Calculate how much money you might have, how long it will last and how much you’ll need in retirement, with our retirement calculators

Working out how much is enough for retirement depends on many factors, such as your lifestyle, plans for the future, and the number of years you’ll spend retired. Additionally, estimating how much you’ll have when you plan to retire depends on factors such as your current salary, super balance and assets. With so many factors, it’s easy to see why you might need a retirement calculator to get an idea of your retirement savings needs.

By using our helpful retirement calculators, you can get an indication of whether there’s a shortfall between how much you are estimated to have and how much you’ll need in retirement, and put a plan in place to address the situation.

How much is enough for retirement?

The Association of Superannuation Funds of Australia (ASFA) estimates that Australians aged around 65 who own their own home and are in relatively good health, will need the following amount of money each week and year in retirement¹:

A modest lifestyle is considered better than living on the age pension, while a comfortable lifestyle means someone can afford a good standard of living, be involved in a broad range of leisure and recreational activities and travel domestically and occasionally internationally².

For Australians on above-average incomes, another rule of thumb to estimate how much money you’ll need in retirement is to assume you will require 67% (two-thirds) of your pre-retirement income to maintain the same standard of living³.

What are your retirement lifestyle expectations?

Ultimately, how much money you’ll need for your own retirement is very personal, and will depend on your own situation, wants, needs and lifestyle expectations. It may help to factor in your day-to-day spending habits, your recreational activities and hobbies and whether you’ll be entering retirement debt-free. The following figures are a guide taken from the ASFA retirement standard.⁴

How long will you work for?

The age at which you retire can have a significant impact on how much money you have and how much money you need in retirement. It can depend on factors such as your health, debts, super balance, age you can access your super, whether you have dependants, and your partner’s retirement plans (if you have one).

How long will you be retired?

Keep in mind that if you’re planning to retire at around age 65, it’s likely you’ll live for another 20 years or so. Men aged 65 can expect to live to 84.6 years, while women can expect to live to 87.3 years⁵.

How much money will you have in retirement?

The money you use to fund your life in retirement will likely come from a range of different sources including the following:

Superannuation

Knowing your super balance is a crucial part of planning for retirement, as it’s likely to form a substantial part of your retirement savings.

Age pension

Depending on your circumstances and assets, you could be eligible for a full or part age pension, or alternatively, may not be eligible for government assistance at all.

Investments, savings and inheritance

You may be planning to downsize your house, sell shares or an investment property, or use money you’ve saved in a savings account or term deposit to contribute to your retirement. Or perhaps an inheritance or the proceeds from your family’s estate may help you out in your later years.

Meet Mac. He’s 51, married and planning to retire at age 65.

To work out how much Mac might need in retirement, he tries our retirement needs calculator. Mac is hoping for a comfortable standard of living in retirement, and our calculator estimates this will cost him $1,154.49 a week – or $60,033 a year. He’s also planning on buying a new car and doing some travelling once retired, and thinks he’ll need $40,000 for these one-off expenses. Based on a life expectancy of 81 years, our retirement needs calculator estimates he’ll need a total of $993,473 to fund his retirement.

So how much might he have in retirement, and how long is his money likely to last, based on his current and expected financial situation?

Mac currently has $172,000 in superannuation invested in a balanced investment option, an annual pre-tax salary of $82,000, shares worth $20,000, and the couple owns their family home. Based on this information, our retirement simulator calculates he’ll retire with savings of $294,944. Based on his expected expenditure in retirement outlined above, our retirement simulator estimates his money will only last until age 71, leaving him with a funding shortfall of 10 years in retirement.

While this news may seem scary, it’s not an uncommon situation. Luckily, finding out about the possible shortfall now means there may still be ways to boost his savings before retirement.

What do you do if you won’t have enough to retire?

If, like Mac, you’re facing a shortfall in retirement, there are several things you can do to get your retirement on track. You could consider boosting your super through additional contributions, delaying your retirement, adjusting your retirement lifestyle expectations, or selling other assets.

Simply by having an idea of your current and projected retirement savings, thanks to our retirement calculator and simulator, you could work to improve the situation. The earlier you start, the easier it may be for you to reach your retirement goals.

Please contact us on Phone: 07 5641 4134 if you seek further assistance on this topic .

