Retirement Planning

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Retirement Roadmap

Our Retirement Roadmap service is tailored to your unique circumstances along with the aspirations you have in life.

We start by analysing your financial situation, and then discuss your life aspirations along with all the things you want to do for yourself and your family that will require money, advice, and planning.

We then prepare detailed projections on where you are headed if you stay on the same path, and determine whether you will achieve your financial targets.

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Only Strategic Advice you'll need

After identifying any shortfall in assets, or deficiency in future cash flow, we then prepare strategic advice that provides the specific financial steps that you will need to follow to get to where you need to be at retirement.

As a real client illustration of the value provided by our Retirement Roadmap, we have set out a summary of Michael and Julie’s circumstances, and the strategic advice we provided to enable them to achieve their life aspirations.

By implementing our six strategic advice steps over the last five years of their working life they should accumulate an additional $1.8 million in wealth by retirement and have an additional $175,000 annual income throughout their retirement.

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Retirement strategy

Case Study: How we helped Michael and Julie

Michael is age 59 and is the founder and 50 per cent shareholder of a Sydney-based consulting company, while Julie, aged 54, is the administration manager of the consulting company.

They are in good health and enjoy an active lifestyle that is focused on their children and grandchildren. Financial security is important and they “hope that we have enough assets to maintain our lifestyle in retirement”.

They reside at Rose Bay, and have three investment properties and a commercial office.

Current assets

Value $
Home - Rose Bay
3,200,000
Office (50%) - Sydney CBD
1,900,000
Apartment - Darling Point
2,840,000
Apartment - Maroubra
875,000
Apartment - Avoca Beach
820,000
Bank Accounts
80,000
Equity - Business
500,000
Shares
57,460
Superannuation
583,700
Boat
300,000
Less: Mortgages
-3,470,000
Net Assets
$7,694,160

Michael has indicated that he will likely retire in five years at age 65.  At that time he would like to have paid out all debt, and have assets producing an income stream to meet their basic living needs of $20,000 per month.

Michael realises that he will have to sell his boat at retirement as the running costs will absorb too much of their cash flow should he keep it. They expect by retirement to live off their rent from the commercial office, rent from their investment properties, and drawdowns on their superannuation.

They are thinking at retirement of selling their Rose Bay home and using the proceeds to pay out the mortgages. They will then move into their Darling Point apartment, which has magnificent views of Sydney harbour.

We projected Michael and Julie’s assets out over the next five years should they continue on their current path. We estimated that once they had sold their Rose Bay home, sold their equity in the business, and used the proceeds to pay down their mortgages, that their net assets should be as follows:

projected assets

Value $
Apartment - Darling Point
3,593,500
Office (50%) - Sydney CBD
2,404,100
Apartment - Maroubra
1,107,150
Bank Accounts
70,000
Shares
78,700
Superannuation
875,930
Boat
250,000
Less: Mortgages
-352,670
Net Assets
$8,026,710

At retirement their main income-producing assets will be the Sydney office, the Maroubra unit and their superannuation. We anticipate that under Michael and Julie’s current retirement plan their cash flow should be as follows:

projected Cash Flow

$ pa
Superannuation Pension
43,740
Net Rent - Sydney Office
75,600
Net Rent - Maroubra
12,368
Bank Interest
1,500
Less: Cost of Living
-250,000
          Mortgages
-40,724
Cash Flow Deficiency
-$157,516

Our Solution

Despite accumulating significant assets by their retirement in five years, they will not produce the income that they require to maintain their current standard of living.

In fact, we anticipate that they will have a significant shortfall of approximately $13,000 per month that will only worsen as the years progress.

We prepared a Retirement Roadmap that provided seven-step strategic advice for them to implement over the next five years. The advice focused on paying down debt and increasing super contributions.

With the same asset growth and return assumptions, through our strategic advice we project that they should accumulate almost $10 million in unencumbered assets as follows:

enhanced assets

Value $
Apartment - Darling Point
3,593,500
Office (50%) - Sydney CBD
2,404,100
Bank Accounts
1,586,126
Superannuation
1,997,598
Boat
250,000
Less: Mortgages
0
Net Assets
$9,831,324

With their enhanced strategy, their superannuation should accumulate to $2 million at retirement. Despite drawing down more than $90,000 in the first five years of retirement, with an additional $1m contributed from their bank accounts, they should still have a balance of more than $2.8m in superannuation when Julie reaches age 65.

By following our strategic advice over the next five years, we estimate that their cash flow will be enhanced as follows:

enhanced cash flow

$ pa
Superannuation Pension
170,000
Net Rent - Sydney Office
82,416
Bank Interest
14,250
Less: Cost of Living
-250,000
Cash Flow Surplus
$16,666

The Value of Advice

Their superannuation pensions will be tax free and by utilising their family trust they should have no tax on their other income.

By following our strategic advice, Michael and Julie should have a monthly income stream of $22,000 to provide for their basic living needs.

Michael and Julie are relieved that they will be able to maintain their existing lifestyle throughout their retirement. Michael is also very happy that he will be able to continue to afford to enjoy his boat for many years to come.

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