Planning your financially independent future

12 December 2017

Tony Simmons , Consultant, Private Wealth |

 Whether you want to sail on the Queen Mary II, buy a place on the coast where a new generation of family memories can be made, or just keep doing the things you enjoy, planning your retirement income is important as you head into your 40s.

Getting started

While chatting with family or friends can be helpful, at some point most people will need to seek professional advice because everyone’s circumstances are different.

If you don’t know how much income you’ll have to live on after you stop working or aren’t sure if you need financial planning, we share our tips to help you get on the path to a comfortable retirement.

Dispelling the myths

1. You need a million dollar income

Many people think they need significant resources to get value from financial planning. In reality, if you earn more than $100,000, have a few hundred thousand dollars in investable assets like super, or run your own business, it’s wise to have a financial plan in place.

2. You need to be debt-free first

Life in our 40s life is a jumble of priorities with different demands on our resources. You might still have a mortgage on your home or investment property, be changing careers or wanting to fund your children through university. Making a financial plan now can be the difference between hoping or knowing that 15 or 20 years from now - when the paychecks stop - you will be debt-free and won’t have to sacrifice the things that you enjoy.

3. You need to know what you want

A good financial planner will ask the right questions to help you work out your goals and be able to clearly explain your options. Understanding priorities, values and attitude to risk is just as important as knowing your income and assets. The aim is to make your financial assets work harder for you. For example, some people benefit from switching to a self-managed superannuation fund because it provides a taxation benefit. (Our independent, in-house superannuation audit service makes complying with ATO requirements easy).

4. You need significant current assets

Not really. If you have a decent income, your future earnings can make a big impact on your estate value at retirement. It’s also important to plan for unexpected events. Continuity of income is critical to realising your plan, so your financial planner will speak with you about insurance. For example, trauma cover can provide a pool of money to pay for expensive medications or interstate treatment should you be unlucky enough to develop a serious illness. If you run a business, expense cover might also be an option so you can keep paying salaries and rent until you get back on your feet. Insurance can be structured in a few ways and generally, the younger you are when you start, the cheaper the premium will be.

5. You can retire comfortably by just contributing more to super

It may be possible, but the amount you can sacrifice to super has decreased recently and many people will need a more diverse strategy to retire comfortably.

A good financial plan is achieved over 10 to 20 years and we like to think of it as a personal financial business plan. With the right plan, you can be surprised by what you can achieve. You might need a little more sacrifice now, but it is too late to realise you won’t be able to live as well as you thought when you are no longer earning an income.

6. Financial plans are complicated and expensive to produce

They shouldn’t be. We keep our approach simple by focussing on key questions:

  • What level of income do you want and need in your retirement?
  • Are you contributing as much to super as possible?
  • How can you knock off non-deductible debt as quickly as possible?
  • Are you appropriately insured?

Your first consultation at BDO runs for an hour. It’s free, without obligation and will give you information about the areas we can help you with, fees and how we work. The average time it takes to put a plan in place is a month depending on complexity of insurance needs, and the plan is reviewed annually.


What was the situation?

The 46 and 44 year old clients ran a consultancy business. They didn’t have any insurance in place and had teenage children who they were supporting through private education. They wanted to know how they could grow their wealth outside of their business and had superannuation assets of $200,000.

What risks and opportunities did they need to consider?

They wanted to make their money work better and have a goal to work towards. They also wanted to make sure their assets were structured for tax effectiveness and risk management purposes.

BDO’s approach

We helped them set up a self-managed superannuation fund, and put a contribution plan in place. We worked out it would be more tax effective for them to buy a property from which to run their business than to stay in their existing premises.
We worked through insurance options, using our comprehensive platform of policies to match the right provider to their needs, making sure their children’s financial future was protected if something happened to them.

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.

BDO is the brand name for the BDO network and for each of the BDO member firms.