1 Association of Superannuation Funds of Australia (ASFA) Retirement Standard December 2019.
2 Association of Superannuation Funds of Australia (ASFA) Retirement Standard.
3 ASIC Moneysmart, How much super is enough?
4 Association of Superannuation Funds of Australia (ASFA) Retirement Standard December 2019.
5 https://www.aihw.gov.au/reports/life-expectancy-death/deaths-in-australia/contents/life-expectancy

Source : AMP August 2020 

Important: This information is provided by AMP Life Limited. It is general information only and hasn’t taken your circumstances into account. It’s important to consider your particular circumstances and the relevant Product Disclosure Statement or Terms and Conditions, available by calling Phone: 07 5641 4134, before deciding what’s right for you.

All information in this article is subject to change without notice. Although the information is from sources considered reliable, AMP and our company do not guarantee that it is accurate or complete. You should not rely upon it and should seek professional advice before making any financial decision. Except where liability under any statute cannot be excluded, AMP and our company do not accept any liability for any resulting loss or damage of the reader or any other person. Any links have been provided for information purposes only and will take you to external websites. Note: Our company does not endorse and is not responsible for the accuracy of the contents/information contained within the linked site(s) accessible from this page.

The Reserve Bank of Australia (RBA) had its August board meeting on Tuesday 4th, and though there were no real surprises, I think we can expect more out of the central bank in the coming months.

In its meeting, the RBA made mention of the situation unfolding in Victoria, which is sadly seeing COVID-19 infect more people in the state now than it did back at the pandemic’s initial outbreak in March and April. I think this is what will trigger further response from the central bank.

Source: covid19data.com.au

The stage four lockdown which has ensued in Victoria will dent Australia’s recovery, and the central bank has previously said it will do everything in in its power to support the economy through this period. As a result, I think we can expect more broad-based quantitative easing from the RBA.

The central bank has said it doesn’t want negative interest rates, though there is a possibility it could cut rates to 0.1%. It’s questionable whether this would really have much impact, but it remains a possibility. The RBA has also said it doesn’t want to directly finance government spending, or intervene in the foreign exchange market.

In addition to this, there will be more pressure on the federal government for stimulus, as growth takes more of a hit than forecast in the current quarter from the situation in Victoria. As such, we can expect more support measures from Canberra in the months ahead.

Author: Dr Shane Oliver, Head of Investment Strategy and Economics and Chief Economist, AMP Capital Sydney, Australia

Source: AMP Capital 6 August 2020

Reproduced with the permission of the AMP Capital. This article was originally published at AMP Capital

Important notes: While every care has been taken in the preparation of these articles, AMP Capital Investors Limited (ABN 59 001 777 591, AFSL 232497) makes no representation or warranty as to the accuracy or completeness of any statement in them including, without limitation, any forecasts. Past performance is not a reliable indicator of future performance. Performance goals are merely goals. There is no guarantee that the strategy will achieve that level of performance. The information in this document contains statements that are the author’s beliefs and/or opinions. Any beliefs and/or opinions shared are as at the date shown and are subject to change without notice. These articles have been prepared for the purpose of providing general information, without taking account of any particular investor’s objectives, financial situation or needs. They should not be construed as investment advice or investment recommendations. An investor should, before making any investment decisions, consider the appropriateness of the information in this document, and seek professional advice, having regard to the investor’s objectives, financial situation and needs.

This document is solely for the use of the party to whom it is provided and must not be provided to any other person or entity without the express written consent of AMP Capital.

Not sure what to do with your tax refund? Strategic financial decisions for your tax return begin with a strong plan.

Whether you breeze through tax time or dread the extra admin, receiving a tax refund makes the effort worthwhile. For many of us, getting a financial boost will be even more welcome this year, and you might be looking around for the best ways to use it.

These simple actions can help you figure out how to make a plan for your tax return. And if you’re looking for inspiration for how to spend it, we suggest some ideas to consider, too.

Plan to succeed

Never underestimate the power of a well-crafted plan – it’s easy to watch funds dwindle when you haven’t given them a clear direction. Recent research has revealed that 81% of us admit to splurging an average of $1,430 annually as a result of comfort spending¹  and that one in six Australians struggles with credit card debt².

Like any goal, your ambitions for this year’s tax return can be more easily realised if you have a concrete plan in place. In fact, studies have found that taking the time to write down your goals and plans can actually improve your chances of making them happen³.

Once you’ve lodged your tax return, you should have a decent idea about the amount of your refund. Use the time before you receive the money to give yourself a financial check-up and decide exactly where you plan to put your tax refund to avoid excitement spending once it lands in your account. This includes any money you’re hoping to use for a holiday or other splurge – work it into your financial plan to avoid spending beyond your means.

