Getting a retirement plan in place while aged in the early 50s to allow retirement at 65

Background:

Our clients are a couple in their early 50’s with a household income of approximately $155K/annum. They have a mortgage of $414,000 against their home and investment assets of $431,000, which are made up of their savings, super accounts, and a personal share portfolio. Clients would like to retire when they are 65, so they are now getting a plan in place in their while in their 50s to help with this goal.

Goals:

  1. Retire at 65 and be able to fund our living expenses of $66,000/annum from our investments
  2. Be debt free by the time we retire
  3. Review our super accounts and consolidate our multiple accounts into one account each
  4. Review our personal insurance coverage and look to reduce our annual premiums

Strategy:

  • Consolidate their multiple super funds into a low-cost superannuation account that has a strong long-term investment track record
  • Update their personal insurance policies to reflect the current financial position and establish some policies through super accounts to help with cash flow
  • Husband to commence a salary sacrifice strategy and start contributing $200/fortnight into his super account
  • Sell down the personal share portfolio of $25,000 and contribute the funds into the husband’s super account via a personal deductible super contribution
  • In year two, once their daughter’s braces have been paid for, commence a loan reduction strategy and start paying an extra $6,000/annum into the home loan

Advice Outcomes:

With a retirement strategy in place, our projections show that our clients will be able to retire at the age of 65 and fund their annual living expense target of $66,000/annum. Their retirement income will be funded by a mix of superannuation income streams and Centrelink-age pension payments.

As a result of superannuation consolidation advice, we reduced the fees clients were paying in their superannuation accounts by $2,900/annum.

Year one tax savings with the super contribution strategy implemented will be approx. $3,535. An updated insurance policy structure will save clients approx. $4,812/annum in insurance premiums.

Although our client’s current cash flow position was quite tight when we met them. We were able to help them with a strategy that allowed them to contribute extra funds into their super in year one and make additional mortgage repayments commencing in year two.

They now have a sense of progress with their finances and a clear retirement plan that we can work on and towards over 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.