56 year old clients will retire debt free at 60 with their travel to-do list already in the planning stage!

Background:

Our clients are a couple who are both 56 and have a household income of approximately $340K/annum. They have a mortgage of $570,000 against their home and investment assets of $1,657,000, which is made up of their savings, super accounts and a personal share portfolio. They would like to be in the position to retire when they are 60.

Goals:

  1. Be in the position to retire when they are 60 and fund monthly living expenses of $6,500/month from their investments
  2. Allocate $30,000 for annual travel in the first 10 years of retirement
  3. Pay off the mortgage by retirement  
  4. Complete renovations on their home for up to $100,000

Strategy:

  • Pay $4,000/month extra off their mortgage
  • Both clients will maximise their annual superannuation concessional contribution cap of $27,500/annum
    • Husband will make a one-off top-up contribution of $2,000 before the EOFY
    • Wife will contribute a $1,000/month salary sacrifice contribution into super and then a one-off contribution of $9,000 before the EOFY
  • Sell down some of their personal share portfolios after the age of 60 to pay off their mortgage for retirement  
  • Set up an allocated pension account in retirement and draw an annual income of $6,500/month from these accounts to fund annual living expenses. With lump sums taken out for travel in the first 10 years of retirement.   
  • At the age of 65, sell family home, downsize and contribute sale proceeds of $800,000 into super as downsizer and non-concessional contributions.

Advice Outcomes:

Our clients will be able to retire at the age of 60 and be debt free. They have a plan in place that shows them that they can comfortably fund their desired living and travel expenses in retirement.

With a mortgage repayment strategy in place, their mortgage balance will be approx. $220,000 lower at retirement than it would have been if they continued to pay the monthly minimum repayment.

The annual super contribution strategy is expected to save our clients approx. $4,000/annum in income tax.

Our clients feel excited about their financial future and the options they will have in retirement. They have told us they have already started making their travel to-do list for their first year of retirement in four years’ time.

Ryan Porter is a Wealth Coach at Catalyst Wealth Group. His mission is to help his clients achieve financial success and live their ideal life.

Any advice or information in this publication is of a general nature only and has not taken into account your personal circumstances, needs or objectives. Because of that, before acting on the advice, you should consider its appropriateness to you, having regard to your objectives, financial situation or needs.