Proof Projects
  • Home
  • What We Do
  • Who We Are
  • Podcast
  • Blog
  • FAQ
  • Contact Us

Good problems to have.

12/3/2019

 
Couple thinking about their pension and retirement
When meeting new clients one of the first questions we ask is what their goals are.   We often hear that they want to ‘maximise Centrelink benefits in retirement’ or ‘minimise tax’. While these are important aspects of financial planning, these approaches are a means not an end.
Maximising Centrelink and minimising tax is great but it doesn’t tell me what your goals actually are and if you’re going to achieve them.

After bit more digging we can usually clarify the most important goal as something like ‘retire at age 62 with a retirement income of $60,000 per annum net of tax, in today’s dollars’.

If this is your goal and you retire with $1,500,000 I’ve got good news and bad news.

The good news is that you will be able to meet your retirement income needs forever and a day, with a fair chunk to leave behind as well. The bad news is that you’ve got no chance of ever getting any Centrelink benefits.

The same applies with tax savings leading up to retirement. If you’re on a high income we want to make sure we’re using this income in the most tax effective way e.g. salary sacrificing to superannuation.

However there isn’t huge scope to minimise tax without actually getting rid of the money. Once again, the good news is that you should have a fair bit of spare cash flow to be able to grow your retirement savings in your last years of work.

The bad news is that you are going to have to pay a lot in tax.

Thus you find yourself faced with two choices:
  1. take a lower paying job to save tax, spend your retirement savings, and live on the Age Pension in retirement
  2. maintain a high income while working, pay the extra tax, and save enough to be a self-funded retiree… and say goodbye to Centrelink benefits.

This is a simplified description, and obviously we always want to minimise tax and maximise Centrelink as much as possible.

But if it came down to one of these two choices… I’d personally prefer the latter.

Written by Dallas Davison.

Comments are closed.

    Author

    Dallas Davison, Michael Hogue and Ali Hogue.

    Archives

    October 2020
    September 2020
    August 2020
    July 2020
    June 2020
    May 2020
    April 2020
    March 2020
    February 2020
    January 2020
    December 2019
    October 2019
    September 2019
    August 2019
    July 2019
    June 2019
    May 2019
    April 2019
    March 2019
    February 2019
    January 2019
    December 2018
    November 2018
    October 2018
    September 2018
    August 2018
    July 2018
    April 2018
    March 2018
    December 2017
    November 2017
    October 2017
    September 2017
    August 2017
    July 2017
    June 2017
    May 2017
    April 2017
    March 2017
    February 2017
    January 2017
    December 2016
    November 2016
    October 2016
    September 2016
    August 2016
    June 2016
    May 2016
    April 2016
    January 2016
    November 2015
    July 2015
    June 2015

    Categories

    All
    Alice Springs
    Book Reviews
    Budget
    Charters Towers
    Cloncurry
    Contract
    Contributions
    Debt Reduction
    Economy
    Events
    Examples
    FAQ
    Fees
    Financial Adviser
    Financial Planning
    Fund Management
    Goal Setting
    History
    Hughenden
    Inflation
    Interesting
    Interest Rates
    Investment
    Julia Creek
    Lifestyle
    Media
    Money
    Money Over 50
    Mount Isa
    Pandemic
    Pension
    Priorities
    Retirement
    Richmond
    Risk
    Sharemarket
    Superannuation
    Tax
    Travel
    Uncertainty
    Wealth
    Winton

    RSS Feed

​HOME
WHAT WE DO
WHO WE ARE
PODCAST
BLOG
CONTACT US

Important Information
Financial Services Guide
Privacy Policy
Lighthouse Financial Advisers Townsville
​
Tel 07 4772 0938
Email mail@lighthouseadvisers.com.au
45 Ingham Road West End Townsville Qld 4810

Lighthouse Financial Advisers Townsville Pty Ltd ABN 26 146 225 505, 45 Ingham Road, West End Queensland 4810 is the holder of an ASIC Australian Financial Services Licence (AFSL) #471826.

Website by Grey and Grey
  • Home
  • What We Do
  • Who We Are
  • Podcast
  • Blog
  • FAQ
  • Contact Us