WELCOME TO THE SUMMER EDITION OF

Logo

ASPIRATIONS

News and Information in this Edition
Five things to do in retirement
Thinking about managing your own super?
Home ownership - is it a reality in Australia?
Should I repay my Homeloan or boost my super?
What's worth more - your belongings or your livelihood?
The virtue of salary sacrifice

The Wright Family Trust

Trading as Pivotal Planning
YOUR PARTNER IN LENDING AND
ALL OF YOUR FINANCIAL
PLANNING NEEDS
Anthony Wright
Authorised Representative of
AMP Financial Planning Pty Limited
AFSL No. 232706
ABN 60 262 244 285
Level 1/47 Lower West Burleigh Road
Burleigh Heads QLD 4220
Office Number: 07 55200 698
Email: anthony@pivotalplanning.com.au
Website: www.pivotalplanning.com.au

We can provide advice on:

1. Investment Strategies (strategic
asset allocation and goals based
investing)
2. Budgeting and cash flow
management
3. Debt management (including
borrowing for personal and
investment purposes
4. Salary packaging
5. Superannuation strategies and
retirement planning
6. Personal Insurance
7. Estate Planning
8. Centrelink and other Government
benefits
9. Ongoing advice and services,
including regular portfolio
reviews

5 things to do in retirement
Whether you're in the planning stages or already retired, there's
plenty on offer.

Online source: Produced by AMP Life Limited and published on 4 September 2015. Original article.
Print source: By AMP Life Limited, originally published on 4 September 2015 on amp.com.au/insights
Once you retire you might be wondering how you ever had time to work! But, assuming your health is in check, there are some
interesting pursuits you might want to consider:
1.
Travel to an exotic destination Join around 700,0001 other Aussie travellers who depart our shores annually. For instance, step
outside your comfort zone to trek along the El Camino in Spain, drive a sports car along the Amalfi Coast in Italy, or cruise among the
frozen peaks in Alaska.
2.
Indulge your love of music Learn to play a musical instrument or join a choir. Contact your local music school or
conservatorium or have private tuition.
3.
Do something different to your usual line of work Do something youve always wanted to, such as starting a small business,
doing some charity work or joining a company board. Learn more about becoming a seniorpreneur.
4.
Educate yourself Upgrade your computer skills, learn another language (handy for travelling) or get that qualification youve
always wanted, such as teaching English as a second language. If you want to teach overseas have a look at CELTA.
5.
Take up a sport - If youre feeling a bit sportier why not try out competition golf, a few roll-ups of social lawn bowls or learn the
tactics of how to play chess by downloading the Chess app from iTunes.
Not quite retired? Check if youre on track
Whatever stage youre at, you might want to review whether you have the funds to do all you really want to in retirement.
Check out AMPs Whats my number calculator to see if you have enough money to live the lifestyle youre hoping for.
And, make sure youre aware of your governments asset limits and income test to receive part or all of the Age Pension.
Doing whats right for you
Just remember everyones financial situation and goals are different. Whats right for your family, friends or colleagues may not be right
for you.
Need help?
Speak to us today and we can chat about your retirement plans.
1ABS

Retirement and retirement intentions, 6238.0, July 2012 to June 2013

Important information
AMP Life Limited. This provides general information and hasnt taken your circumstances into account. Its
important to consider your particular circumstances before deciding whats right for you. Although the information is
from sources considered reliable, AMP does not guarantee that it is accurate or complete. You should not rely upon
it and should seek qualified advice before making any investment decision. Except where liability under any statute
cannot be excluded, AMP does not accept any liability (whether under contract, tort or otherwise) for any resulting
loss or damage of the reader or any other person.

