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AM I BETTER OFF BUYING INSURANCE THROUGH MY SUPER?

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When it comes to arranging insurance it’s important to decide what types of insurance are available to you and what you’ll need for your particular life circumstances. From here you’ll need to consider whether you should keep it inside your super fund or set it up separately.

What are the benefits of insurance through super?

1. Get more for less

It can be cost effective to buy insurance through super. That doesn’t mean you won’t find cheaper cover outside your super fund. But it’s likely you’ll be better off because tax benefits mean you could end up paying less overall and group buying power—which normally comes with insurance through super—often gives you more for less.

2. Boost cashflow

In super you can pay for your insurance using before-tax money rather than dipping into your take-home pay, which can also be a tax-effective way to pay your premiums. Or, you can simply have the premiums deducted from your existing account balance. Be sure to keep an eye on your super balance though—less super may affect your lifestyle in retirement.

3. Access government help

You could make after-tax contributions to your super and use these to pay for your insurance. If you do, you may be eligible for a government co-contribution.

4. Be covered more easily

You’ll usually be granted insurance cover automatically when you buy through super. Outside of super you may have to submit an application, undergo medical examinations and wait for approval.

What are some of the downsides?

1. Tax on claims

Depending on your circumstances, you may pay tax on disability claim payments when your insurance is held through super. And certain beneficiaries may be subject to tax on death benefit claims they receive.

2. Limited beneficiaries

Payments (following death) can only be paid to superannuation dependents. If you have insurance outside of super there are generally no restrictions (unless your insurer specifies otherwise).

3. Longer timing on payments

When it comes to payments for some policies, including life insurance, total and permanent disablement and temporary salary continuance, the money will normally be paid by the insurer to the super fund first. The trustees can then pass it to you or your beneficiaries in accordance with the fund’s rules and the Superannuation Industry Supervision Act—this means payments can take longer.

4. Restricted types of cover

Cover provided through super can be more limited than a policy held outside super. For example, trauma cover is generally not available through super, but funds like those offered by AMP make it easy to link the cover you have inside and outside super.

What now?

After you’ve considered the pros and cons of holding insurance inside super, you need to determine the level of cover you need. At Tailored Lifetime Solutions we specialise in helping people work out the right amount of cover and type of insurance that best meets their individual needs. Call us on (03) 9851 0300 to arrange a meeting with one of your financial planners.

Article originally published by AMP LTD.

2015-16 FEDERAL BUDGET – WHAT DOES IT MEAN FOR YOU?

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The Federal Budget is in and while it may not be as contentious as last year’s there are still some proposed changes that could affect you. Whether you’re a retiree, a family with young children, expecting a new baby or running a small business the budget may have an impact on you.

The technical specialists at AMP have put together a brief discussion on the proposed changes and how they affect families on a practical day-to-day level.

At Tailored Lifetime Solutions we specialise in helping people achieve their financial goals in an ever changing environment. If you have any questions about how the proposed Federal Budget changes may impact your financial goals call us on 03 9851 0300 to arrange a meeting with one of our Financial Planners.

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ACCESSING YOU SUPER

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For the average Australian, Superannuation will be the largest asset they have besides their own home. But do you know what your options are when accessing your superannuation? At Tailored Lifetime Solutions our Financial Planners specialise in helping people make the most out of their superannuation by guiding them through the ins and outs of super. To help you get started, AMP has put together a short video outlining some of the options available when accessing your superannuation. If you want to know more about superannuation or if you want help building a plan to achieve your goals, call us today on (03) 9851 0300 to arrange a meeting with one of our Financial Planners.

GREYING, WORKING AND CONTRIBUTING

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More of us a working longer and taking a less traditional approach to retirement. Continuing to build up super or spend less of it as we get older can make a big difference for you in retirement. The ageing of the population – as outlined in the latest intergenerational report – together with a growing trend to work past traditional retirement ages inevitably means more of us will want to contribute to super for longer. At Tailored Lifetime Solutions our financial planners specialise in helping people reach their retirement goals

Perhaps you are among the many choosing to extend their working lives into older ages by winding-down their working hours as employees or becoming owner/operators of small businesses.

