Potential Changes to Super Rules in the Federal Budget

The media has recently speculated that there may be alterations to superannuation rules in the 3rd of May Federal Budget. It is believed they will target annual contribution caps and / or Transition to Retirement strategies for super.

What does this mean for you?

While these changes are only speculative at the moment, now may be the best time to consider making the most of any potential benefits that are available under the current rules.

This includes considering:

  • Whether you should salary sacrifice into your superannuation to help reduce your tax payable and increase your retirement funds; and / or
  • If you should commence a transition to retirement pension whilst you are still working to help supplement your income in the lead up to your retirement.

Rules on starting a pension

Rules on the transition to retirement pension

Final Thoughts

As you would expect we are quite concerned about any potential changes to superannuation tax arrangements in the upcoming Federal Budget that may have the possibility of reducing your ability to self-fund your retirement, whether it is now or into the future.

Craig Day, Executive Manger of Colonial First State, states that while more tinkering with the rules can be expected, super is still likely to remain one of the most tax-effective ways to save for retirement, so it is worth planning how to maximise it.

If you are worried about any potential changes, you should speak to your financial adviser before May 3rd and consider taking action to ensure that you can make use of the current super rules before it’s too late.

At the end of work – A first-hand experience about retirement

at the end of work retirement

A first-hand experience about retirement by Solace Financial client, Ian.

I ceased paid work in August 2013. It was not the “gold watch at the end of 30 years of Service” type of event. The mining project in Central Queensland that I was working on was completed. The engineering service company I was working for had no more suitable contracts so it was “thanks”, hand in your building access “Dog Tag” and away you go, type of event. I did have lunch with colleagues but, as there had been weekly farewell lunches for a while, mine did not feel that special. So, it was a low-key end and not really of my own timing.

Having been through this process before the prospect of trying to find further employment and the mental anguish of many job applications, specifically written resumes with no response from recruiters was not something to be entertained so I stopped being in paid employment.

The positive was that I did not have to work because our financial plans had come together just as predicted by Whittaker McNaught and Solace Financial. I still find this financial security hard to believe!

At the time we were living in Brisbane and we have since moved to Tasmania. There were no close family reasons for remaining, plus we did not like the heat of Brisbane Summers so we went south in search of a cooler climate. We also elected to go from a house to an apartment so we could leave behind the problems and work of maintaining gardens, even though we loved this activity. We could see that it would not be long before we were not fit enough to successfully do this activity so we took the opportunity to stop.

How has it all panned out?

On the apartment, we still miss the opportunity to garden, to pick fresh flowers and vegetables that are the fruits of our own endeavours. (We can buy them at a fantastic Farmers’ Market about three blocks away every Sunday!) We have stepped into the issues of Body Corporates. We were particularly under researched with the problems of Body Corporates.

On the positive the car gets very little use as we can walk to most activities. This exercise is good for our health.

On the financial side it has been difficult to get my head around the fact that we are spending and no longer earning. Time is pushing this problem further from the “front of mind”.

On the mental activity side we still have not found all the activities we need to fill our weeks. I am volunteering at a historic replica museum and this provides the opportunity to learn more of the history in response to our visitor’s questions. It also gives me contact with people. I am also doing some more volunteering for a church organisation in the form of energy auditing. Again this is mental stimulation.

Would I work again?

I would consider it if it was something I was interested in and where I could take time off at will! (Unlikely I guess!)

The final point I would make is about my “status”. I reject the title of “retired”. I am no longer in paid work. Please treat me based on who I am, not a title based on age or some other classification. (Contrast this with the fact that I am quite happy to show my Senior’s Card if it is worth a 10% discount!)

Aged Care

Aged Care

I have been specialising in Aged Care for the past 7 years and have seen over 500 families move into Aged Care.  Please give me a call if you would like to discuss your situation and I can answer any general questions you may have.

The move into aged care is a very difficult time for the family.  It is normal to be stressed and overwhelmed with what to do and what’s best for Mum and/or Dad both financially and personally.  Usually it is the responsibility of one family member to organise the move into care and it is normal for other siblings to have differing opinions on what is best.  Below is a couple of the “tips and tricks” for moving into Aged Care.

Tip One – Be prepared
Over the years I’ve seen a lot of cases where Mum and/or Dad has had a fall in the home and has needed to be hospitalised.  In these cases the hospital is very reluctant to release Mum and/or Dad home and may ask you to nominate a short list of Aged Care facilities to release them to.  Hospitals are generally at full capacity and will want to free up a bed very quickly (can be within a week).  So the pressure is on.  Those people who have already looked at an Aged Care facility or have spoken to the family about this are a lot more prepared.

Tip Two – Call a meeting
If possible, call a meeting with the family and invite a professional with experience in Aged Care to this meeting.  This way the family can discuss what is best for Mum and/or Dad and the professional can talk to you about the rules and regulations that fit specially into your situation.

Tip Three – Finding a facility
There are two ways to find a suitable Aged Care facility.  The first is to take the time to call and organise appointments with facilities to have a look at them.  The second is to speak to a placement consultant about a suitable facility.  A placement consultant will know a large number of Aged Care facilities, which ones are full, what they offer and match up a short list for you with the features that are important to the family.  I have a lot of experience in Aged Care and know most of the facilities in Brisbane, but personally I would still engage a placement consultant for my family. However, as with any industry there are good and not so good placement consultants.

Tip Four – Finances
There was a large over-hall to the Age Care system in July 2014.  This has made it difficult for facilities and new residents to learn and administer the new rules.  The government has a lot of information on their website at http://www.myagedcare.gov.au/ about the different fees and charges.  If you would like more information about the fees and charges please give me a call.

The main cost that a facility will talk to you about is there Refundable Accommodation Deposit (RAD).  This cost is generally in the hundreds of thousands and is fully refundable when the resident leaves the facility.  What I’m finding at the moment is that some facilities are offering to give you a discount if you pay the Refundable Accommodation Deposit (RAD) at the date of entry.  It’s worthwhile asking the facility if they offer this.

Scott Quinlan
Principal/Financial Adviser
Masters of Financial Planning
Bachelor of Commerce
CFP®