Helping our clients retire ‘now’ with a healthy income per annum, including funds for travel goals

Background:

Our clients are a couple in their 60s with a household income of approx. $70K/annum. They have net assets of $1,870,000, including their home, super accounts and investment property with a mortgage attached to it. They recently received an inheritance of $1,200,000 and would like to know how to use this money to set themselves up for retirement, with both clients wanting to retire ASAP.

Goals:

  1. Put a plan in place for retirement and be able to fund their living expenses of $5,000/month from their investments
  2. Allocate $15,000 for annual travel in retirement
  3. Pay off all debt so they don’t have to worry about mortgage repayments anymore
  4. Complete renovations on home for up to $100,000

Strategy:

  • Contribute as much of their savings as possible from an inheritance into superannuation. Our strategy allowed clients to contribute $992,000 of inheritance into superannuation over two financial years
  • Sell investment property and pay off all debt
  • Use some of the inheritance super contributions to make personal deductible super contributions and reduce capital gain tax on investment property sale
  • Set up an allocated pension account and draw an annual income of $75,000/annum from these accounts to fund annual living & travel expenses 
  • Use $100,000 from the inheritance to complete renovations on the home

Advice Outcomes:

Both clients retired within 30 days of our initial meeting.

They have a plan in place that shows them that they can comfortably fund their living and travel expenses of $75,000/annum in retirement.

Clients were able to invest most of their inheritance funds in the tax-effective superannuation environment. While maintaining enough cash to complete their home renovations, purchase a new car and maintain a cash safety net.

Capital gains tax on the investment property sale was reduced to $0.

The superannuation contribution strategy will save clients approximately $13,000 in income tax over the next two financial years.

The plan we implemented relieved our clients’ financial anxiety about what to do with the inheritance. While providing them with confidence that they could enjoy their retirement without having to stress about money concerns once they stopped working.

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.