Anticipate your upcoming living expenses

When making your plan, you might want to consider your upcoming living expenses, particularly any large, irregular bills such as car insurance and registration costs, utility bills and general home maintenance.

Putting aside some of your tax return as a cushion for upcoming expenses or in an emergency fund helps you avoid reaching for other financial support – such as personal loans and credit cards – when the bills start to build up.

Reduce outstanding debt

If you have some debt to pay down, you’re not alone: the average Australian household debt-to-income ratio is around 190%, meaning we owe almost twice as much as we earn each year⁴. Putting your tax return towards any outstanding debts, including mortgage repayments, personal loans and any credit card debt may help reduce any interest charges. Please contact us on Phone: 07 5641 4134 if you seek advice to paying off debt for more ideas on where to start and how to tackle it.

According to the research…

• 81% of Australians admit to splurging an average of $1,430 annually on comfort spending

• 1 in 6 Australians struggles with credit card debt   1

• 90% the debt-to-income ratio for the average Australian household

Invest in growing your wealth

If you don’t need the money for immediate expenses, paying off debt (or the occasional luxury), you might be looking to make a long-term investment with the extra money. You might consider contributing some or all of your refund to boost your super, or add it to a term deposit or savings account.

The Australian Government’s new HomeBuilder grant means that home renovations are on many people’s minds. If you’re thinking about home improvements that will add value to a property, experts say that repainting rooms, updating the kitchen and adding a bathroom are among the most profitable upgrades and home improvements⁵.

Make tax-deductible purchases

If you’ve been holding off buying specific equipment for work, such as a new laptop or desk, now could be a good time to make the purchase. For purchases over $300, tax deductions are calculated on the depreciation of the ‘effective life’ of the item⁶. If you purchase them at the beginning of a financial year, the item has almost a full year to depreciate before you do your next tax return.

Donate to a charity

Although this has been one of the most difficult years in living memory, Australians have shown extraordinary generosity by donating to bushfire appeals and other charities. If you plan to support a charity or not-for-profit organisation, don’t forget that any donations over $2 to eligible organisations in Australia are tax deductible7. Just remember to keep a receipt for when you start preparing next year’s tax return.

For further tips on managing money, please contact us on Phone: 07 5641 4134

1. Mozo: Mozo’s Comfort Spending Report – 2019
2. ASIC: 18-201MR ASIC’s review of credit cards reveals more than one in six consumers struggling with credit card debt
3. Forbes: Neuroscience explains why you need to write down your goals if you actually want to achieve them
4. Reserve Bank of Australia: Property, Debt and Financial Stability
5. Domain: Which renovations offer the best return when you sell?
6. Australian Taxation Office: Decline in value of depreciating assets – individuals
⁷. Australian Taxation Office: Gifts and Donations

Source : AMP July 2020 

Important: This information is provided by AMP Life Limited. It is general information only and hasn’t taken your circumstances into account. It’s important to consider your particular circumstances and the relevant Product Disclosure Statement or Terms and Conditions, available by calling Phone: 07 5641 4134, before deciding what’s right for you.

All information in this article is subject to change without notice. Although the information is from sources considered reliable, AMP and our company do not guarantee that it is accurate or complete. You should not rely upon it and should seek professional advice before making any financial decision. Except where liability under any statute cannot be excluded, AMP and our company do not accept any liability for any resulting loss or damage of the reader or any other person. Any links have been provided for information purposes only and will take you to external websites. Note: Our company does not endorse and is not responsible for the accuracy of the contents/information contained within the linked site(s) accessible from this page.

Your parents weren’t kidding when they said breakfast is the most important meal of the day. Whether you enjoy it sweet or savory, hot or cold, earlier or later, there are a few non-negotiables you should be including. But the first step is eating your food mindfully. Mornings can be busy; getting the kids ready for school, rushing off to work, trying to fit in a workout and a quick load of washing – but taking an extra 5 minutes to sit down and eat your breakfast is one of the best things you can do to aid digestion of your meal.

Our good friend Dr. Libby even believes that this might just be the most important meal of the day. It doesn’t matter if you’re an early riser or an intermittent faster, fuelling your body with the right kinds of foods from the get-go is so important. And if you’re including good-quality, slow-burning foods, this meal will see you all the way till lunchtime – without the heavy snacking.