Thinking about managing your own

super?
If youre wondering whats involved in self managed super and whether
its a good option for you, here are some things to consider.
Theres a lot to consider when it comes to managing a self managed super fund (SMSF). Setting up a compliant fund and managing
your investments takes time and can give you the freedom to have more control over your future.
Of course acting as a trustee of an SMSF comes with specific responsibilities. Your SMSF must remain compliant with the rules
governing self managed super. There are administrative and reporting obligations, and stringent guidelines about what you can buy
through your super fund, and how the assets can be used.
The practicalities
Some of the practical details you need to take care of when setting up your SMSF include:
1. Registering your fundevery SMSF must be registered with the tax office. You can do it yourself or we can do it for you.
2. Rolling over your superwe can help you set up a bank account for your SMSF so your accumulated super money can rollover.
3. Administering and reportingthere are a range of administration, compliance and reporting obligations your fund is required to
meet. We can run through these with you.
4. Setting up a trust deedevery SMSF must have a trust deed which sets out rules for the way the fund must operate.
Structuring an SMSF
There are two ways you can set-up the structure of your SMSF. You can choose an individual trustee or a corporate trustee structure.
Deciding on the type of trustee structure for your fund is an important decision that will affect the way the fund is managed and its
costs.
Following the rules
There are several laws governing self-managed superannuation funds (SMSFs) in Australiaand strict penalties for trustees of funds in
breach of them. We can help you understand the obligations your fund has and the responsibilities that would sit with you as a
trustee.
Investing your super
Your SMSFs investment strategy must be documented and will determine how your fund invests its money. The investments of an
SMSF generally include a mix of cash, term deposits, shares, managed funds and direct property. We can help you establish your
funds investment strategy.
There are stringent guidelines that determine how SMSF assets are used. From 1 July 2016, all assets considered as personal assets
need to be compliant with new legislation. We can help you understand how assets like artwork, jewellery, wine and motor vehicles
need to be managed.
As part of your investment strategy, youll also need to consider the insurance needs of each member of your fund. We can help you
consider life insurance, total and permanent disablement cover and income protection for each of your fund members.
Find out more
An SMSF isnt for everyone so come and chat with us and we will help you work out whether an SMSF is right for you.

Home Ownership - is it reality in

Australia
Dr Shane Oliver sheds some light on why home ownership
rates have declined over the past twenty years.

Online source: Produced by AMP Life Limited and published on 27 May 2016. Original article.
Print source: By AMP Life Limited originally published on 27 May 2016. on amp.com.au/insights

For many Australians, deciding whether to rent or buy a home to live in is a choice, and over time their preferences around this will
undoubtedly change or evolve. But for others its more a matter of affordability.
Housing affordability in Australia
According to AMP Capitals chief economist Dr Shane Oliver, housing affordability has been declining over the last two decades, with the
ratio of average home prices rising from a norm of around three times annual disposable income, to around six times across Australia, and
this is much higher in a number of cities, including Sydney and Melbourne.
How does this compare with other countries?
The 12th Annual Demographia International Housing Affordability Survey (2016 edition: 3rd quarter 2015) which covers 367 metropolitan
markets across nine countries, rated Sydney as the second least affordable housing market, next to Hong Kong.
In comparison, the third least affordable was Vancouver, with Auckland, San Jose and Melbourne coming in as fourth least affordable. San
Francisco was fifth least, London 6th least affordable and San Diego and Los Angeles coming an equal 7th.
Home ownership decline and the reasons why
Home ownership too has been declining since the mid-1990s. The latest data available from the ABS shows that households who owned
their homes (with or without an outstanding home loan debt) accounted for 67.5% of all households in 2011/12 compared to 71.4% in
1994/951.
So, what has contributed to the decline in affordability that has been a major factor behind the decline in home ownership in Australia? We
called on Shane Oliver to provide some insight.
He says a significant driver is the constrained supply of dwellings. While population growth has been solid, leading to strong underlying
demand for property, the supply of dwelling has failed to keep up over the last decade. Land release controls are very stringent in and
around Australian capital cities and development restrictions are quite tight, compared to say cities in the United States. Despite a surge in
construction of apartments in the last year, Australia as a whole still has an overall shortfall of properties and this has driven prices higher.
Concerns around the impact of negative gearing, foreign buying and buying in SMSFs are really a sideshow compared to the fundamental
failure of property supply to keep up with demand. He suggests that until we can address the supply issue, affordability is likely to remain
relatively poor.
Shane suggests another driver may be a change in the attitudes of millennials who may be less motivated to buy their own home because
of the financial commitment. In other words the love affair with home ownership may have faded a bit as younger generations prefer the
flexibility that comes with renting. Its hard to disentangle this from the affordability issue though. Then there are social changes to
consider, such as people partnering up later in life and delaying home ownership.
Is owning a home still one of your key goals?
Owning your own home has, and continues to be, a key goal for many Australians. Yet for others its an unachievable dream or a dream
thats been delayed for a while.
There are numerous other options though, including renting, staying at home for longer and saving up for an investment property, or
saving to invest in assets other than property.
Need help?
Speak to us today and we can work out how you might still achieve the great Australian dream of owning a place to call your own.
1 4130.0 - Housing Occupancy Costs, 2013-14, Australian Bureau of Statistics
Important information

AMP Life Limited. This provides general information and hasnt taken your circumstances into account. Its important to consider your particular circumstances before deciding
whats right for you. Although the information is from sources considered reliable, AMP does not guarantee that it is accurate or complete. You should not rely upon it and should
seek qualified advice before making any investment decision. Except where liability under any statute cannot be excluded, AMP does not accept any liability (whether under
contract, tort or otherwise) for any resulting loss or damage of the reader or any other person.

