retirement savings with strategy will be $589,168, a whopping $45,966 more than if she hadn’t used this strategy. Retirement savings $589,168 Assumption: Earnings at 7%, CPI at 2.5%, 9.50% SG paid on full salary package and no loss of employment benefits.

Pension payments tax-free from age 60 More savings for Eleanor How does Eleanor benefit? Salary sacrifice taxed at 15% not 34.5% 15% tax offset on taxable pension payments Investment earnings on pension taxed at 0%

You are ready to retire At retirement – generating income How receive your income Government support – age pension and concessions

Invest in: Assets with higher earning potential Account based income streams Non Account based income streams What are the options?

55 Regular monthly or quarterly income Select the level of income you require (above a prescribed minimum) Alter income level each year Income assessed favourably by Social Security Account balance not lost on death In-built investment options Stay in control How allocated pensions help you

56 Age pension won’t be enough … The Age Pension: For singles - $22,211 p.a. For couples - $33,488 p.a. NOTE: Age pension rates are inclusive of the pension and clean energy supplements. Some age pensioners will be assessed under transitional rules. Source: Guide to Australian Government Payments, 20 Sept to 31 Dec 2014

57 Homeowners Single Couple (combined) For full pension up to $202,000 up to $286,500 For part pension less than $771,750 less than $1,145,500 Non-homeowners Single Couple (combined) For full pension up to $348,500 up to $433,000 For part pension less than $918,250 less than $1,292,000 Thresholds apply from 20 Sept 2014 Pension entitlement reduces $1.50 for every $1,000 over thresholds (single and couple) Example: $10,000 over the lower threshold reduces pension by $390 pa Social security – assets test

58 Social security – income test Family situation Single Couple (combined) For full pension (pf) up to $160 up to $284 For part pension (pf) less than $1, less than $2, Pension entitlement reduces 50 cents for each dollar over the limit (single) 25 cents for each dollar over the limit (couple – each) Example: $100 per fortnight over threshold reduces pension by $1,300 per annum Thresholds apply from 20 Sept 2014

59 The Pensioner Concession Card gives you: Concessional travel Discounts on - Council and water rates - Prescriptions - Electricity and gas bills - Car rego (in most states) - Public transport - Some eye and hearing services Note that some other concession cards provide some but not all of these benefits. Pension concession card

60 Not eligible for Age Pension Commonwealth Seniors Health Care Card Income of less than $51,500* (single) or $82,400* (couple – combined) May assist with costs in retirement such as Discounts on eligible prescriptions Bulk billing with some medical practitioners Some state and territory based concessions (eg discount transport costs) *Thresholds apply from 20 Sept 2014

You know what you want … but where are you now? On track Can help you: Keep on track Get ahead Shortfall Can help you: Get on track Strategies to get to there We can help you achieve your goals Where are you today? Where do you want to be?

We can: Assess your situation Estimate how much money you will need in retirement Suggest ways to maximise retirement savings Give you strategies to maximise income in retirement Help you choose the right income stream Talk to you about the possibility of using protection to secure enough income to cover cost of necessities in retirement Help you transition to retirement, if desired. Talk to us about building a retirement income plan to suit you

Why us? We are part of RI Advice Group who: Have over 30 years experience providing advice to Australians Are one of the most well-known adviser groups in Australia Are backed by one of the country’s largest wealth managers Have access to its leading research and technical teams Have a dedicated local team, closely connected to the community Pride ourselves on quality service with a personal touch Are experts in retirement planning Provide holistic advice to meet your circumstances

Would you like more information? >  Ph: ( )  Mob: ( )   > > Please call me if you’d like to find out how I can help you with your retirement plan.