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Tag: Australian Lifestyle

Comfortable retirement?

Achieving a comfortable retirement

Written by on . Posted in Retirement Strategies. No Comments on Achieving a comfortable retirement

Comfortable retirement?

 

But this step often means being free from financial worries or concerns and for a large proportion of women, the prospect of a comfortable retirement can seem elusive. Especially when you do the sums.

The latest Intergenerational Report predicts the number of Australians aged 65 and over is likely to more than double by 2055 compared to today – and there could be as many as 40,000 people aged 100 and over by 2055. There were only 122 Australian centenarians forty years ago. Both male and female average life expectancies will jump significantly, with males at birth expected to live for 95.1 years and females for 96.6 yearsi.

While the prospect of a longer life is great news, the rub is that we’ll need to find extra money to fund lengthier retirements. Pauline Vamos, CEO of peak superannuation industry association, ASFA, says this issue is particularly important for women, who are expected to live longer, “yet are retiring with around half as much superannuation as men”.

Less superannuation than men

Women retire, on average, with $105,000 in super savings, which is $92,000 less than men, according to ASFAii. More concerning is that 1 in 3 women retire with no superannuation at all. The upshot is that around 90% of women retire with inadequate savings to fund a comfortable retirement. “Adequacy will also be a key factor, which is why we will continue to advocate for the Superannuation Guarantee (SG) to be increased to 12% as soon as possible,” said Ms Vamos.

There are many reasons for the difference in super savings. Not consolidating super accounts, a lack of personal contributions, and even a lack of knowledge about how superannuation works are factors. For many women taking time out of the workforce for children or caring for others, has a massive impact. According to an American research reportiii, women are likely to take an average of 12 years out of the workforce for family related reasons – and it’s likely the situation is pretty similar in Australia. When women return to the workforce, they often take part-time/low-paid or even free employment for several years to balance having a care-giver role as well.

When women work full-time, their average earnings are often lower than the take home pay of men. As our SG contributions are often linked to our earnings, men generally end up with larger superannuation nest eggs than their female counterparts.

Building a bigger superannuation nest egg

On the plus side, women can take steps to build their retirement funds. For instance, it’s critical to check your super balance regularly, as well as the insurance and investment options to ensure they match your circumstances and future requirements.

If you’ve worked in several jobs, you’re likely to have multiple super accounts and you can save fees by consolidating your super into a good quality, low fee super account. This could save thousands in unnecessary fees, which over time can make a big difference. Also note there is more than $14 billioniv in lost super and some of it could be yours. To find lost super, go to www.ato.gov.au/Super and then ‘Find your lost super’ tab.

Some super funds are trying to close the ‘knowledge-gap’ when it comes to retirement savings and what individuals are eligible for. Consider taking advantage of the seminars offered by your super fund.

Richard Denniss – Executive director, The Australia Institute, says “another way women can help themselves is to compare and switch funds with the aim of saving on fees: the average Australian spends more on super fees than they do on electricity.”v

And for working women backing yourself when it comes to discussing pay and negotiating total remuneration is vital. Being prepared to discuss your remuneration with confidence means making sure you can demonstrate the tangible value you contribute through your role. Never underestimate the lifetime value of earning your full worth.

Whatever your situation, “Those who receive financial advice are more likely to only rely on a part-pension rather than a full pension,” said Mark Rantall, CEO of the Financial Planning Association of Australia (FPA). “They are more financially secure, have a greater level of standard of living and are able to better manage any longevity risk.”

Doing what you most want in your later years means taking regular, active steps to look after your financial health.

 

Will you have the financial freedom you dream?

Whether your goal is to be debt-free, save enough to buy a property or to have a comfortable retirement, we can help you. Call us for professional advice on how to achieve your goals on 02 9328 0876.

 

i.  www.treasury.gov.au/PublicationsAndMedia/Publications/2015/2015-Intergenerational-Report
ii. www.superguru.com.au/super-sorter-power-hour
iii. www.caregiver.org/women-and-caregiving-facts-and-figures
iv. www.ato.gov.au/Media-centre/Media-releases/New-statistics-reveal-$14-billion-in-lost-super/
v. www.wgea.gov.au/sites/default/files/Womens-Super-Summit.pdf

General Disclaimer: This article contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information. Please seek personal financial advice prior to acting on this information.

 

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Relief for NSW first home buyers

Relief for NSW first home buyers

Written by on . Posted in Property. No Comments on Relief for NSW first home buyers

Relief for NSW first home buyers

First home buyers face many hurdles when entering the housing market with affordability being the number one barrier. The state government has responded to the astronomical house prices, lack of supply, and heavy competition from foreign investors by developing policies that aim to alleviate some of the burdens for first home buyers. The new policies were recently announced by Premier Gladys Berejiklian and will take effect from 1 July 2017. The package of policies will include grants and concessions, increased investment into housing supply and acceleration of the delivery of infrastructure to support growing communities.

Below is a breakdown of the package and perks for first home buyers:

  • Abolish stamp duty on all homes up to $650,000
  • Give stamp duty relief for homes up to $800,000
  • Provide a $10,000 grant for builders of new homes up to $750,000 and purchasers of new homes up to $600,000
  • Abolish insurance duty on lenders’ mortgage insurance
  • Ensure foreign investors pay higher duties (4%) and land taxes (2%)
  • Investors no longer allowed to defer stamp duty payments on off-the-plan purchases
  • $3b infrastructure funding to boost housing supply.

