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Retirement Planning Brisbane

Hudson financial planning has worked with hundreds of clients to prepare them for their retirement. The process can start many years prior to them actually retiring, with carefully designed plans to suit each individual, that can minimise taxation, maximise contributions and invest wisely and appropriately to maximum growth from a clients investments. When the switch finally comes from growing your assets to relying on them to create an income Hudson have multiple strategies we employ to enhance investment returns and provide a reliable income throughout retirement.

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    What Types Of Financial Planning Go Into A Retirement Strategy

    Almost all facets of your financial affairs will at some stage contribute to your retirement planning and your retirement needs. No matter your age a Hudson adviser can work with you to assess your budget and your cashflow in order to begin investing surplus income. This may include investing in property which has historically been an outstanding investment vehicle. It may also include building up your Superannuation which compounds through time. Only funds that have been contributed to Super can eventually be converted to Pension phase, a completely tax-free environment.

    As retirement approaches it is more important than ever to seek advice. An adviser can work with you to maximise your Super contributions through various strategies. This may even include removing funds from Super only to put them back in, in a more tax-effective manner. They can also consider the sale of investment properties in order to make lump sum contributions to Super. This might be to $300,000 per person or even more.

    When possible, Pension phase should be considered. A Hudson adviser can work with you to create a Pension account, invested in a way that suits your particular situation. Pension accounts are remarkable, in that all earnings, both income and capital gains are completely tax-free. At the time of writing, an individual can have up to $1,700,000 invested .. completely tax-free! But, there is a catch, only money that is held in Superannuation can be converted to Pension phase. That’s why it is so important to start your retirement planning and start your focus on Superannuation as early in life as possible. Hudson have decades of experience in creating and maintaining pension accounts for our clients.

    Investment For Retirement Vs. Saving For Retirement

    The basic difference is that savings typically involves lower earnings with virtually no risk, while investing involves the potential for greater returns but with more risk and the potential for losses also.

    Saving for retirement is essential. It will eventually mean that you can create a source of income to replace your employment income when you retire. However, savings are at risk of being eroded away by the effects of inflation. Investing for your retirement can make an exponential difference to your eventual retirement nest egg and as such your eventual income in retirement. It can allow you to do all the things you have dreamed of doing in retirement, from travelling the world to having the dream home, to giving your children the financial assistance they may need to start their own financial journey.

    Investing throughout your life firstly increases the likely returns on your money, compared to saving Cash. This is because historically the returns from the likes of the share market and property have vastly outweighed the returns on cash. Secondly, the higher the returns from investments the greater the benefits of compounding. This is whereby earnings then go on to create earnings themselves, and the result is like a snowball rolling down a hill, getting ever larger as it rolls

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    The Benefits Of The Hudson Retirement Investment Planning

    1) Experience and expertise. Our 4 advisers have over 50 years of accumulated knowledge and investment expertise. We have model portfolios that have been carefully prepared and can cater to any risk appetite. We continually test the investments within these models using an independent research house. Our advisers can work with you each year to continually revise your investments based on your situation and also market conditions.

    2) Knowledge. Hudson advisers never stop training and are constantly abreast of all changing legislation regarding Superannuation. This knowledge can assist when it comes to maximising Super contributions or suitably distributing Super assets between spouse members.

    3) Protecting yourself and loved ones. Hudson can assist in the set up and maintenance of personal insurance policies that can be funded from your Superannuation account. This might include Life insurance to protect your loved ones, or Total & Permanent Disability or Income protection to protect yourself. Hudson will also make sure that you have beneficiaries named on your Super and also have an appropriate, valid Will in place.

    4) A clear plan. Hudson advisers have access to detailed forecasting software that can map out your expected future assets, whether you are working and seeking to grow your Super, or if you are retired and require an income from your Super. These forecasts can be adjusted as time progresses to factor in changing market conditions and unexpected changes in your situation.

    5) Strategies. With 30 years behind us, Hudson have developed a range of strategies that can maximise returns and put you in the best possible position when you come to retire. These include but are not limited to:

    • The Bucket strategy. This is designed predominantly for retirees and is a way to invest for growth, while also protecting you from share market volatility through the segregation of defensive assets.
    • Core and Satellite. Hudson believe that minimising ongoing management fees are important in order to maximise returns and we also believe in diversification. A core holding of low cost index funds can help achieve both of these things. We also believe however, that there are fund managers out there with a proven history of beating the index. As such we also exercise the use of “satellite” investments to boost overall returns.
    • Re-contribution strategies to maximise concessional Super contributions and reduce taxable income.
    • Recycling taxable component to reduce the “taxable component” in ones Super and as such reduce the possibility of your beneficiaries paying tax in the event of your death.
    • Age pension strategies. We have employed legitimate “sheltering” strategies that have increased members age pension entitlements by up to $50,000 in some cases.

