Happy New Year! The start of a new year is an ideal time to ensure your finances are organised and up to date. The major areas we recommend revising are:

• Superannuation
• Insurance
• Wills and enduring powers of attorney

Organising your Superannuation:

• Find all your lost super: There are millions of unclaimed dollars as Australians change jobs and forget to take their super with them. The ATO has SuperSeeker, which is a tool that will help you look for your lost and unclaimed super and provide you with a list of possible matches. Superseeker is free, and found on the ATO website.

• Consolidating your super: As you change jobs, it can be easy to forget about super and open up new accounts with each employer (with them all charging fees!). Think about what fund is best for you, and then consolidate them. Your financial planner will be able to assist you with this.

• Contributions and tax concessions: The government offers a range of attractive tax concessions for you to take advantage of. However there are caps to be aware of on these, which can cost you money rather than saving it if you exceed them.

• Salary sacrificing: Salary sacrificing is a tax-effective way of contributing to your super. Because you only pay income tax on your take-home pay, salary sacrificed amounts are not taxable in your hands. If you’re in a high tax bracket, this is an opportunity to achieve significant savings.

• Government co-contributions: To encourage you to save for retirement, the government will match certain personal super contributions up to a limit. If you do qualify for the government co-contribution, it could make a dramatic difference in your retirement savings over time.

• Consider a Self Managed Super Fund: More and more Australians are taking up this retirement savings option. SMSFs give you greater control in the ability to choose your own strategy and investments, and you can enjoy the same tax benefits as you would with superannuation via regular superannuation funds. There are several things to consider (your assets, administration, record-keeping, liabilities of trustees etc) before jumping into this, if you’re interested, speak to your financial planner.

Organising Your Insurance:

It is important to have adequate insurance cover, and it’s possible to take out insurance through your superannuation fund. There are three main reasons why taking out insurance through a superannuation fund can be attractive:

• It is usually cheaper because the fund is able to buy in bulk and negotiate a lower rate.

• It is tax-effective since the premiums are paid for out of contributions made by your employer or from personal contributions that generate either a direct tax deduction (for the self-employed) or are paid from pre-tax income, in the case of salary sacrifice contributions.

• Basic cover often doesn't require a medical check, with some funds also providing additional cover without the need for a medical.

 

The most common insurance options offered are:

• Life insurance: This provides a lump-sum payout, in addition to your super balance, if you die while a member of the fund.

• Total and permanent disability insurance: This provides a lump-sum payout if you become totally and permanently disabled.

• Income protection insurance: This provides a replacement income of up to 75% of your income if you cannot work for an extended period of time

Organising Your Wills:

Have there been any significant changes in your life lately? Bought a house, had kids, remarried etc? You need to update your will to reflect these changes. Also, it’s good practice to review them periodically to make sure they’re still appropriate for you.

• Keep the information about your property and the debts you owe current. If you are organised, you will be able to have a plan in place that is ready for your family immediately following your death. You may be able to save money now as well as save time and money for your family in the future. In addition, you will relieve the family from having to make decisions after your death.

• Implement an Enduring Power of Attorney. An EPA is a legal agreement that enables a person to appoint a trusted person - or people - to make financial and property decisions on their behalf. An EPA is an agreement made by choice, that can be executed by anyone over the age of 18, who has full legal capacity.

• Contrary to what most people think, wills do not cover superannuation. Superannuation can be one of the largest assets people leave behind when they die and can form a significant part of your beneficiaries’ inheritance. Your superannuation fund can pay your death benefit to your partner, any of your dependants or your estate, at its discretion. Just as you nominate beneficiaries in your will, you need to do the same with your super or pension fund by instructing the Trustee of your fund accordingly. This is done by completing a binding death benefit nomination.

 

If you would like to know more about any of these topics, speak to your financial planner. They will find the best strategy for you personally and guide you through the process. If you do not have a financial planner, we recommend Total Advice Partners – and their first consultation is free! You can contact Linda of our office on 5413 9300 to book an appointment.