If you’re building a smoothie bowl or a hearty plate of whole foods, there’s a formula that we love to follow. It involves a balance of macronutrients (we’re talking healthy fats, complex carbohydrates, and good sources of protein), coupled with some micronutrient-rich superfoods. Your macro balance will be unique to your body’s needs, so if you have specific dietary goals in mind we recommend reaching out to a qualified professional. The most important thing is to reach for healthy, good-quality sources. We’re not interested in ruling out any food groups unless there’s a specific intolerance. In fact, having a breakfast that is largely made up of proteins, healthy fats, and micronutrient-rich complex carbohydrates (while limiting your intake of refined carbohydrates) can aid in both brain function and weight loss. Tucking into a delicious, balanced breakfast is also vital in balancing blood sugar levels for both managing and preventing diabetes, and done right, it can also be a good source of dietary fiber.

Here’s why these are our four pillars of a well-built, nourishing breakfast. So read away and set yourself up for a nourishing day…

Help Yourself To Some Healthy Fats:

Fats are more than just deep-fried treats; not only are some good for us, they actually make up a vital part of our diet. Our bodies need them for brain function, long-lasting energy levels, and radiant hair, skin, and nails. Because they take longer for us to break-down, the energy they give provides for us when we’re depleted of carbohydrates. However, we only need a small portion to meet generic daily requirements. They’re that easy to throw on as an afterthought; a few of our favorites are avocados, flaxseeds and chia seeds, almond or cashew butter, free-range eggs, and fatty fishes like salmon, mackerel, and sardines. All of these foods contribute to a balanced intake of omega-3s – which is something the standard diet is often deficient in!

Cram In The Complex Carbohydrates:

Popular diets have made us a population fearful of carbohydrates, but it’s really not as simple as that. Carbohydrates come in all shapes and sizes, with the complex carbs often wearing the stigma of refined, bleached, heavily processed, and nutrient-poor carbs. Including carbs in your breakfast helps your body get the energy it needs for the beginning of the day. Vegetables, for example, are one amazing source of carbs – giving your body the much-needed glucose to carry out daily tasks, alongside an abundance of vitamins and minerals, and the all-important fiber. Fresh fruits are another wonderful source, although we recommend eating these first as many fruits shouldn’t be combined with other foods as not to impair digestion. Some of the best (in our opinion) ones to squeeze into breakfast are sweet potato, oats, bananas, spinach, and fresh berries.

Plate Up The Proteins:

Proteins give us something different from the other macronutrients; they break down to amino acids, which become the building blocks of our bodies. Many people are often living with protein deficiencies, so breakfast is another great opportunity to work it into your diet in the best possible way. And because they take longer to break down than your carbs, they’ll help to keep you feeling fuller for longer. Some of the best wholefoods sources that are perfect for breakfast are free-range eggs, peanut butter, yogurt, tofu scramble, or a good plant-based protein powder.

Make Sure You Have Micronutrient-Rich Superfoods:

We know a healthy, whole foods diet is more than balancing your macros. Vitamins and minerals are just as (if not more) important for your overall health and wellbeing, so it’s important to make sure you’re getting a dose with each meal. Some of the best ones you can include as a last-minute addition to your breakfast are blueberries, hemp seeds, maca & cacao blend, cinnamon, or an easy, supercharged greens powder. You can throw them in a smoothie or scatter them on top, but they’ll promise to fill out that well-rounded breakfast bowl you just built.

Source : Foodmatters August 2020 

Reproduced with the permission of the Food Matters team. This article by TESS PATRICK was originally published at https://www.foodmatters.com/recipe/how-build-nourishing-breakfast-satiate-until-lunch

Important: Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business nor our Licensee takes any responsibility for any action or any service provided by the author. Any links have been provided with permission for information purposes only and will take you to external websites, which are not connected to our company in any way. Note: Our company does not endorse and is not responsible for the accuracy of the contents/information contained within the linked site(s) accessible from this page.

A further rise in COVID-19 cases around the world is leading to questions about the need for another round of government-mandated lockdowns. Given that there are arguments for and against government lockdowns, we look at what the actual economic outcomes have been in both cases in this Econosights.

The backdrop

After the majority of the world went into a strict “stay at home” lockdown over late March-April, a lot of these restrictions have now been lifted. Most economies are now operating with “intermediate” lockdown stringencies (see chart below) which generally means that there are social distancing restrictions in place across public venues and on transport along with restrictions on gatherings.