    Retirement Investment Planning Often Raises Many Questions

    Planning for retirement often raises many questions. Examples of these are:

    • How much money will I need to fund my retirement?
    • Will I outlive my money?
    • Can I slow down and work part-time?
    • Will I receive an age pension from Centrelink or DVA?

    It is often difficult to answer these questions without first looking at questions we do know the answers to. Such as:

    • How much money do I currently have?
    • Do I have any debts?
    • When do I want to retire?
    • Do I want to work part-time in retirement?

    By dealing with the questions we do know the answers to, we are then able to plan for and deal with the questions we initially had difficulty with.

    General Information For Retirement Planning & Investing

    Age Pension Information

    The Hudson Financial Planning fee for service offers financial advice for non-members on a fee for service basis. That is for a casual short-term financial advice/planning for a range of services:

    • Eligibility
    • Income
    • Deeming rates
    • Assets test
    • Payment rates

    Eligibility

    To qualify for Age Pension, you must first satisfy the age and residence requirements. Centrelink then works out how much Age Pension is payable. This depends on your income and assets and other circumstances.

    If you are legally blind, you may be eligible for Age Pension (Blind), which usually has no income or assets test.

    Age pension age

    The age pension age will be increasing from 67 – 70 in 2035 – delaying access for those currently aged in their teens to late 40s.
    From 1 July 2017, the qualifying age for Age Pension will increase from 65 years to 65 and a half years. The qualifying age will then rise by six months every two years, reaching 67 by 1 July 2023.

    The table below shows the gradual increase in women’s qualifying age for Age Pension over the period leading up to 1 July 2013, and then the increase in qualifying age for both men and women from 1 July 2017.

    Born Women eligible for Age Pension at age Men eligible for Age Pension at age
    Before 1 July 1935 60 65
    Between 1 July 1935 and 31 December 1936 60 and a half 65
    Between 1 January 1937 and 30 June 1938 61 65
    Between 1 January 1937 and 30 June 1938 61 and a half 65
    Between 1 January 1940 and 30 June 1941 62 65
    Between 1 July 1941 and 31 December 1942 62 and a half 65
    Between 1 January 1943 and 30 June 1944 63 65
    Between 1 July 1944 and 31 December 1945 63 and a half 65
    Between 1 January 1946 and 30 June 1947 64 65
    Between 1 July 1947 and 31 December 1948 64 and a half 65
    Between 1 January 1949 and 30 June 1952 65 65
    Between 1 July 1952 and 31 December 1953 65 and a half 65 and a half
    Between 1 January 1954 and 30 June 1955 66 66
    Between 1 July 1955 and 31 December 1956 66 and a half 66 and a half
    After 1 January 1957 67 67

    Income and assets
    Your Age Pension payment is calculated under both the income and assets tests. The test that results in the lower rate (or zero) will apply.
    If you are legally blind you may be eligible for Age Pension (Blind) which usually has no income and assets tests.

    Income test
    Your income affects the amount of payment you receive.
    Note: This income test does not apply if you receive Parenting Payment Single.
    You are exempt from this income test if you are permanently blind and you get Age Pension or Disability Support Pension.

    Single, couple combined, illness separated (couple combined) pensioners

    Single
    Fortnightly Income Reduction In Income
    up to $160 none – full payment
    over $160 50 cents for each dollar over $160
    Couple combined, illness separated (couple combined)
    Fortnightly Income Reduction In Income
    up to $284 none – full payment
    over $284 50 cents for each dollar over $284 (combined)

    Transitional rate pensioners​

    The income test for transitional pensioners is effective from 19 September 2009.

    Single
    Fortnightly Income Reduction In Income
    up to $160 none – full payment
    over $160 50 cents for each dollar over $160
    Couple combined, illness separated (couple combined)
    Fortnightly Income Reduction In Income
    up to $284 none – full payment
    over $284 50 cents for each dollar over $284 (combined)

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    How does deeming work?

    Deeming is a simple set of social security rules we use to assess income from financial assets. Under the pension income test and allowance income test, any income you get from financial investments is assessed under these rules.

    The deeming rules assume your financial assets are earning a certain amount of income, regardless of the income they actually earn. Deeming encourages you to earn more income from your investments and reduces the extent that your payments may vary.

    Deeming is used to calculate income for pension, benefit and allowance payments. As Family Tax Benefit is based on taxable income, it is not affected by deeming.

