Superannuation

5 Ways To Make The Same Money As Men

A man is not a plan, but they enjoy higher salaries now and more wealth later. To be precise, 17.5 per cent a year higher and $1 million over a lifetime more (the estimated dollar detriment for women who are in their 30s and 40s today).

RELATED: Helen Mirren: ‘Women Are Still Toddlers In This Modern World’

It certainly doesn’t help that females are still the more likely sex to take career/pay breaks to raise kids.

Bottom line: the system is dreadfully biased against women… so it’s time to man-up your money plan. Here are five easy ways to ensure we hit the same financial heights.

1. DON’T be scared to go for a pay rise – back yourself with your boss (your partner would)

Women are notoriously shy about asking for the salary we deserve, often because we can’t quite accept we deserve the job in the first place. This is the so-called, so-common ‘imposter’ syndrome. I’m betting you do deserve it – your employer clearly thinks so – and if you put a calm and convincing case for extra cash (including evidence of your contribution), it will be granted (even if it takes a while).

2. DON’T trust super – it will fail you unless you pay in more before and after children

Super has only been compulsory since 1992 but already women are retiring with less than half the balances of men because it is earnings-based. Indeed, super is actually sabotaging us: it’s lulled us into the false belief that a comfortable retirement is assured. Far from it, but you should avert disaster if you make even small extra contributions in periods when you are working and any possible when you are not (check out the free money available via the co-contribution scheme and tax incentives for spouse contributions). The early years are crucial for compounding.

3. DON’T trust your partner – to always provide for you, that is. For many reasons, he might not be able to

Not to get too grim, but death, divorce, dire money decisions… they could all leave you broke. Besides, what a responsibility for a man to shoulder your financial future too on the basis of out-dated gender roles. He may be clueless! Get across the basics of your money life: know your accounts (and be sure you can access them), your insurances (ensure they are enough) and your investments (check they are suitable). Come what may you need to be protected.

4. DON’T just think about your family – you owe it to them to also look after your future

‘The woman’s money is the family’s money, the man’s money is his money,” a participant in a recent RMIT University study of females and finance said succinctly… and scarily. And another added: ‘It’s a mother’s job to go without.” No, no, no. This is the attitude at the root of our ultimate income inferiority. If you need further motivation: what if your kids came to you for money as adults and you couldn’t help?

5. DO dare to dream – the situation is serious but also easily fixed if you simply make prosperity a priority

You don’t amass money for money’s sake. You do it to have options, to have opportunities. So decide exactly what it is you want from LIFE. Crystallise these precious aspirations and the process of achieving them – and the small sacrifices it may take along the way – will seem so worth it.

Nicole is the founder of TheMoneyMentorWay.com and developer of the 12-Step Prosperity Plan, an achievable and even enjoyable blueprint to take Aussies from worry to wealthy. Nicole’s writing has earned her top personal finance awards in both the United Kingdom and Australia. Her career credits include founding and editing The Australian Financial Review’s Smart Investor magazine, and reporting and editing for the magazine arm of the UK’s Financial Times. Author, qualified financial adviser and Fairfax’s Money Matters columnist for the last decade, Nicole is a regular on television and radio. She talks money without the mumbo jumbo. Follow her on Twitter at @NicolePedMcK.

September 16, 2015

6 Tips You Can Do Today To Retire Comfortably

There’s no shortage of advice for ways to retire comfortably, yet actually setting yourself up for it can be a different story. For many, the idea of it is pushed to the back of our minds while others a little more prepared. Believe it or not, building wealth to retire financially comfortable is actually simpler than we think. The challenge doesn’t lie in the knowledge – but instead translating that knowledge into results that are meaningful.

Retirement decisions that have an impact on you down the track start early with lifestyle choices that can make your retirement more satisfying. Some want to spend their days playing golf through retirement, relaxing by the pool, traveling around the globe or adventure treks through the mountains. What does a comfortable retirement mean to you? Whether it consists of golf club memberships, living in your dream home or luxury vacations we check out some tips for creating a comfortable retirement.

1. Start thinking about retirement when you start saving

As farfetched as it may sound, it pays to start thinking about your retirement when you get your first start saving. It’s not the easiest thing to do when you’re thinking about your immediate goals but as start to make major financial decisions – a car or home – you should be taking into account how much money you will need for retirement.

Although employees put a percentage away in preparation for this, it’s not always enough for your future needs. The more of your income you set aside for retirement at a young age, the easier it’ll be to retire comfortably. Saving early ensures your retirement benefits from the value of compound interest. Whether you have a pension fund or a self-managed superfund, it does pay to take control of your SMSF investments from the very beginning to ensure your money in growing as quickly as possible. This article from Blueprint Planning provides a great resource about how to manage your super-fund.

2. Have a plan and make goals

The first big mistake people make when it comes to retirement is not having a written plan and retirement strategy for their financial security. The success of your plan results from the small goals and decisions you make each day.

