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  • By Kofkin Bond & Co / May 23, 2018

    The end of the financial year is rapidly approaching and, along with it, the opportunity to claim a tax deduction on additional superannuation contributions.

     Why contribute more to super?

    Superannuation does impose restrictions on access to your money. It is, after all, intended to provide for your retirement. So why would you lock up more of your money? Because superannuation remains one of the most tax-favoured environments within which to build wealth. That can make it an ideal place to invest your long-term savings. 

    What are concessional contributions?

    Concessional contributions are super contributions that have been claimed as a tax deduction by someone. They include employer contributions – both super guarantee and salary sacrifice – as well as personal contributions on which you may be eligible to claim a tax deduction.

    How much can I contribute?

    For the 2017/18 financial year the limit on concessional contributions from all sources is $25,000. For example, if your annual salary is $150,000 and you only receive super guarantee contributions, your employer will contribute $14,250 (9.5% of your salary) to your fund. That means you can make personal contributions of up to $10,750, and if you meet the eligibility terms, claim a tax deduction. Entering into a salary sacrifice arrangement with your employer would achieve the same result. Based on the above salary, the maximum amount you could salary sacrifice is also $10,750, but you may not have enough time to do that this financial year. 

    When is the deadline and what paperwork is required?

    Your contributions must be received and credited by your super fund by 30 June. To play it safe make your personal contribution at least two weeks before the end of financial year.

    What if I’m approaching the cap?

    If you’ve maxed out your cap for this year and your spouse’s income is under $40,000, you may pick up a tax offset of up to $540 by making a spouse contribution to their fund. 

    Need help?

    Contact Kofkin Bond & Co to help you work out how to make the most of your concessional contribution cap and explain the finer details. And if you miss this year’s deadline, talk to us to put in place a plan to ensure you take advantage of next year’s concessional contribution opportunity.

    For further information, call Kofkin Bond & Co. on (03) 9111 2675.

     

  • By Kofkin Bond & Co / May 16, 2018

    We often hear Australian expats taking the age-old set and forget approach when it comes to their superannuation, so in this article we wanted to run through what risks you may be exposed to in an Australian expats superannuation fund.

    We all know we can’t touch it for years, so why should expats bother looking into it before they jet off or even while they are abroad? Sometimes we hear of the avid Australian expat who will go the extra mile and at least do a quick consolidation of their super funds because they are likely to have more than one job, and more than one super fund.

    A recent article out of the Australian Financial Review (AFR) has placed the spotlight on how our superannuation is invested and potentially exposing expats to investment risk that they may not have been aware of.

    It points out the lack of transparency that members face when it comes to knowing where their super is invested and what the actual level of risk members take on by being in specific investment option (i.e. Balanced, Growth and High Growth).

    The low-interest rate environment has created a situation where super funds are investing in unlisted investments to increase their potential returns for members. Unfortunately, when it comes to these types of alternative assets, there can be huge discrepancies in classifications. The view of these super funds is that AAA grade government and corporate bonds don’t offer high enough returns and therefore they’ve switched into higher yielding but much riskier assets such as unlisted property and infrastructure.

    According to the AFR, industry insiders confirm that this isn’t just an accidental oversight on the administration side but in fact, there are considerable incentives for investment managers of super funds to adopt this approach. This is very alarming when we consider that there is roughly AUD$2.5 trillion in our superannuation system.

    What Does This Really Mean for An Australian Expats Superannuation Fund?

    An Australian expat investing in a balanced fund (which, depending on the research firm, is usually defined as between 60 and 80 percent of growth assets), could have more than 90 percent of their super savings invested in riskier assets, without them having the faintest idea of how much risk is being taken.

    Furthermore, due to the lack of reporting it can make it increasingly difficult to compare super funds, as one cannot compare apples with apples.

    If a defensive option is outperforming another super fund’s growth option, there could be some serious discrepancies in the transparency of where that super fund is actually investing its members funds.

    Australian expats who leave their superannuation in good faith to their ‘reliable’ industry super fund need to be more proactive in how and where their super is being invested and whether it is in line with their retirement goals or investment time horizon.

     Is the Insurance Cover Valid Inside an Australian Expats Superannuation Fund?

    Another area Australian expats need to be aware of is the default cover they hold in their super funds. Recent cases have shown that 65% of super funds default insurance cover won’t cover you once you go overseas for an extended period of time over 90 days. This is of great concern because it means an expat could pay for 5 to 10 years’ worth of premiums while overseas only to find out that their insurance was invalidated in the first few months abroad. This means thousands of dollars in wasted premiums have come out of their super balance for no reason. A staggering number of just over 880,000 Aussie expats was recorded at the end of 2016, which would equate to billions of dollars in the superannuation system.

