The 5 Pillars of Wealth
As a financial concierge, I’m with my clients for the long haul. I don’t just help them build and run profitable businesses. I also ensure they enjoy the fruits of their labour. Which means planning for a luxe retirement, too.
These days, many folk simply close their eyes and trust their superannuation to see them through their sunset years. Unless they’ve enjoyed high-paying jobs throughout their career, they’ll probably rely on a part-pension to maintain a decent standard of living. But if you live well into your eighties, you may run out of super. You’re required to draw down a minimum percentage of your balance each year, and you want to maintain a comfortable lifestyle.
As we age, our medical needs increase. If your health fails and all you have is the Commonwealth Age Pension, you’ll be placed in care. If you’re a multi-millionaire, you should have the cash you need to choose the best provider. But middle-class Australians are caught between a rock and a hard place. Many will need to sell their home to fund a bed in aged care.
My clients leave nothing to chance. They know that planning for retirement is their responsibility. The sooner they begin, the better off they’ll be after they hang up their boots. My timeframe for building wealth is thirty years or more. And I’ve based my clients’ wealth creation strategies on five solid pillars:
- Their family home
- Superannuation
- The value of their business
- Property investments
- And one final surprise …
Let’s begin with the family home.
The Family Home
Most Australians feel a sentimental attachment to their home. It provides a sense of security and connection to community that far exceeds its financial value. But it’s also their major financial asset. So it plays an essential role in wealth creation.
With house values skyrocketing after COVID, if you sell the family home you’ll likely pocket a decent wad of cash, tax free. Exemptions apply, of course, and the ATO is only too willing to help you self-assess your capital gains tax status. Running a business from home may complicate things, for example.
But if you sell your home, you still need a place to live. Which either means renting, buying a caravan to live out your grey nomad dreams, or buying another house in a rising market. So the financial value in your home only matters if you wish to borrow against your mortgage, or if you’re downsizing. We’ll check both options later. In the meantime, owning your home outright is the bedrock of a secure retirement.
But to live the retirement of your dreams, you’ll need a few other tricks up your sleeve. The first of these is superannuation.
Then… There’s Superannuation
Superannuation has been compulsory for workers since 1992. If you’re smart, you’ve been salting as much cash as you can spare into your super for as long as possible. Despite the odd financial shock, your super balance will far exceed inflation—unless you’ve chosen a dud scheme to invest in.
Australia’s superannuation laws are complex, so you need a skilled adviser to help you navigate them. I’ll keep you compliant, and I’ll track the performance of your fund as part of your financial portfolio. I’ll factor your fund’s performance into your tax planning while you’re running your business, and while you’re kicking back in retirement. Wherever you are in life, I guarantee to get you the best possible tax breaks on your income.
One caveat: share trading requires specialised knowledge. If you want to trade shares through your Self-Managed Super Fund, I’ll introduce you to experts who can wring the maximum performance from your investment. That’s all part of the service I offer as your financial concierge.
Speaking of super, if you decide to sell the family home and move into something more compact and suited to your needs, you and your spouse can currently contribute up to $300,000 to your superannuation accounts. That’s a decent boost which turns your family home into a savings bank. Again, conditions apply, so talk with me before you take the leap.
Are your family home and a decent superannuation balance enough to underwrite the retirement you deserve? Blunt answer: no. Next time, we’ll look at options for turbocharging your wealth. They could be the difference between drinking homebrew and drinking Moët.