A plan is one thing though – it’s important you create a realistic one with goals that are going to get you there. If you’re currently living a lavish lifestyle drenched in champagne, you’re probably not going to be happy with a beer budget come retirement day.

3. The age you retire matters

How many years do your retirement savings need to provide enough income for? Underestimating life expectancy is another common mistake people can make. Nowadays, it can be safe to assume that at least one spouse will leave to the age of 90 or beyond whereas the life expectancy years twenty years ago was only mid 70’s.

Retirees tend to want to settle down around the age of 62, but there is usually a big difference in the age people say they want to retire to when they actually do.  The decision to retire is sometimes made for superficial reasons, like not being happy in your job. Retiring on impulse isn’t a smart move – it’s much more fulfilling to retire toward a life that excites you rather than running from one that didn’t. Always have an exit strategy before you leave to help you retire comfortably.

4. Make your money hard to reach

When your savings are readily available, it makes it an easy solution to the curve balls life will throw at you. The retirement fund soon becomes an “it’s an emergency fund” and before you know it, there’s not much left for you to rely on. Whilst discipline plays a huge factor in this, even the most self-controlled of us are guilty of digging in to the savings when things get tough.

There’s always going to be a good excuse to do it too. Borrowing from your savings account when you’ve lost your job, just to get you by until you find something else – but, it all adds up. Thus, to be a smart investor (and your retirement fund is an investment) it’s vital to put those dollars into a hard-to-access, tax deferred retirement plan.

5. Don’t forget about insurance

Taking out insurance to protect your retirement plan is about applying risk management principals to your personal finances. Types of insurance that should be considered include life insurance, health insurance and long-term care – and can mean the difference between a comfortable retirement and years of heartache.

Risk management is an essential principal of planning for your retirement to insure away all threats you can’t afford to lose. It can play a major role in estate planning, useful for someone who needs home care and makes a dramatic difference in those retirement years. The alternative is not acceptable – and that’s to put your lifetime of hard work at risk for one mistake, accident or health issue.

6. Get a life – an exciting one

When we think about retirement, most of us think about the money we will need. That’s because all retirement dreams need money – to a degree. But there’s more to a comfortable and happy retirement than just money – what about relationships, health and a life that engages your interest and fulfils you?

Money is the means to a good life, not the end so make sure your plan includes investing time into relationships, your heath and things that nurture and build you. Once your financial goals are in place and your retirement plan filled with motivating interests, you’re bound to be one step closer to a comfortable retirement – in all areas!

By Jayde Ferguson, a freelance writer based in Western Australia. Connect with her on Google+ today.

September 24, 2014

The Best SMSF Advice You Can Be Given in Your 30s

As you near retirement, investment advice is important with more retirees looking toward SMSFs for help. Self-managed super funds can be managed without much hassle if you have the right information. When you are in charge of your own investment choices, you’re more likely to be more profitable and more engaged in the process.

The latest research shows SMSF trustees are getting younger, with nearly a third between 35 and 44 years. Thus, it’s absolutely crucial you’re armed with the best advice in preparation for a successful retirement. We check out a few vital tips below.

Understand your role in SMSFs

The purpose of your SMSF is to ensure that everyone gets an adequate retirement. Professionals should be used because it is difficult for a novice to understand all of the tax laws to protect your assets. The sole purpose test must be passed in order to receive all the full tax concessions that are available to SMSFs.

Diversification, risks, and return on your assets should be discussed according to your members’ needs and circumstances. Many people will re-evaluate their SMSF assets near retirement age and may add to their portfolio a more low risk and low reward investment.

Know your duties as a trustee and the governing bodies

For instance, if you’re setting up an SMSF, you should consider devising an investment strategy. The strategy should include how to accept contributions and pay the benefits.

The authority of SMSFs is the Australian Taxation Office. It enforces the majority of regulations and restrictions that are related to an investment strategy. When you are a trustee, you have full control over your retirement investments. You can choose to invest in shares, property, art, or collectables.

Know how to keep your fund compliant 

Ensure that you’re in compliance with all tax laws and super laws. This will also protect your members’ assets. Again, the sole purpose test must be passed to get full tax concessions.

If anyone is under the age of 60, the amount of tax deductible contributions that can be made without accruing a penalty is $25,000. If you’re over the age of 60, the maximum amount is $35,000. Many people make a salary sacrifice to make the contributions. Check with your employment agreement to determine what the maximum amount allowed is at this point. In general, you need to work for at least 40 hours for 30 consecutive days before you can make non-deductible contributions and tax deductible contributions to a super.

Know how to make investment decisions

In general, your investment decisions should always be evaluated according to the increasing returns on your fund. Experts suggest that you change your SMSF asset to include more low reward and low risk investments. These are the basics you must know before investing in these types of products.

Be aware of personal tax deductions to superannuation

Self-employed people and investors can receive less than 10 percent of their income deducted for superannuation. Always notify the fund and tell them how much you’re eligible to claim every year. Always save your paperwork for your accountant or tax agent.