    If you want transparency in where your superannuation is invested, it is always best to seek professional advice from  Kofkin Bond & Co. To find out more, email Kofkin Bond & Co on: enquiries@kofkinbond.com.au

  • By Kofkin Bond & Co / May 9, 2018

    Lifestyle is a very personal thing – luxury living for one person is a modest existence for someone else. This article offers you some guidance on the amount of money you need for retirement to cover your basic living costs and support a hobby or active social life. For example, do you expect to take frequent holidays and are you planning to enjoy regular glasses of wine or beer?

    Choosing a retirement lifestyle is simple — you live the life you can afford. If you want a more salubrious lifestyle, you save more, earn more, win the lottery or inherit lots of money from a rich relative. The same philosophy applies to your retirement lifestyle. If you want a comfortable life in retirement, then now is a good time to start thinking about what that type of life will look like.

    So, the big question is: how much money is enough for your retirement? Or more specifically, have you worked out the amount of superannuation and other savings that you will need to finance your retirement?

    So you think $1 million is enough to retire on? Well, it might be.

    That sum of money may sound like a lot, but it is not necessarily all that much to retire.

    According to John Piggott, director of the Australian Institute for Population Ageing Research at the University of New South Wales, agrees: “$1 million will not do all that much for you. It will give you a very low [salary] replacement rate.”

    Piggott has a point. These days, $1 million will buy you the average house in Sydney or Melbourne with not much change left over, or perhaps a two-bedroom flat in the inner city. Little wonder, then, that it is no longer the magic figure for a couple who want to travel offshore once a year, eat out with friends, sip on flat whites at the local coffee shop most days and spoil the grandchildren from time to time once they retire.

    The figure might be mind-boggling, but professional couples had better start getting their heads around the fact that $2 million is more like the size of the nest egg they will need to avoid a drop-in living standard when they leave the workforce.

    It may well feel like adding insult to injury. The Australian share market has not yet recovered from the rout of 2008 and, in the meantime, the amount of money needed to fund a decent lifestyle in retirement has soared.

    As central banks around the world have slashed interest rates in a desperate effort to prevent their economies from contracting, their efforts are impacting those seeking to make that purchase now.  Especially those on the brink of leaving the workforce – are in a much worse position than those who made it a decade ago.

    The culprit here, though, is the increase in life expectancy, thanks to advancements in medical technology. Mercer predicts a 65-year-old female has a 50 per cent chance of living until she is 91. A 65-year-old male has a similar chance of living until he is 88. In 1960, says the Australian Bureau of Statistics, a 75-year-old male would have expected to live until he was 82.5 years, a female until she was 84.

    Then comes the reality check about how much we will need in retirement. The most often quoted benchmark is the Association of Superannuation Funds of Australia (ASFA) retirement standard, which calculates a budget needed by Australians to fund either a “comfortable” or “modest” standard of living in retirement.

    The problem is that “comfortable” turns out to be a relative term.

    For a retired couple the $58,000 annual budget assumes a weekly food bill of $200 and a clothing bill of $57. It assumes a couple will spend $309 a week on leisure activities and $33 a week on communications. (Disconcertingly, the leisure bill includes all holidays.)

    Sadly, it is not a budget that is likely to meet the needs of the flat white set.

    Basic comforts

    Clearly, the one constant for every Australian in retirement is meeting basic living costs. Thanks to a ground-breaking study originally released in February 2004 and now updated every few months or so, I can tell you, with some authority, how much money you need to live on each year in retirement, depending on the lifestyle that you want to have. The study, known as the ‘ASFA Retirement Standard’, measures the cost of a modest or comfortable lifestyle in retirement, in dollar terms, and adjusts these costs periodically in line with the cost of living.

    The ASFA Retirement Standard study is ground breaking because Australians now have a tangible savings target with a clear idea of what type of lifestyle that amount of money can give them in retirement.

    The ASFA standard provides for slightly above the basic necessities, but you have to hope that nothing goes wrong. For example, if you need to buy a new fridge, then it will throw your budget.

    The ASFA retirement standard is useful as a benchmark and a starting point for a conversation about budgeting for retirement. This could trigger couples to look at the standard and ask themselves if that is the way they want to live?

    For many professionals, the answer will be a resounding “no”.

    Take a couple on a combined annual income of $250,000 and assume the breadwinner earns $200,000 and the spouse $50,000, giving them an after-tax income of $173,000.