NSW will scrap stamp duty for first home buyers on new and existing homes up to $650,000 and a proportioned discount will be applied for homes up to $800,000. This could see first home buyers reap a five figure savings on stamp duty alone.

Those who choose to build a new property valued up to $750,000 along with anybody purchasing a new property worth up to $600,000 will be eligible for a $10,000 grant.

Insurance duty on lenders’ mortgage insurance (LMI) has been abolished.  Typically, banks and financial institutions will require you to have a 20% deposit in order to borrow money to purchase your home; however, LMI is an alternative option where lenders may allow you to borrow the same amount with a smaller deposit than would otherwise be required. Luckily for first home buyers, the insurance duty attached to LMI has been waived. 

To minimise competition from investors, the NSW government has doubled the stamp duty surcharge for off-shore investors from 2% to 4% and land tax has also increased from 0.75% to 2%. Furthermore, the concession to delay payment of stamp duty from 3 to 15 months after settlement on off-the-plan purchases is no longer available for investors, both domestic and international.

The NSW government also hopes to improve housing affordability by increasing housing supply, including the acceleration of rezoning and building infrastructure such as roads, schools and utilities that can facilitate development. 

Increasing housing supply is only possible if there is adequate infrastructure to service new homes and support communities. The NSW Government will inject $3 billion into infrastructure funding to accelerate the delivery of housing, ensuring that works which support housing are prioritised and in locations in alignment with government planning and housing demand.

 

You think you qualify? but have a few more questions…

If you are considering buying or moving, or to simply find out if you are eligible for the first home buyers concessions and exemptions. Contact us for advice on how to get started or have your current situation reviewed, call us on 02 9328 0876.

 

General Disclaimer: This article contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information. Please seek personal financial advice prior to acting on this information.

Investing in a Holiday House

Investing in a holiday home

Written by on . Posted in Investment Property. No Comments on Investing in a holiday home

Investing in a Holiday House

And you start thinking: “If we had our own place, we could go there all year ‘round and instead of contributing to someone else’s financial future we could be contributing to our own”. 

It’s a tempting thought.

That was then…this is now

In days gone by, a second home by the sea might only have been a glorified shack with an outside loo, but it was an integral part of the Aussie dream. And it was pretty cheap so it didn’t break the bank. 

But fast forward to the present day and you’d be hard pressed to find many cheap and cheerful beach shacks anywhere near a major city. 

These days, a holiday house is a major financial investment that’s got to work over the long term. And if you’re like most Australians, any major financial investment becomes an emotional investment too. 

The great dream…

  • It’ll be great for the kids –they will love it and the memories will last a lifetime!
  • It’ll be great for your sense of freedom – you can transform it into the holiday home of your dreams!
  • It’ll be great for cash flow – you could receive a regular income from tenants.
  • It’ll be great for your tax bill – your tax deductions will mount up.
  • It’ll be a great way to make money over time – you could be looking at a decent capital gain if the value of your holiday home increases.

…versus the reality

Before turning your dream into a reality, you should ask yourself what owning a holiday home will really be like. 

  • Do you want to go on holiday to the same place every year? Young kids will enjoy the routine. But think about when the kids are older and looking for more cultural experiences.
  • Will you be able to improve the property? Many holiday homes are part of a body corporate, so you may not be able to renovate or redecorate easily the value of your property could be affected by other owners.
  • How easy will it be to attract tenants? Unlike a permanent rental, occupancy rates can fluctuate throughout the year, depending on school holidays, long weekends, public holidays and summer. Plus external factors can also affect bookings, like economic downturns and the high Aussie dollar. So you should ask yourself how attractive the property will be to prospective holiday makers: Is it within driving distance of a major city? Is there a nearby airport? Is there an oversupply of similar properties in the area?
  • What are the running costs? Although many of these are tax-deductible, your rental income could be swallowed up by:
    • cleaning costs every time a tenant leaves
    • body corporate fees
    • agents’ fees
    • marketing costs
    • utility bills
    • general upkeep
    • What sort of capital gain could you be looking at? Holiday regions can be the first to suffer and the last to recover when the market turns. So it’s best to do your homework, buy in the right area and hold onto the property for long enough. And don’t forget about stamp duty when you buy the property and capital gains tax when you sell.

A holiday home isn’t for everyone. If all you’re worried about is your return, there may be better ways to invest your money – a city apartment with a permanent tenant or Australian shares with franked dividends are just a couple of examples.

But if you’re looking for a family getaway that will leave your kids with wonderful memories, plus the opportunity to reduce your tax bill, receive some ongoing income and benefit from a potential long-term capital gain, a holiday home could be for you.

Making the decision to buy or not to buy can be complex, so it’s important to talk to your financial adviser or mortgage broker before you take the plunge.

Are you considering investing in a holiday home?

Speaking with one of our financial advisors would be a good place to start. Make a booking or call us on 02 9328 0876 to arrange a meeting.

General Disclaimer: This article contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information. Please seek personal financial advice prior to acting on this information.