Source: Oxford University, AMP Capital

The first round of severe lockdown restrictions worked well to “flatten the curve” to reduce COVID-19 cases, to prepare the hospital system with protective equipment and testing tools and to get the contact tracing system in place. But as several countries started to open up their economies again over late May and June, COVID-19 cases started to spike again (see chart below).

Source: ourworldindata.org, AMP Capital

It always seemed highly improbable to completely eliminate the virus without a vaccine so it was always expected that there would be pockets of COVID-19 cases once the economy opened up again. However, the problem now is that some second waves of the virus in places like the US and Australia have higher case counts compared to the first round. While the US fatality rate is not as high this time round (see chart below), hospitals in some states like Arizona, Florida and Texas are getting overwhelmed with COVID-19 cases, and deaths will get worse from here as they tend to lag behind new cases.

Source: The Covid Tracking Project, AMP Capital

Should countries experiencing a second wave (or an extension of the first wave) re-impose lockdown restrictions again? Lockdown measures would reduce deaths and help the hospital system. On the other hand, lockdowns lead to closed businesses and higher unemployment. Both points of view are valid. However, the experience of COVID-19 around the world has demonstrated that in both cases, there is a big fall in consumption as households self-regulate their behaviour.

Sweden’s experience

Sweden did not impose any strict “stay at home” lockdowns (restrictions including things like social distancing at public venues and banning groups larger than 50 people) at the start of the pandemic, instead opting for a “herd” immunity approach (where you need the majority of the population or ~60% to become infected before the country has some long-term immunity to the virus) and expecting that some people would decide to self-regulate their behaviour.

In theory, less lockdowns of businesses means better economic outcomes. But, interestingly Sweden hasn’t made a strong case for this argument. June quarter GDP growth is still expected to have a steep decline (see chart below) but it does appear to have been better than the falls in the US and Eurozone, and around the same as Australia (but Australia had a strict lockdown for around 5 weeks).

Source: Bloomberg, AMP Capital

A herd immunity approach also argues that the outlook for economy overall ends up stronger because lockdowns do not have to stop and restart cases rise and fall. But it is still unclear what achieving herd immunity actually looks like, with the main questions being what proportion of people actually need to get infected before herd immunity is achieved and how long does immunity last? Not enough is known about COVID-19 to answer these questions. And widespread accurate antibody testing to assess population immunity is still not widely available.

So far, the Swedish forward-looking economic indicators and high frequency data are still pointing to subdued near-term activity. High frequency indicators (like daily consumer spending transactions, hotel bookings, mobility and restaurant bookings) didn’t fall as much as the US and Australia but the bounce back has also been slow (see chart below), just like in the US and Australia.

Source: AMP Capital

Finally, the most important factor to consider in the lockdown debate is the cost of human life, or the death toll. Sweden has had around 550 deaths per million in the population (see chart below), one of the highest in the world (US is 428 deaths/million and Australia is 5 deaths/million). So, Sweden’s experience of similarly poor economic outcomes against a high death toll doesn’t leave much to be envied.

Source: ourworldindata.org, AMP Capital

Some interesting research from Australian professors at the University of New South Wales have estimated the costs of lockdowns against the benefit of saving lives, which can actually be measured by statistical agencies – known as the cost of a “statistical life”. On these estimates, the costs of lockdowns tend to be greatly exaggerated in the media and by politicans. On their numbers, the cost of lockdown in Australia is around $90bn, but this is heavily outweighed by a much larger ($1.1tn) economic benefit in saving lives.

Household surveys have shown that on average, households do tend to support lockdown measures. In a survey of US houesholds in June (from CivicScience), around 62% of households (on average) supported returning to lockdown as a strategy to reduce rising COVID-19 cases.

Suppression or elimination of COVID-19?

Without a vaccine, there appears to be no way to completely eliminate COVID-19 while it is still circulating around in parts of the world. So suppression of the virus is the only strategy from here. But, lockdowns may still be required in localised areas if case growth becomes too unsustainble, which is what happened in Melbourne.

The economics of lockdowns show that they aren’t as disastrous for the economy as initally assumed. The pandemic will lead to a big hole in economic output with or without lockdowns. It means that more government support is required to fill this hole in economic output. While this means a build up of government debt, the low inflation environment and record low borrowing costs mean that government debt repayments are sustainable for now.

