Transition To Retirement – A Case Study

Transition To Retirement – A Case Study

Jamie McIntyre - March 10, 2017

I have been fortunate to meet and work with some great people. Often, they have come to me through a referral, and want to retire or plan to retire in the next five to ten years, but they have no idea how and even if they can afford it.

Usually, there is a superannuation account, or one primary account and a secondary smaller account from the non-working partner that they have started to pay attention to in the last ten years. It isn’t enough to support two people from age 67 to well past the late 80’s (which marks the start of the next chapter again).

transition to retirement - a case study

Here is a recent real-life example of a solution we developed for a client:

Mr and Mrs X came to see me when they were 59 years old, wanting to retire at 67. They had a mortgage and a combined income of $88,000 per year and combined superannuation balance of $280,000. They were not sure if and how they could plan to not go to work.

As a first step to help them, we defined some clear goals of what we needed to achieve:

  1. Pay off all debts.
  2. Save for comfortable retirement with $50,000 per annum income required.
  3. Be in a position to purchase another vehicle when debt repaid.
  4. Have peace of mind that they had a clear plan for their future.

The first step was developing a spending plan to change the behaviour and attitude towards current spending. I say spending plan, as it is unrealistic not to have discretionary spending. No one should be punished for wanting to buy incidental items outside of food and necessities. The key is to plan for what you can spend and try to reduce it where you can.

As a way to focus on reducing discretionary and non-discretionary spending, we established specific bank accounts with set budgets.

The next part of the transition to retirement plan (TTR) was to pay down existing debt within 3.5 years. Mr and Mrs X did not think this would be possible. It was.

To achieve this, we adjusted their contributions to take advantage of co-contribution strategy as well as altered Mr X’s existing $300 monthly contribution to superannuation to be salary sacrifice. This saved him on tax payable and effectively increased his wealth instantly.

We also established a strategy to maximise their age pension entitlements and showed them how much they could expect in age pension payments in 2020 when they became legible for Age Pension.

By sticking to the plan, and working together regularly over the next few years, Mr and Mrs X are now Mr and Mrs Wealthier Client and were able to pay off their mortgage completely and are now debt free.

We also found a way to reduce their tax, which allowed us to redirect more funds to wealth building activities, which for this couple, was in the way of an investment portfolio.

With all considered, I am happy saying that we increased their super through taking advantage of the co-contribution scheme and enhanced retirement asset value through the development of a complete strategy, that we regularly checked in on the ensure was working.

People like Mr and Mrs Wealthier Client give me a lot of job satisfaction. I love being able to create a plan and follow it through. The effect of smart financial strategy is vital and makes a difference to the end game.

Having financial knowledge and keeping up to date with legislation around superannuation is a good start for people wanting to set and achieve their own financial goals.

We go a step further. We help our clients be financially organised to ensure that they know how to grow their wealth and live a financially comfortable lifestyle.

Jamie McIntyre.

Wealth Specialist

MAC Financial

If you are thinking about transitioning to retirement or want to know what you can do to increase your personal wealth, contact our office, we are always happy to take your call. It’s your wealth, let’s build it.

Our clients trust us to get them where they want to go

We enjoy seeing our clients achieve their wealth goals, and would love to show you how this is possible for you.

Contact us today!