Case Studies

Planning For Retirement

 

Goal: Aim to retire by 65 years old with $1.5 million in retirement savings

 
A couple in their late 40

 

Client Details:

Mr Smith 55 years of age

Mrs Smith 54 years of age

Their current assets are as follows:


 

 
 
NameAgeSuperannuationPer annum earnings
Mr. Smith55$ 155,000$90,000
Mrs.Smith54$140,000$65,000
House Worth$760 000  
Current Debt$100,000  

The Challenge

On current projections, their retirement savings will be $500,000 short of what they need to retire comfortably.

They want to downsize their house for maintenance and cost purposes. On current repayments, their existing house will be debt free within a 10-year period.

 

The Solution

  1. Salary sacrifice extra $5000 per annum each into superannuation. Over ten years this will total an extra $100,000 being contributed to superannuation.
  2. Buy retirement house now.

Clients spend $800,000 on proposed retirement property straight away (borrowing $800,000).

If we assume that properties will grow by 5% per annum over the next ten years, their current house will be worth $ 1, 237 960 in 10 years’ time.

By the time they retire, they can sell their own house and pay off the loan on the retirement home. They will have excess cash of $477, 960 after paying off their retirement home.

 

Conclusion

By salary sacrificing into superannuation and having the extra cash from the sale of their property, there will have well more than the extra $500,000 they needed to top up their retirement savings and retire comfortably.

Winding Up Your Business

Background:

Arthur and Mary wanted to wind up their company

 
The Challenge

The company which had retained earnings of &270,000 which they wanted to wind up. The company had no franking credits so if they paid out the retained earnings as unfranked dividends they would each receive $135 000 as taxable income. The tax on that amount would have been approx.. $40 250 each.

The Solution

Financial Advisors from Suttie Financial Group advised that if they liquidated the company they would have disposed of their shares in the company. This meant that the disposal would become a half rate of capital gain. Therefore their respective taxable incomes became $67 500 each. Each of them was then liable to pay $14 805.

Good advice does save tax dollars.

Income Protection

Background:

Alex ran a small business but had no income protection. 

The Challenge

The business had a number of overheads including loans which needed to be met monthly. Under a normal income protection policy he would have received enough income to meet his household expenses but the business would not be able to pay its overheads.

 

The Solution

Financial Advisors from Suttie Financial Group informed Alex that under income protection you can also take out a separate business insurance policy to cover your overheads for 12 months. The cost for Alex was cheaper than his income protection policy and it ensured that he could meet his next 12 months business overheads if he was unable to work.

Please note that everyone circumstances are different. The information provided through out the “www.suttiefinancialgroup.com.au” website is of general nature and should not be taken as tailored advice.

Disclaimer

Richard E Suttie Pty. Ltd. Trading as Suttie Financial Group.

© Suttie Financial Group 2019

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