    Then assume they would need 60 per cent of this amount as an income in retirement, or about $104,000. Assuming a real return of 3 per cent, or a 5.5 per cent nominal return, the amount required to generate that level of income would be between $1.7 million and $2 million, depending on how long they assume each member of the couple will live, and assuming the couple retires at 65.

    The problem here is that for many Australians, who are looking after their children for longer and perhaps helping them to buy their first home, saving more will be difficult.

    The upshot?

    In 2010, the ASFA Retirement Standard was revamped to “give Australians a more comprehensive picture of how much they need to spend to support their retirement lifestyle. The Standard has been revised to reflect changes in living standards, new expectations of retirees and their evolving spending patterns. In particular, the budgets for Communications, Health, Energy, Clothing, Household Goods and Services, Recreation and Transport have been updated” (extract from ASFA website).

    According to ASFA. currently around 20% of current retirees have reached and are living a comfortable standard of living, as per ASFA income levels.

    In January 2017, ASFA predicted those living a comfortable lifestyle in retirement will increase to 40% of retirees by 2040, compared with the current 20%.

    According to the ASFA Retirement Standard, a comfortable lifestyle enables an older, healthy retiree to be involved in a broad range of leisure and recreational activities and to have a good standard of living through the purchase of such things as; household goods, private health insurance, a reasonable car, good clothes, a range of electronic equipment, and domestic and occasionally international holiday travel.

    For Further Information

    To find out how to retire comfortably, Click here

  • By Kofkin Bond & Co / May 6, 2018

    Kofkin Bond & Co announced today, it has won the Australian Financial Planning Practice Development Award 2017,  at the Total Financial Solutions Australia (TFSA) awards evening in Adelaide.

    The award is presented to extraordinary and visionary advisers and practices, recognising best practice financial planning, qualities in leadership, customer focus and improve Australia’s financial literacy.

    Kofin Bond & Co Tony Kofkin said the Award is testament to our commitment to improve our client’s financial literacy so they can make informed decisions for their future and improve well being.

    Tony added, “A financially literate community means opportunity for all — and I know we are all working hard to make that happen”.

    Kofkin Bond & Co is an established, respected brand which has become synonymous with professional, knowledgeable advisers.

    “At a time when there’s considerable dissatisfaction and movement within the industry, the Award restores confidence and creates an ideal environment for practices like Kofkin to thrive.

    We are committed to raising the professional standards of financial advisers, improve consumer trust and confidence in the financial services sector” says, Tony.

  • By Kofkin Bond & Co / March 6, 2018

    For the past year, we’ve espoused the benefits of managing risk, more so than taking risk.

    On 5 February 2018, the Dow Jones Industrial Average plunged 1,175 points,1 marking an exceptionally volatile day for financial markets around the world. The 4.6% drop was the biggest decline since August 2011 and caught many market participants by surprise.

  • By Kofkin Bond & Co / November 15, 2017

    You have probably heard of the significant benefits associated with workplace wellness programs; perhaps you have even implemented one in your organization. What many employers (and others) don’t realize is that financial wellness is just as important as physical wellness. In fact, employees who struggle from financial trouble are often more likely to have less focus at work, an unhealthier lifestyle and higher medical costs. Incorporating a financial component to your wellness program can be a strategic move that both your budget and your employees will appreciate.

  • By Kofkin Bond & Co / October 22, 2017

    Many Australians don’t have to think twice about saving for retirement because their employer regularly contributes on their behalf. These savings then have decades to grow and years to ride out the ups and downs of the share market.

    But what happens once you retire? Is there a one-size-fits-all, no fuss retirement investment option? Right now there’s not, so it’s important to understand what you need to start thinking about to make the most of your retirement savings. Brian Long explains.

  • By Kofkin Bond & Co / October 17, 2017
    In most cases, a spinal cord injury is permanent and irreversible. It is a traumatic and devastating experience for the individual, their family, and friends and changes their lives forever. Spinal cord injury can happen to anyone at any time.

  • By Kofkin Bond & Co / May 19, 2017

    By Ashley Owen on May 18, 2017

     

    The 2017 Federal Budget has turned attention as usual to the issue of government debt. Commonwealth governments ran a surplus during the mining boom from 2003-2008 but it has run deficits since the GFC to prop up employment and growth. The deficits have been funded by running up $500 billion (and rising) in debt. Is this too high? Can we afford it?

  • By Kofkin Bond & Co / April 27, 2017

    Financial planning is very much so a “chicken or egg” exercise when it comes down to which part of one’s financial life. Where do you start?

    While I love to delve off into economics, investments, strategies, etc. I find my default is to first ensure everything my clients intend to happen, even in the scenario of an unplanned event, still does happen.