    From 4 November 2013:

    • if you are single and getting either a pension or allowance, the first $46,600 of your financial investments is deemed to earn income at 2% per annum and any amount over that is deemed to earn income at 3.5% per annum
    • if you are a member of a couple:
      • if at least 1 of you is getting a pension, the first $77,400 of your and your partner’s financial investments is deemed to earn income at 2% per annum and any amount over that is deemed to earn income at 3.5% per annum, or
      • if neither of you is getting a pension, the first $38,700 for each of your and your share of jointly owned financial investments is deemed to earn income at 2% per annum and any amount over that is deemed to earn income at 3.5% per annum

    Assets test

    An asset is any property or possession you own either partly or wholly. It includes assets held outside Australia and debts owing to you.

    Assets test threshold for full pension
    Family situation For homeowners
    full pension assets must be less than
    For non-homeowners
    full pension assets must be less than
    Single $202,000 $348,500
    Couple (combined) $286,500 $433,000
    Illness separated (couple combined) $286,500 $433,000
    One partner eligible (combined assets) $286,500 $433,000
    Assets test limits for part pensions
    Family situation For homeowners
    full pension assets must be less than
    For non-homeowners
    full pension assets must be less than
    Single $764,000 $910,500
    Couple (combined) $1,134,000 $1,280,500
    Illness separated (couple combined) $1,410,500 $1,557,000
    One partner eligible (combined assets) $1,134,000 $1,280,500
    Transitional
    Family situation For homeowners
    full pension assets must be less than
    For non-homeowners
    full pension assets must be less than
    Single $678,000 $824,500
    Couple (combined) $1,054,000 $1,200,500
    Illness separated (couple combined) $1,238,500 $1,385,000
    One partner eligible (combined assets) $1,054,000 $1,200,500
    Assets test for DSP under 21 (no children)
    Family situation For homeowners
    full pension assets must be less than
    For non-homeowners
    full pension assets must be less than
    16-17 years – single dependent $440,250 $586,750
    18-20 years – single dependent $471,250 $586,750
    16-20 years – single independent $567,500 $714,000
    16-20 years – couple combined $1,013,000 $1,159,500

    Note: the rate of payment is calculated under both the income and assets tests. The test that results in the lower rate (or nil rate) will apply. Limits will increase if Rent Assistance is paid with your allowance or pension.

    Extra allowable amount for retirement village and granny flat residents
    If your entry contribution is equal to or less than the extra allowable amount at the time of entry, you are assessed as a non-homeowner. Your entry contribution will count as an asset. You may qualify for Rent Assistance. The extra allowable amount is the difference between the non-homeowner and the homeowner asset test limits, currently $139 500.

    Disposing of assets

    You or your partner can give away money or other assets to any value you choose at any time, but the rate of income support payment you receive may be affected.

    Gifting is a term used when you or your partner:

    • give away assets, including transferring assets for less than market value, and
    • do not receive adequate consideration for the gift or transfer in the form of money, goods or services.

    We also use the term ‘deprived asset’ for a gift.

    You or your partner can give away money or other assets to any value you choose at any time, but the rate of income support payment you receive may be affected if you gift assets worth more than the allowable gifting amount or ‘free area’.

    The gifting rules are:

    • there is an allowable gifting amount or free area for a single person or a couple of $10 000 in a single financial year, and
    • there is an allowable gifting amount or free area for a single person or a couple of $30 000 over a five year rolling period. The rolling five year period is the current financial year plus the previous four financial years.
    • Any asset or amount that you gift over and above either the $10 000 in a single year free area or the $30 000 five year free area is treated as a gift or deprived asset for five years from the date of disposal.

    Gifts are:

    • included in your assets until the fifth anniversary of the date of the gift
    • deemed to earn income in the same way as financial assets.

    Any amounts you disposed of or gifted in the five years immediately before you were granted a payment can also be considered.

    Gifting includes:

    • money or any asset you have transferred to members of the family or other relatives
    • gifts to other people or charities
    • gifts to private trusts or companies where you or your partner are not the controller of the trust or company
    • assets sold for less than their market value
    • relinquishing control of a private trust or company. If you do this you will be considered to have gifted all the assets held by the trust or company
    • transferring your shares in a private company or units in a fixed trust and you do not receive full market value for them.

    Gifting does not include you selling or reducing your assets to meet normal expenses, for example, to buy consumer goods like a fridge or washing machine, for home maintenance/improvements, or to pay for holidays. Nor does it include payments for services received, e.g. lawn mowing.

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    Payment Rates

    These Age Pension payment rates are effective from 20 March 2014. An income and assets test will be used to work out how much you can get.