Certainly, numerous people decide to keep working into their sixties and beyond for the satisfaction that work may give them. Then, of course, there are the financial benefits.

More years in the workforce provides an opportunity to save more for what will be a shorter and therefore less costly retirement. And obviously, there will be more money to meet day-to-day living expenses.

Australia’s changing demographics means more people will need to understand the rules about contributing to super beyond 65 and about whether their personal super contributions are deductible.

As simply explained in the Australian Superannuation Handbook, published by Thomson Reuters, a super fund can accept:

  • Compulsory contributions from an employer regardless of an employee’s age.
  • Personal and salary-sacrificed contributions from members up to 74 years of age. (Beyond 65 years, members must have paid work for at least 40 hours over 30 consecutive days during a financial year. This is known as the “work test”.)

A key question for someone who is winding-down their working life by operating a small business in their own name is whether their personal contributions are deductible.

Superannuation commentator Trish Power has written a valuable article – Who can make tax-deductible contributions? – in the latest issue of online investment newsletter Cuffelinks. (Power publishes the SuperGuide online newsletter.)

As Power explains, a person can usually claim a deduction for personal contributions up to the concessional contributions cap if they are self-employed or an employee who earns less than 10 per cent of their assessable income (salary-sacrificed super and reportable fringe benefits) as an employee.

A plan to extend your working life can be made more attractive if your super contributions are deductible.

If you would like to talk to one of our Financial Planners about your retirement goals call us on 03 9851 0300 to arrange a meeting.

Article originally published by Vanguard Investments Australia.

SEVEN STEPS TO CUTTING DEBT

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You enjoy a challenge – right? Then step towards financial fitness by cutting your debts this year.

  1. Understand and embrace your debt. Firstly, work out where and what type of debt you have and start to plan how you’re going to cut it down. For example, if you roll multiple debts into one, you may save on fees and interest rates. AMPs education module Good debt bad debt can help you figure this out.
  2. Create a budget. Work out your daily, weekly and monthly spending. There are various tools available to help you do this. Check out MoneyBrilliant to organise your finances online, try ASIC’s TrackMySPEND app or the AMP Budget Planner.
  3. Reframe your thoughts. Think about money in a new way. Tell yourself how proud you’ll be if another $500 comes off your credit card debt instead of going towards new clothes. Make your lunch: buying your lunch every day tends to cost more than making it. So try making your lunch for some extra savings that can then put toward paying off debt.
  4. Work actively with your money. Set up separate accounts for debt payments and monthly bills. Consider using cash instead of EFTPOS – this may make you realise how much money you are actually spending!
  5. Look for larger debt cuts. Can you drive a smaller car so you’re paying less in fuel? Can you use public transport instead of having a car? Can you find a cheaper place to rent? Look at ways you can cut debt in more substantial chunks, as this will mean paying less interest sooner.
  6. Earn some more cash. What about a second job on the weekends? Or, selling your unused goods on eBay or at your local markets.
  7. Reward your progress. Update your budget each week – and reward yourself with a low-cost treat.

Use these steps and you’ll be on the way to reducing your debt in no time. Review your situation in a couple of months – if you’re not progressing as quickly as you’d like, then call Tailored Lifetime Solutions on (03) 9851 0300. Our Financial Planners are specialist in budgeting and will work with you to get you back on track.

SMSF MISTAKES TO AVOID

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It pays to avoid making mistakes when running your own superannuation fund. The government imposes severe penalties on self-managed super funds (SMSFs) that breach the strict legislation governing SMSFs.

The Australian Taxation Office (ATO) has identified the four most common breaches made by SMSFs and they’re outlined in the table below.