Author: Diana Mousina, Economist – Investment Strategy & Dynamic Markets, Sydney Australia

Source: AMP Capital 23 July 2020

Reproduced with the permission of the AMP Capital. This article was originally published at AMP Capital

Important notes: While every care has been taken in the preparation of this article, AMP Capital Investors Limited (ABN 59 001 777 591, AFSL 232497) and AMP Capital Funds Management Limited (ABN 15 159 557 721, AFSL 426455) (AMP Capital) makes no representations or warranties as to the accuracy or completeness of any statement in it including, without limitation, any forecasts. Past performance is not a reliable indicator of future performance. This article has been prepared for the purpose of providing general information, without taking account of any particular investor’s objectives, financial situation or needs. An investor should, before making any investment decisions, consider the appropriateness of the information in this article, and seek professional advice, having regard to the investor’s objectives, financial situation and needs. This article is solely for the use of the party to whom it is provided and must not be provided to any other person or entity without the express written consent of AMP Capital.

As investment market volatility continues, what does this mean for Australians’ retirement savings?

The COVID-19 (coronavirus) crisis has caused uncertainty in many areas of life, not least on investment markets. Share prices have been fluctuating wildly as investors react to unfolding global events.

From its high point in March the Australian All Ordinaries Index shed more than a third of its value before recovering some ground towards the end of June¹.

And just as concerning have been the day-to-day swings. The coronavirus pandemic has created the largest daily fluctuations since the Great Depression, with the US S&P 500 Index experiencing an average daily change of 4.8% in the five weeks to 8 April 2020² —higher than both the GFC and the 1987 share market crash.
 

Why this could affect your super

You may not think of yourself as an investor in stocks and shares. But most Australian super accounts are invested in shares to some degree because of their potential to deliver strong long-term gains. So share price ups and downs are still likely to affect your finances, and many people’s super balances have taken a hit as a result of the volatility.

Many working Australians have their super in a balanced option, where your super is spread across a mix of investments – from ‘growth’ assets like shares and property, which can deliver higher potential long-term returns but with higher risk, to ‘defensive’ assets such as bonds and infrastructure, which can potentially provide some level of protection against share market downturns.

So, the good news is your super may not have been quite as affected by the COVID-19 volatility as the headline share price numbers you see in the media.

But it’s important to check with your super provider exactly how your retirement savings are being invested. Different super funds define ‘balanced’ in different ways and it’s possible up to 80% of your retirement savings could be invested in growth assets such as shares, even in a balanced fund.

When will your super bounce back?

We can’t be sure. Market movements are difficult to predict, even for experienced investors and economists.

AMP Capital Chief Economist Shane Oliver says, “Short-term sometimes violent swings in share markets are a fact of life but the longer the time horizon, the greater the chance your investments will meet their goals.

“So, in investing, time is on your side and it’s best to invest for the long term when you can.”³

Should you think about switching your investment mix?

It’s tempting to react to short-term market movements by changing your investment strategy. But it could be worth bearing in mind that if you sell out of shares when prices are low you may end up crystallising your losses and missing out on any future upturns.

As Shane Oliver says, “We’ve seen recently growth assets like shares have periods of bad short-term performance versus bonds and cash. But they provide superior long-term returns, which is essential to grow retirement savings. It makes sense for superannuation to have a high exposure to them.

“The best approach is to simply recognise that super and investing in shares is a long-term investment.”⁴

What’s lifecycle investing?

One option to consider could be a lifecycle investment strategy. This is where your super investment mix is automatically adjusted as you get older to reflect your changing tolerance for risk – from when you’re just starting out with plenty of years ahead of you in the workforce to when you’re approaching retirement and you have less time to play catch-up after a downturn.

Some ways we can help

If you’re concerned about the impact of COVID-19 on your super investments, there are practical ways to weather market volatility and stay focused on your long-term goals

If you’re closer to retirement it can be more difficult to think long term as you may have less time to make up any losses before you stop earning a regular income. 

It could also be a good idea to speak to a financial adviser, who can provide you with quality financial advice based on your current situation and future needs.

Please contact us on Phone: 07 5641 4134 if you require further assistance on this topic.

