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Change is coming!

A recent study¹ found up to 50% of older working Australians are expected to retire with debt and around 20% are expected to retire with a mortgage.

So what do you think is one of the primary reasons for this level of debt? It’s the sandwich!

The trend has largely been attributed to our current older generation being the first ‘sandwich’ generation. Many over 50s are under financial pressure from intergenerational dependency resulting in almost $200 billion being contributed to both their parents and children in their lifetime.

The study estimated around 72% of this is going towards education, home deposits and other expenses for adult children over 18.

Interestingly, mortgage debt has been identified as a significant contributor to financial stress during retirement.

So do you think this trend will continue for the NEXT generation of retirees? Well…

Probably – unless we learn from it!

So how DO YOU plan for a successful financial future?

Of course there is always our superannuation – but super is just ONE component of planning for future retirement. The path to wealth creation can take many forms.

As your finance specialist we can assist you to explore options suitable to your particular circumstances. We can also introduce other specialists in the finance industry to support your path to wealth creation.

Did you also know there are upcoming changes to Australia’s superannuation system as of 1 July?

Most changes to the super system initially announced in the May 2016 budget commence from 1 July 2017. The changes will potentially affect our super contributions and the way super and retirement income is taxed.

You may not be affected, however it certainly pays to find out IF and HOW the changes could affect YOU – whether that be now or further down the track. After all, your super is YOUR money!

Here is a general overview of some of the changes and who they may affect2:

Low income earners(earning less than $40,000 pa)

  • Change to spouse tax offset
  • New low income super tax offset (LISTO)
  • New ability to ‘carry forward’ your super cap
  • Change to government super cocontributions

Retirees or people approaching retirement

  • Earnings on transition to retirement (TTR) pensions taxed up to 15% (currently NOT taxed)
  • For the first time there will be a limit on how much super can be transferred to a tax free account-based super pension

High income earners(earning more than $250,000)

  • Division 293 tax threshold reduced from $300,000 to $250,000 affecting more higher income earners

There is also a reduction to before and after tax contribution limits that may affect all income levels.

Financial commentators generally agree the new super rules can be complex. Ultimately, the impact of changes will depend on your financial situation and stage of life.

There are strict rules in place as to who can give you financial advice so you should always seek independent financial advice to determine how these changes may apply to your individual circumstances.

And should you help your kids before you help yourself? Ask us that question when we next chat.

Remember! It’s NEVER too early to start planning for a debt free retirement but it can certainly be TOO LATE!

Time to get started? Call the office for our article ‘Planning for retirement. Will you have enough money?’

Please feel free to contact us for any further information.

Darren-0487 800 900
Office-03 9497 4917

1. REST Industry Super white paper – The Journey Begins
2. www.moneysmart.gov.au

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