One of the most common breaches relates to in-house assets and the sole purpose test. Every SMSF must comply with the sole purpose test. That means the fund must be run for the sole purpose of providing superannuation benefits for members in retirement (or for member’s dependants if the member dies before retirement).

That means, any asset—for example, artwork or an investment property—purchased by an SMSF cannot be used by any member or his/her family in any way before retirement.

Who can help me meet my SMSF obligations?

It can be challenging to ensure that every aspect relating to the running of your SMSF complies with superannuation law.

If you’d like to speak with us about the ways we can help you manage your fund’s administration and compliance obligations, call (03) 9851 0300 to speak to one of our SMSF specialists.

Article originally published by AMP Ltd.

SOCIALLY RESPONSIBLE INVESTING

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You can invest your super in an ethical way without affecting your bottom line.

Socially responsible investing has come a long way over the past 15 years or so. It used to be a marginal activity, confined to government agencies and activists, and focused more on ‘negative screening’ by excluding companies that take part in activities like arms, tobacco, pornography, alcohol and gambling. There was also the perception that it could negatively affect your bottom line.

Now socially responsible investing is increasingly common as ordinary investors realise the power they hold to influence companies for the better. As such, it’s moving towards ‘positive screening’ with investment in companies whose products and services have a positive and sustainable effect on society and the environment. What’s more, investors are realising that socially responsible investments can perform just as well as other types of investment. As Peter Shergold, AMP Limited Director, asserts “[i]f you look at most socially responsible funds through the Global Financial Crisis and beyond, they’ve actually done pretty well compared to other funds.”

So you may be able to more closely align your investment strategy with your ethical beliefs without affecting the performance of your super. In addition, there are links between an organisation’s environmental and social impact, the quality of its corporate governance, and its long-term business success.

What is socially responsible investing today?

Socially responsible investing takes environmental, social, ethical or governance considerations into account. It can involve investing in businesses and funds engaged in solving challenges such as:

  • helping the working poor buy a home through microlending
  • developing sustainable agriculture in developing countries
  • building energy-efficient infrastructure like wind farms.

AMP Capital—making a difference

At AMP we like to talk about Environmental, Social and Corporate Governance (ESG) investing. And the issues are as important to us as they are to you.

As Australia’s largest responsible investment manager, our AMP Capital investment experts have over a decade of experience integrating ESG factors into investment decisions. A deeper understanding of ESG factors provides greater insight into areas of potential risk and opportunity that can impact the value, performance and reputation of the investments we make on your behalf.

Back in 2007 we were among the first companies to sign on to the Principles for Responsible Investment. We are committed to extending ESG integration across our mainstream investment activities.

So you can rest assured we are working to hold the companies in which your money is invested to account.

Take control of your super

If you want to make sure your money is invested in a way you are comfortable with, you should ask the hard questions. Remember, it’s your money. So you get to decide how it’s invested. And at Tailored Lifetime Solutions we can help you take control of your super and own your tomorrow.

If you’d like to know more, call us on (03) 9851 0300 to talk to one of our financial planners.

Article originally published by AMP Ltd

 

WILL YOU HAVE ENOUGH TO RETIRE ON?

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Research shows Australians’ savings rates are among the worst in the world.

The global survey of 16,000 showed Australians expect their retirement to last an average of 23 years, but their savings and investments are on track to run dry within 10 years, making it the largest gap in Asia and the fourth largest globally.

The research also revealed more than half of the nation has never saved specifically for retirement outside of compulsory superannuation.

Globally, an average of 39 per cent of people have not saved or are planning to save for retirement, compared to 53 per cent in Australia.

With wage growth in Australia now slowing to 2.6 per cent per annum, the lowest rate of growth since 1998, many Australians were struggling to afford retirement.

One in six people believe they will never be in a financial position to fully retire.

The research found more than a third of retirees felt their preparation was insufficient and half feel they should have started saving at age 30.