Financial planning not just for Retirees
Age 18-24 - starting out
- The focus at this stage is on budgeting and increasing savings:
A tax offset if your income does not exceed $21,600. - If you are undertaking tertiary education you could be eligible for the Youth Allowance. Also repaying the Higher Education Contribution Scheme (HECS) in advance could mean a discount of 25 per cent.
- Lower income earners contributing to superannuation can also receive a 150 per cent co-contribution from the Government.
Age 25-34 - growing money demands
This a good time to put money towards larger investments such as property or shares, reduce non-deductible debt and take advantage of tax concessions through superannuation.
- Contributing to super, through a salary sacrifice arrangement for example, is one of the more tax effective ways to save for the future.
- First home owners may be eligible for the Government’s First Home Owner Grant of $7,000.
- Life insurance is an important consideration to protect your wealth including income protection and trauma insurance.
Age 35-44 – building wealth
Strategies to make your money work more effectively can help accumulate wealth at this stage.
- Various government benefits may apply to you such as the Family Tax Benefit.
- Accumulate wealth with strategies to manage your tax more efficiently, such as negative gearing (borrowing money to invest).
- Splitting investment income with a spouse may lower the marginal tax rate.
New legislation was also introduced so super contributions can now be split with a spouse.
Age 45-55 – financial independence
This is another good time take advantage of increases in income.
- Tax offsets may be available if you are contributing to super on behalf of a spouse on a lower income.
- Consider salary sacrifice arrangements with your employer.
- Consider ways to boost your retirement savings such as the Government’s co-contribution or superannuation splitting.
- Consider timing of income receipts to help manage your tax.
Age 55-64 – changing priorities
Now is the time to reduce debt and plan for the retirement you want.
- Review your investments and make sure they are structured in the most effective way to achieve your goals prior to and in retirement.
- You no longer need to retire fully from the workforce to access your super so consider part time work supplemented by an income stream.
- Plan the timing of your retirement as this may have an impact on your tax liability.
Age 65+ - retirement
Your financial plan at this stage should maximise the income available for your retirement.
- Choose retirement income streams that do not negatively impact social security entitlements.
- Retirees may gain access to many concessions through the Commonwealth Seniors Health Card, the Pensioner Concession Card, the Health Care Card and state based Seniors Cards.
These are just some strategies to help you make the most of your money at different stages of life. It is important to note that certain tips will apply to more than one age group. A RetireInvest financial adviser can provide further information on planning your finances more effectively at any age.