Retirement Planning

Our retirement planning professionals have been helping clients in the Perth area since 2005. We have more than 40 years of combined experience in the financial planning and advising field. Property investing is currently a popular form of saving for retirement. We would like to share with you some warnings from the Australian Securities and Investments Commission about property investing to help you decide whether or not it is appropriate.

“Pros” of Property Investing

One of the more attractive benefits about property investing is that you can create rental income while also benefiting from capital growth over time, assuming that your property actually does increase in value. Another benefit is that property is a less volatile investment than shares. When you invest in a bricks and mortar rental property, it is a tangible asset that you can touch and see.*

There is also a tax benefit to property investing. You can use the costs of maintaining and managing your property as an offset against your taxes. The interest on your loan can also be used to lower your taxes.*

Age pension still exists to help those who need it, but the retirement planning professionals in our Perth office are dedicated to helping you secure a future in which you don’t have to rely on age pension.

Our Approach

The earlier one begins investing, the more money then can amass for their future. Sound investments make money due to the principle of compound interest. Compound interest is what happens when you reinvest interest that you made in previous years and make interest on your past interest.

As anyone who is paying attention to their home or auto loan knows, compound interest can add up to a lot of money. AMP Capital uses a simple example. If you make 15% interest on $1,000 in one year and reinvest it, the next year you are making interest on $1,150.*

If you are planning your retirement, a retirement planning professional can be a valuable ally. We have been a trusted name in Perth since 2005 and our financial advisors have more than 40 years combined experience in the industry. While we aren’t allowed to provide anything constituting individual financial advice in this blog, we would like to pass along three crucial decisions to be made before retirement, courtesy of the Financial Planning Association of Australia (FPA).

How Much Money Do You Want to Receive?

It is popular among many financial planners to recommend at least 75% of your pre-retirement income on a monthly basis when you retire. An easy example: if you currently make $80,000, you should plan to make $60,000 a month in retirement. You will be paying little or no taxes on this income compared to your time in the workforce and expenses related to work will disappear when you retire. *

According to the ASFA (Association of Superannuation Funds of Australia) Retirement Standard, couples should aim for $58,128 per year and singles $42,433 for a comfortable retirement. However, the FPA recommends that you create your own budget based on the lifestyle you want to live and then try to figure out where the money is going to come from.*

Retirement planning can be tricky if you don’t know what you’re doing. Fortunately, we have helped numerous people in the Perth area get started on the path to a prosperous retirement. At Approved Financial Planners, we have a wealth of local experience, combined with the resources of AMP Financial.

While we are not allowed to give any specific advice on this blog due to the disparity in individual financial situations, we would like to provide you with some general information that both we and AMP feel is important when making investment decisions.

Why Retirement Planning is Important

For many in the previous generation, an age pension was enough to provide a comfortable retirement. However, the Australian Government is now encouraging everyone to take control and save for their own retirement.*

As more baby boomers reach retirement age, the number of people drawing pensions will soon be too large for the current workforce to sustainably support them. Consequently, Australians are being encouraged to create their own sources of income to supplement their age pensions and ensure a comfortable lifestyle after retirement.*

Here are some factors to consider when planning your retirement.*

We provide retirement planning to many of our Perth clients. We have found that a lot of people have no idea what it entails. While we can’t give any specific advice on this blog, we thought it would be nice to give some basic information on retirement planning. Here are the basics of retirement planning, courtesy of ASIC’s MoneySmart website.

Taking Control of Your Finances

ASIC recommends a three-pronged approach to retirement planning: take control of your finances, create a viable, long-term financial plan and find suitable vehicles for growing your retirement income.*

ASIC provides a booklet that tells you where you may withdraw your super, investment options and income stream choices for retirement, pros and cons of a lump sum versus an income stream, pros and cons of transitioning into a pension stream and where to obtain professional financial advice.*

After you know these facts, ASIC recommends that you find out exactly where you stand financially. This includes knowing your assets, where and when you can access your super, when you can apply for age pension and whether or not you are likely to pass eligibility tests.*

Whether you call it financial planning or retirement planning, it is never too early to start thinking ahead, especially if you plan on staying in the Perth area. While we can’t provide advice in blog posts, we can provide you with some general information regarding the planning of your retirement. Just remember that you need to call one of the financial advisors in our Perth office for individual advice.

Why is it so Important to Plan Your Retirement?

Once again, we can’t give anything that constitutes advice. What we can tell you, though, is that there is plenty of research suggesting that those who plan their retirements with specific goals are more likely to fulfil those goals than those who don’t have any goals. *

In a social or lifestyle sense, retirement goals may include lifelong learning, avenues for social engagement and intergenerational connections. Financially speaking, our retirement planners will work with you to set a retirement date and a retirement income. Then, it’s a matter of organising your finances to help you get there.

One of the biggest questions in retirement planning, especially in a market like that in Perth, is whether to downsize or stay in your family home.

Remember that we can’t give any individual advice here because everyone’s situation is different. So, don’t constitute any of what we are saying as “advice.” That being said, here are some factors to consider when thinking about downsizing.

The Numbers: Who is Downsizing?

Our parent company, AMP, has some pertinent numbers on their website. According to research cited on the AMP website, approximately 25% of Australians between the ages of 55 and 64 relocated in the last five years. (1)

Four popular reasons were cited. 23% said they wanted to live in a smaller home. 22% said they moved for family reasons. 20% said they moved because they wanted a lifestyle change. 23% said they moved for reasons related to health. (2)

Pros and Cons

Ideally, downsizers who move into a smaller home enjoy their lives, happily ever after. They have less maintenance and smaller monthly bills because there is less space. They may have a nice addition to their “nest egg” from the profit of selling their old home and buying a smaller, less expensive one. They find it easier to get around. Some even opt for “sea change” and its more relaxed lifestyle.