1 https://www.amp.com.au/insights/grow-my-wealth/shares-climb-a-wall-of-worry-but-is-it-sustainable
2 https://www.marketwatch.com/story/stock-market-investors-have-to-go-back-to-1929-to-find-daily-swings-this-wild-2020-04-07
3 https://www.amp.com.au/insights/grow-my-wealth/olivers-insights/five-charts-on-investing-to-keep-in-mind-in-rough-times-like-these
4 https://www.amp.com.au/insights/grow-my-wealth/why-super-and-growth-assets-like-shares-have-to-be-seen-as-long-term-investments

Source : AMP July 2020 

Important: This information is provided by AMP Life Limited. It is general information only and hasn’t taken your circumstances into account. It’s important to consider your particular circumstances and the relevant Product Disclosure Statement or Terms and Conditions, available by calling Phone: 07 5641 4134, before deciding what’s right for you.

All information in this article is subject to change without notice. Although the information is from sources considered reliable, AMP and our company do not guarantee that it is accurate or complete. You should not rely upon it and should seek professional advice before making any financial decision. Except where liability under any statute cannot be excluded, AMP and our company do not accept any liability for any resulting loss or damage of the reader or any other person. Any links have been provided for information purposes only and will take you to external websites. Note: Our company does not endorse and is not responsible for the accuracy of the contents/information contained within the linked site(s) accessible from this page.

Ensuring you have an up-to-date and valid will is a central tenet of good financial planning, so it’s a little surprising that almost half¹ of Australians don’t have one.

But how many of those without a will know what actually happens to their investments after they pass away?

When you die without a will you are said to have died ‘intestate’, a legal term that simply means without a will. The situation where a person has died without a will is called ‘intestacy’. It’s even possible to die ‘partially’ intestate, meaning you have a will that only deals with part of your estate. In that case, the bits left over after your will has been dealt with come under intestacy laws.

Unfortunately, despite the fact our federation is more than a century old, the rules surrounding intestacy differ from state to state. But at their core, their intent has remained unchanged since ancient times—to pass on assets to successors based on an agreed hierarchy of family relationships.

Generally, the closest family relationship is the spouse and that’s where the intestacy rules look first. If the deceased has no spouse, the children inherit the assets.

If you die without a spouse or children to inherit your assets, a series of rules are followed until an heir is found. First, the administrator looks for parents, then siblings, then grandparents and then various aunts and uncles depending on the state. Finally, if no-one can be found, your assets will go to the government.²

Things get complicated when there are children from multiple relationships or more than one spouse—which is possible if the deceased is in a de facto relationship while married. In those cases, assets start getting split up according to fixed formulas.

It’s tempting to think that with one spouse and children from that relationship only, your family will get your assets when you die anyway, so why go to the trouble of making a will?

One problem is the trouble and expense of administering the estate. Leaving your spouse and children with the uncertainty of having to follow fixed statutory formulas can take time and become emotionally taxing on the family.

In more complicated families or families with adult children and grandchildren, leaving no will can lead to conflict and even fallouts between relatives.

And in some cases, you may want to leave a bequest to charity or a friend. This cannot normally be done under the intestacy rules.

Remember that while a will deals with your home, your investments and the other assets you own, it cannot deal with your superannuation, which is held in trust for your retirement and must be passed on after death in very specific ways under the law.

There is some good news amid all this complexity: unlike many countries, there are no taxes on inheritance or estates in Australia. There can be tax implications in passing on super, and capital gains tax applies as usual when an asset is sold, but Australia abolished death duties in 1979. Under Australian tax law, the people who receive your assets when you’re gone generally receive them without an immediate tax bill.

And there are some clever things that a good estate plan can achieve, including the establishment of a testamentary trust, which is a trust that can look after your assets for you after you die.³

A testamentary trust lets you hold off children getting access to assets until they are a certain age or reach a life stage like getting married or completing university. It can also protect beneficiaries that might not be capable of making good financial decisions and stop your assets being caught up in a divorce or a bankruptcy among your beneficiaries.

Going through the process of creating a valid will and keeping it up to date ensures the investment wealth you spent your life accumulating passes on to the people and charities you want to have it.

The process is not difficult although it’s best done with professional advice. But it’s a small price to pay for peace of mind.

Please contact us on Phone: 07 5641 4134 if you seek further discussion on this topic.

1. https://www.tag.nsw.gov.au/wills-faqs.
2. https://www.lawaccess.nsw.gov.au
3. https://moneysmart.gov.au/wills-and-powers-of-attorney 

Written by Robin Bowerman, Head of Corporate Affairs at Vanguard.

Source : Vanguard July 2020 

Reproduced with permission of Vanguard Investments Australia Ltd

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