    Family Situation
    Pension rates (per fortnight) Single Couple each Couple combined Couple each
    separated due to ill health
    Maximum basic rate $766.00 $577.40 $1,154.80 $766.00
    Maximum Pension Supplement $62.90 $47.40 $94.80 $62.90
    Energy Supplement $13.90 $10.50 $21.00 $13.90
    TOTAL $842.80 $635.30 $1,270.60 $842.80

    The transitional arrangements apply to certain pensioners who were receiving part pensions as at 19 September 2009 and only applies until they would get an equal or higher rate under the new rules. Rates are indexed by CPI only.

    Family Situation
    Pension Reform Transitional Arrangements Rates (per fortnight) Single Couple each Couple combined Couple each
    separated due to ill health
    Maximum rate $699.80 $565.10 $1130.20 $699.80
    Energy Supplement $13.90 $10.50 $21.00 $13.90
    TOTAL $713.70 $575.60 $1151.20 $713.70

    Pensioners who elect to receive their pension supplement quarterly will automatically receive their Clean Energy Supplement quarterly from 20 June 2013. Quarterly payment rates are around $88 for single pensioners and $132 for couples combined.

    Step By Step Process For Retirement Planning

    The Hudson step by step retirement planning process is simple;

    Step 1: Reach out to one of Hudson’s superannuation and retirement advisers by calling 1800804296. Matt Paul will send you our Financial Services Guide (FSG) and organise a time with you to have your initial meeting with one of our financial advisers.

    Step 2: Your Hudson Advisor will call you at the allocated tine to review your current financial status and to have a general chat about how we might be able to help you. Fees will be discussed at this initial meeting.

    Step 3: If we ascertain in our initial meeting that we will be able to add value to your retirement planning, we will then map out goals and objectives that work for you and if applicable we can review your current Superannuation with a third-party authority so that we consider your fees and investment returns. After we have conducted a thorough review, we will provide a retirement recommendation at this stage.

    Step 4:  Once we have gone through your plan in detail we will make necessary adjustments and then action your plan. Once everything is in place we will confirm with you. We will then provide on-going support and assistance to help navigate both personal and legislative changes that may come your way. Adapting to your changing needs is the key to long-term success. As part of your initial agreement, we will have annual, bi annual or quarterly reviews, but we are always here if circumstances change and you need to speak with us. Your retirement plan will need to be fully reviewed every year to make sure that we are staying within legislative guidelines and to ensure that your investment mix is being suitably rebalanced.

    Retirement Planning should also link in with your estate planning and your Hudson adviser will work with your estate planner, or one of our experienced estate planners, to ensure that any wealth that you have accumulated throughout your working life, ends up exactly where you want it to.

    FAQs For Retirement Planning Advice

    Discover our most commonly asked questions relating to Retirement Planning at Hudson.

    The best way to plan for your retirement is to speak with a financial planner. We can review your personal situation and devise a plan to achieve the retirement that suits you. We take into account your income and expenses and can recommend investment such as shares and property to get you to where you want to be sooner.

    It is never too soon to start planning for your retirement. The sooner you do it the sooner you can begin to save and invest wisely and tax-effectively in order to build up a retirement nest egg, ready to create an income for you when the time comes.

    Retirement planning does not have to take up too much of your time. The most important thing is to have a sound plan in place initially. A financial plan can be reviewed annually to assess how things have progressed and take into account changing circumstances.

    If you don’t have any retirement savings then it is likely that you will need to rely on the Government to fund your retirement. For a single this is currently around $22,500 per annum and for a couple around $34,000. It is unlikely that such an income will allow you to do the things you want to do in retirement.

    One might consider $4,000 a month a good monthly retirement income, assuming that it is a tax-free income. The average wage is Australia is currently around $90,000 p/a. Net of tax that is around $68,500. Achieving a tax-free income of $4,000 means that you would be receiving 70% of the average wage in Australia.

    You can invest in property before retiring because it does generate income in the form of rent. However, there are several drawbacks of using property as a retirement vehicle, as opposed to shares for example. These include liquidity; property is a very illiquid asset and cannot be broken down in parts to provide for an income, so although you can receive rental income you cannot access the capital. Property, unlike shares, can also be quite expensive to maintain, with rates and water bills, insurances and maintenance issues.

    If you can afford to do so, retiring early can allow you to do many things that you might not be able to do in old age, such as holidays and those more active sports/hobbies. The sooner you start planning for retirement the sooner it can become a reality so speak with a Hudson Financial Planning adviser today about how you can fast track your retirement goals.

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