Any tax deductions that should be taken from a personal savings or an inheritance can come from your personal income. You can also transfer personal investments, an inheritance, or profit from the sale of investments. Keep in mind that you can contribute up to $150,000 after taxes in 2014. If you’re under 65, you can contribute up to $450,000 in a three year period. A tax penalty may be assessed if the contribution caps are exceeded. The penalty can be as high as 46.5 percent.

After July 1, 2014, the cap will increase to $180,000, and $540,000 can be contributed over a fixed period of three years. A professional adviser can help you if you do not understand the process or if you meet the upper requirements for contribution.

Be aware of government co-contribution

If your adjusted income is less than $48,516, you may be eligible for the government co-contribution. If you make super contributions before the end of the financial year, you can consider this feature. The government will contribute 50 cents to your superannuation for every dollar that you contribute. The maximum government contribution is $500.

Know the amount of taxation on superannuation pensions

Keep in mind that the superannuation fund will be taxed at 15 percent rather than being tax free. You should be aware of these taxes to ensure that you are taxed in the appropriate bracket. When you turn 60, the lump sums that are taken from the superannuation are not taxable. Thus, any funds removed before the age of 60 will be taxed. Keep in mind that no tax is payable on amounts up to $180,000.

SMSF asset valuations

Assets present in your SMSF must be valued in a financial year. The assets in SMSF need to be valued every financial year. Property, artwork, and unlisted investments are recorded in your financial statements to ensure that your investments are sound.

By Jayde Ferguson, a freelance writer based in Western Australia. Connect with her on Google+ today.

September 23, 2014

10 Super Terms Every Woman Should Know

Is one of your resolutions to get serious about your savings? If not, it should be! To help you understand superannuation, Crystal Wealth Partners director John McIlroy explains the top 10 super terms to help your retirement and investment choices.

1. Default option
Refers generally to the investment option you are given when you have your super money paid into an industry fund or retail fund and you decide not to make a specific investment choice.

2. Industry fund
These were established primarily to provide benefits for employees engaged in a particular industry (e.g. building industry).  These funds are designed to enable individuals who frequently change jobs within an industry, or have more than one employer within the same industry, to maintain all of their superannuation benefits within the one superannuation fund. Many of these funds have become like retail funds, which means that anyone can be a member, rather than just employees working in a particular industry. Historically, industry funds have provided a low-cost super option with limited investment choices but many are now offering a wider range of investment options.

3. MySuper
This is the name given to a new range of simple super accounts that are low-cost and provide limited investment options. There are MySuper rules which any super fund needs to meet to be classified as a MySuper account. Any fund, industry, retail or corporate super fund can provide MySuper accounts.

4. Preservation
To ensure that superannuation benefits are used for the primary purpose of the provision of benefits in retirement, the government has imposed provisions that restrict access to amounts held within the superannuation system.  These provisions are generally referred to as the ‘preservation rules’. Your age determines when you are able to access your super benefits and most younger people are able to access super benefits from age 60. Older people can access their super from age 55.

5. Retail fund
These are generally superannuation funds, which are ‘open’ for membership to the general public. They are mainly provided by larger financial institutions such as banks and life insurance companies and what they offer can vary considerably from low cost/low choice options to more complex structures which are sometimes referred to as wrap platforms.

6. Rollover
If you are entitled to a superannuation benefit you can, regardless of age, transfer all or part of the payment to another superannuation fund. This can occur simply to amalgamate multiple super accounts into one fund while working or can it occur upon retirement to consolidate savings.

7. Salary sacrifice
This is another type of super contribution but rather than being compulsory, an employee voluntarily elects to direct salary or bonuses into super rather than receiving cash. This may provide some tax benefits to the employee over receiving cash remuneration.

8. SMSF
Self managed superannuation funds are one of the choices you have for managing your super, along with industry funds and retail funds. SMSFs are often also referred to as DIY superannuation funds. They are super funds with fewer than less than members that satisfy specific control and membership conditions. As the name suggests you can invest your own super through this type of fund, but you have to comply with certain rules. You can also appoint advisers to help you.

9. Super Guarantee
Super guarantee or SG refers to the prescribed minimum level of superannuation contributions required under the Superannuation Guarantee (Administration) Act 1992 to be made by employers on behalf of their employees. Also referred to as compulsory super, these contributions are currently at a prescribed level of 9.25 per cent of salary or wages. Most employees have the choice of having these contributions directed to a retail fund, industry fund or SMSF.

10. Superannuation pension
A pension payable from a superannuation fund which is usually provided by way of monthly payments. There are various types of superannuation pensions available and they are an alternative to taking super benefits as a lump sum at retirement.

Crystal Wealth Partners is a privately owned boutique financial advisory and investment management firm specialising in delivery of services to high net worth individuals and family offices.

What are your financial goals for 2014?

January 8, 2014