CASE STUDY – Peter has just been Retrenched, looking after Child with Disability and Maximizing the Retirement Balance

CASE STUDY – Peter has just been Retrenched, looking after Child with Disability and Maximizing the Retirement Balance

Peter has just been Retrenched, looking after Child with Disability and Maximizing the Retirement Balance

WHERE they were at – In his late 50s, he should have seen it coming – with the slowdown in the work due to a slowing economy in Australia, Peter had hoped and was told by management that they were going to get through. But as staff were reduced slowly, the inevitable came, and it was his turn. He took a couple of weeks off to consider his options. He also looked to see what was on offer with jobs – it was a bit thin.

Talking with a financial planner he re-assessed his position. He had about $150,000 and his wife had about $40,000 in super. They owned their own house probably worth $800,000. All the children were settled and married, except their child with a disability that meant he could not hold down a job, even though he was very talented with a high IQ.

What they wanted to have – Peter had 3 people to consider, and he and his wife wanted a comfortable retirement. She was still working but would they be alright if Peter could not get another job? How long should they keep working?

What it will cost They had to look at what they needed to live on, and how long they were going to live for. The planner talked about life expectancy and how much was needed to retire with modest or comfortable lifestyles, based on costs of living as published by the Association of Superannuation Funds (ASFA) Retirement Standard (under Resources). As a couple they could expect to need $32,600 for modest, or $56,300 for a comfortable lifestyle – and since there would be 3 people, the comfortable amount was more likely what they required. Peter would have nearly 26 years to live after he turns 60, and his wife nearly 30 years!

What they would needWith returns on cash so low, but the stock market and property looking like recovering (albeit slowly), if a conservative return of 5% was expected, they would need at least 20 times the comfortable income aimed for. That would be $1,126,000 invested. If they had the modest income, $652,000 would need to be invested at .

If they were able to achieve 7% average return, they would need at least 14 times the income – $788,200 for comfortable, or $456,400. for modest, invested amounts, as a guide. This all assumes no reduction of the capital saved.

What to do NOW It was clear that they didn’t have enough for Peter to retire yet. The planner did some calculations and they looked at their minimum living costs over 1 month, as well as reviewed their spending the last 3 months. They considered what they could reduce, leaving some room for little luxuries like a nice dinner fortnightly. They calculated how much should be salary sacrificed to go direct to super. Peter and his wife had heard of Self-Managed Super and had been to a couple of seminars, as well as read several books. They liked the chance to have more control over their super, and had come to the planner because a friend had had good results with the planner’s advice and suggestions. They wanted to be more proactive with their super, and decided to start an SMSF. SuperBenefit was recommended because there were no set up fees, just one admin fee that was reasonable, as that also included education, client and compliance support – more than any others offered for the similar cost.

They would do best to live modestly at the moment, and for Peter to work hard at getting another job. He would focus on the benefits of hiring someone with his expertise and experience – to sell to prospective employers these values (as he would be competing with many much younger than himself). His wife would enquire if there was a few more hours she could work at her employer’s, and they would salary sacrifice that extra income direct to her super to gain the benefit of lower tax of 15% in super instead of her marginal rate. She felt more comfortable to keep her small super as it was, and Peter’s 2 super accounts were rolled into the SMSF.

Peter found a couple of positions advertised. He sold himself well and had interviews with 2 of them. He won a job! He also requested some of his salary be sacrificed, and the employer agreed.

They were on their way with a Strategy, Structure and Support.

Interested to know what self-managed super (SMSF) is all about, how to get setup FREE and if it is for you? We have FREE seminars and bonuses every month Self Managed Super Fund Roadmap(all you need to know) see 1 SMSF – FREE Seminars or call us 0407 361 596

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Self-Managed Superannuation Service Providers in Australia. WE do not provide Financial Advice or any other service that requires a legally authorized provider. However, where such advice or service is required we have our ‘Connect Assist’, a SuperBenefit resource we use to connect clients to a Licensed Advisor or other legally authorised service provider. SuperBenefit provides a wholistic SMSF assistance, education and administration service continuum - 1. “assistance” is help of whatsoever nature where our overall SMSF experience and knowledge enables us to provide assistance/help without any legal (or “license”) limitations. 2. “education” involves providing knowledge through teaching, coaching and mentoring about all matters SMSF, including (but not limited to) investment issues such as equities and property, 3. “administration” encompasses all admin aspects of legally required SMSF trustee and member record keeping including (but not limited to) audit and ATO matters. In keeping with our key point that SuperBenefit does not provide Financial Advice, where issues arise from 1, 2, and/or 3 above Indicate a need for a legally authorized provider (such as a Financial Adviser) and the client does not have their own service provider, the client can utilize SuperBenefit’s ‘Connect Assist’ … SuperBenefit, in itself, does not provide Financial Advice, but it does provide the wherewithal for great SMSF service. Call us 0407 361 596, no obligation FREE Connection call to see how we can help you!
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