Article:

Assessing your future financial health

05 June 2018

When you’re at the peak of a successful career, busy running your own practice or consultancy, leisure can seem a foreign concept. But the time when you can start to slow down and enjoy the result of your hard work will come around faster than you think.

Finding the time and energy to ensure your retirement plan is in order can be difficult. Many professionals lead exhaustively busy lives – long hours, demanding clients or patients, pressure and deadlines - all leave you with precious little time for family, friends and the things you enjoy.

However, if you’re in this situation and reaching your mid to late 40’s then the time to act is now, not later, and seeking professional advice is often a good idea. As you are expert in your field, so financial planners are in theirs.

We’ve spoken to Tony Simmons, BDO Private Wealth Partner, about some of the key considerations for professionals who aren’t sure where to start, or may be concerned about growing and protecting their financial position.

“Consultants, Executives and Specialists are time poor, and in need of good, easily executed advice. They are often too busy caring for patients or clients to attend to their own situation, and can risk leaving their retirement planning until later than they should” Tony says.

He points out that ideally, laying the groundwork for retirement should take place during our mid to late 40s, maximising the financial return on the long hours put into building a successful career.

While vital, retirement savings shouldn’t be the sole focus of your plan. Tony advocates a full review of your insurance needs, wills and estate planning and considering the establishment of testamentary trusts for children where appropriate.

“It’s never a bad time to review your insurance, but the earlier in life you do it the better and generally cheaper it will work out for you”, he says.

Whether you’re planning to travel more, leave a financial legacy or simply enjoy the peace of mind that comes with security, reviewing and planning now will help make sure you can live the dream when you’re ready to start winding down. It may even help you reach that point sooner than you thought possible!

CASE STUDY

What was the situation?

A couple in their mid-40s from regional SA, one a medical practitioner and the other a schoolteacher, needed to maximise their retirement benefits. They had a very high total income of $400,000+ pa, but hadn’t reviewed or structured their retirement savings or superannuation.

What issues did they need to address?

The higher income earner had no life insurance and inadequate income protection, and their super was spread over multiple accounts. They also had no structure in place for retirement savings.

BDO’s approach

First, we established that a self-managed super fund wasn’t suitable and that it would be best to keep existing super accounts in place, but consolidate to one each. This saved approximately $1,000 pa in fees and charges for the higher income earner.

We worked with the couple to make sure they had a savings plan that would maximise their retirement benefits, including salary sacrificing into super and using the higher wage earner’s income for living expenses. Where possible, extra contributions to super would also be made.

Surplus cash flow was used to pay off non-deductable debt as quickly as possible.

We made sure that insurance levels were adequate, which included a review of existing insurances and adding life and trauma insurance.

We made sure that their wills were up to date, and a key component of our plan was discussing the establishment of a testamentary trust for their children, as it was likely their estate could be significant.

TOP TIPS

  1. Review your retirement savings plan to make sure you’re maximising retirement benefits
  2. Make sure life insurance cover is adequate
  3. Give thought to estate planning, and consider testamentary trusts where children are involved
  4. Minimise your tax and costs by taking advantage of super contributions and consolidating your super into one fund.

Do you know if your current retirement savings plan is adequate to your needs? Are you maximising your retirement benefits so that you are as secure as possible? It may be time to consider seeking professional financial advice.

Any advice in this publication is of a general nature only and has not been tailored to your personal circumstances. Please seek personal advice prior to acting on this information. Before making a decision to acquire a financial product, you should obtain and read the Product Disclosure Statement (PDS) relating to that product. Past performance is not a reliable guide to future returns. The information in this document reflects our understanding of existing legislation, proposed legislation, rulings etc as at the date of issue. In some cases the information has been provided to us by third parties. While it is believed the information is accurate and reliable, this is not guaranteed in any way. Opinions constitute our judgement at the time of issue and are subject to change. Neither, the Licensee or any of the National Australia group of companies, nor their employees or directors give any warranty of accuracy, nor accept any responsibility for errors or omissions in this document.

Tony Simmons and BDO Private Wealth Advisers (SA) Pty Ltd (trading as BDO Private Wealth Advisers) are Representatives of Godfrey Pembroke Limited ABN 23 002 336 254, an Australian Financial Services Licensee 230690, registered office at 105 –153 Miller St North Sydney NSW 2060 and a member of the National Australia group of companies.