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As parents, we all dream about leaving a legacy for our children. Whether that’s in the form of passing on the family home, or another valuable asset, we typically want them to get a head start in life.

Some people take a different approach to leaving a legacy though.

While life insurance is a vital part of a robust financial plan, some women hold onto it much longer than is necessary. Their children may have left home (no longer financially dependent). Yet they hold onto their life insurance so they can leave the proceeds to their children. However, this may not necessarily be the most effective approach.

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The Little-Known Super Tax That Could Cost You Thousands… And What To Do To Avoid It

The superannuation system in Australia can be quite complex. To make things worse, politicians like to tinker with the system, which keeps us on our toes. The unfortunate thing about this is that for the average Australian it can become quite challenging to stay up to date with the rules, regulations, and taxes.

One tax that you need to be aware of though is death benefit tax.

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If you are a business owner, here are a few considerations you need to be aware of.

Your Business Is Only As Valuable As Someone Is Willing To Pay

If you’re planning on selling your business to fund your retirement, you need to remember that any asset is only as valuable as someone is willing to pay for it. Your business may be going well now and it may even see it’s value increasing over time, however, it doesn’t take much for an industry to be disrupted and for business values to plummet.

Think about taxis. A few years ago, a taxi licence in Queensland could be sold for $530,000. Then along came Uber. Now, they are valued less than $150,000.

Imagine if this happened to your industry.

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When it comes to planning for your retirement, you need to start when you’re young. That’s why it’s called investing for retirement – it’s something that you work for years to achieve before you reap the benefits. However, there are two questions that commonly arise:

1.    When should you start planning for retirement?

2.    How much do you need for retirement?

When Do You Start?

The simple answer is: as soon as possible. When you start earning a salary, it’s recommended that you start putting money away immediately. Remember the story about the tortoise and the hare? The tortoise beat the hare in a race because the hare did nothing and relaxed for hours. Meanwhile, the tortoise made slow and steady progress – and won the race. If you spend too much time putting your retirement savings off, it might be too late when you start.

How Much Do You Need?

Answering the question of how much you need for retirement requires you to do some calculations. First, ask yourself what standard of living you expect. Do you want to move to a smaller home? Will you want to travel abroad once a year, or do you want to be able to visit your kids in another state over Christmas and for their birthdays?

Next, estimate your expenses during retirement. Remember to factor out certain expenses that won’t be relevant by that time – for example, will your mortgage be paid for? Will you be living somewhere more affordable? If you’re paying school tuition now, you won’t have to factor in that expense at a later stage.

Your expenses should include enough money to maintain your home, health insurance and medication, travel expenses, basic living necessities such as clothing and food, utility bills, hobbies, and entertainment. You can calculate it annually, to give you a lump sum of how much you need for retirement per year, or monthly if that’s easier for you. Lastly, add inflation costs to your calculations.

Investing for your retirement might be a pain in the neck now, but you’ll be happy to have put in the effort when you’re living out your dream lifestyle. Start as soon as possible, calculate realistic expenses and remember, be the tortoise!


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50 Junction St Nowra, NSW 2541 Ph: 0411 635 164 Fax: 02 4403 0574 info@puddle2pond.com.au Planners: Amanda Pond
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This website contains general information only. It does not take into account your objectives, financial situation or needs. Please consider the appropriateness of the information in light of your personal circumstances.

Puddle 2 Pond Financial Pty Limited, ABN 14 159 325 603, is an Authorised Representative and Credit Representative of AMP Financial Planning Pty Limited, Australian Financial Services Licensee and Australian Credit Licensee.

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