What sort of lifestyle?
Sometimes life has been so busy there has been limited time for choice – school and university fees, mortgage payments and work pressures have been enough to worry about. Between age 50 and 60 it can be a challenge to choose what you (and your partner) really want for the next few decades.

How much do you need in retirement?
This will depend on how you live. For instance, Westpac/ASFA calculations* show that a couple in NSW needs $33,907 a year to live modestly and $ 58,605 to live comfortably, assuming they own their home.

The below graph below from ASFA shows the split of expenditure based on a modest lifestyle in retirement.
 

Setting a budget for your life in retirement is a vital step in achieving your retirement wealth target. Do you have enough invested to live comfortably throughout your entire retirement, which could be as long as 20 or 30 years?

Are your investments suitable?
Now is the time for you to ensure that your investments are working as hard as possible for you. If you have managed funds, shares or investment property, are they the best assets for your changing situation?

If you have life and income insurance policies, do you have the right level of cover for your current circumstances? There is no point paying premiums for cover you don’t need – but take care in cancelling cover that you may not be able to get back.

Are you taking full advantage of superannuation?
Superannuation is clearly the most tax-effective way to accumulate money for retirement and provide capital and income in retirement. Taking advantage of investing in super can make a big difference to reaching your retirement target.

Have you planned beyond your lifetime?
People aged in their 50s will often have growing families as grandchildren start appearing. Some will have more than one family after separation, divorce and second marriages. Taking time to think about how you want your assets to be distributed after your death can save a lot of heartache for those left behind. Don’t forget that the payouts from life insurance policies and superannuation don’t necessarily form part of your estate and may need to be distributed separately from your will.

With all of these things to consider, the first step in updating your financial plan may be the hardest – but it is also the most rewarding.

Contact our licensed financial adviser at Leenane Templeton on 02 4926 2300 who can help you focus on the next stage of your life.

Source: *Westpac ASFA Retirement Standard; http://www.superannuation.asn.au/resources/retirement-standard and click on calculator link

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We've all had those 'what if' moments, where thinking big gives us a rush of adrenaline. But seriously, before you rush off on that long dreamed of holiday, what should you do if you were lucky enough to land a windfall?

Here are three practical options to consider:

1. Pay off debt

Paying off debt is one of the most financially sensible things you could do. In today's debt-fuelled world, it's wise to pay off loans which charge you the highest rates of interest, such as credit cards, car or personal loans, store cards or short term loans, before you think of doing anything else with your cash. 

Only then should you consider paying off your mortgage, in full or in part, because your mortgage is likely to be charging you the lowest interest rates. Apart from the savings you'll make from lower interest payments, getting rid of debt could also eliminate financial stress and allow you to focus on smarter financial decisions for your future.

2. Build up your super balance

You should consider taking advantage of non-concessional contributions and build more of your wealth within super, rather than having it all invested in your own name in the bank. Non-concessional contributions refer to after-tax amounts which are indexed each year.  

From 1 July 2015, you can contribute $180,000. But if you are 64 years old or less anytime in the financial year and you make a non-concessional contribution, it would trigger a ‘bring-forward’ provision, and you could contribute up to $540,000. This would result in a significant tax saving on your investment earnings, but it would depend on your personal income levels. Keep in mind, though, that the downside of building up your super is that you cannot access the money until you stop working or retire.

3. Diversify your investments

Keeping large sums of money in the bank at current term deposit interest rates may not be the best investment in the long term. You could work out what large capital expenses you may have over the next three years and leave this sum in the bank, but the remainder should be invested in a more growth-oriented manner, depending on your appetite for risk.

If you have already purchased an investment property, you could consider building up investments in Australian shares, international shares and other asset classes to diversify your investment portfolio.

You could also look at a managed fund that is appropriately diversified across a number of asset classes, but a good portion should be in Australian shares to deliver the growth that can be achieved over the long term with this asset class. 

4. Seek professional help

If you find yourself receiving a windfall, it is wise to seek professional help. As with any income there are capital gains taxes that might need to be consider, and depending on your stage in life, investing in your super balance could make better long term sense than diversifying investment or vice-versa.

For more on how to manage a windfall, speak to your Leenane Templeton financial planner on 02 4926 2300

Source: Colonial First State

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