Should I repay my home loan or

boost my Super?
Both options make good financial sense - we look at some pros
and cons to help you decide
Online source: Produced by AMP Life Limited and published on 19 November 2015. Original article.
Print source: By AMP Life Limited, originally published on 19 November 2015 on amp.com.au/insights

Retirement may not be as far off as it used to be. With this in mind, are you finding theres a trade-off between home loan repayments and your
retirement nest egg?
Adding money to super has its advantages and so does paying off your home loan. So if youve got some extra cash, how do you choose
between the two? Or maybe you can do both.
Lets consider the pros and cons of each, along with factors like your age, personal goals and income to help decide whats best for you.
Your age and retirement goals
If you put extra into superdepending on your ageyou may have to wait a while before accessing it, which may not suit your goals. But on
the upside, if you retire in 15 years youll benefit from compound interest and dollar-cost averaging, which are two powerful ways to build longterm wealth. Use AMPs dollar-cost averaging calculator to see how regular contributions build up over time.
Repaying your home loan will reduce the overall amount owing, which means your interest will go downand youll have a valuable asset that
can provide comfort and security in retirement. Check out the home and retirement planner to see how your home fits in with your plans.
Your income and tax
When it comes to tax benefits, super may be the clear winnergenerally you have to use after-tax dollars to repay a home loan. In super you
can contribute pre-tax dollars. That means more in your hand down the track, with minimal impact on your take-home pay:
1.
Less tax is applied to the portion of income going into super (15% ) so youre lowering your overall tax bill each year, and
2.
You may reduce your taxable income (by making a super contribution, before tax is applied) and attract a lower tax rate. Learn more
about the different types of super contributions.
Use AMPs salary sacrifice calculator to find out how this would work for you.
Bear in mind that when you sell your home any profit is tax free. In super, your money is also tax free, but only after you turn 60 and providing
you receive your super as an income.
Saving has its limits
Even though super is a tax-effective way to build wealth, you may not be able to add as much as youd likedepending on the amount your
employer contributes. Visit the ATO website to find out more about contributions limits.
When it comes to your home loan check with your lenderthere may be restrictions or fees for additional repayments. Flexibility and
accessibility
If your home loan offers a redraw facility you may be able to withdraw extra repayments youve made.
On the other hand, super provides less flexibility as far as access goesthe money is generally inaccessible until retirement. However, there is
flexibility in how your money is invested, as you can change your investment options at any point in time. Earnings and economic markets
Your home and your super can be affected by economic changesyour super investment returns can fluctuate, a variable loan interest rate can
change, as can your homes value.
Whats right for you?
Explore the super versus mortgage calculator at the MoneySmart website and have a look at AMPs education module to decide if property or
super is better for you. Theres a lot to considerand you may not need to choose one option over another.
Important information
AMP Life Limited. This provides general information and hasnt taken your circumstances into account. Its important to consider your particular circumstances before deciding whats
right for you. Although the information is from sources considered reliable, AMP does not guarantee that it is accurate or complete. You should not rely upon it and should seek
qualified advice before making any investment decision. Except where liability under any statute cannot be excluded, AMP does not accept any liability (whether under contract, tort or
otherwise) for any resulting loss or damage of the reader or any other person
.

What's worth more - your

belongings or your livelihood?
At least one in five of us will be unable to work due to injury or
illness in our lifetime, yet we're still more likely to insure our car
than our most important assetourselves.

What's worth more - your

belongings or your livelihood? Continued
You can buy different forms of personal insurance through your super fund or via an insurance company. Heres a rundown of the four
main types of cover available:

Life insurance pays a lump sum on your death or the diagnosis of a terminal illness

Trauma insurance pays a lump sum on the diagnosis or occurrence of a specific illness

injury

Income protection provides a replacement income of up to 75% of your regular income if youre unable to work due to illness or

Total and permanent disability (TPD) pays a lump sum if you become disabled and are unable to ever work again.

What AMPs doing in this space?

In 2014, AMP paid more than $887.6 million in claims across its life, trauma, income protection and TPD policies. The age range of those
making a claim varied from six years old to 88 years old.
The important thing to understand is why insurance might be necessary for your situation, whether that includes a partner or children, and
how much you need so you are not under or over insured.
For further information

AMPs Online calculators can help you estimate how much insurance costs and how much insurance you need and for further
information - videos and information.
Need help?
Speak to us today.
1 www.lifewise.org.au/facts-research#sthash.fSaAIgeC.dpuf
2 www.lifeinsurancefinder.com.au/post/compare-life-insurance-australia/the-impacts-of-underinsurance-in-australia/
3

www.lifeinsurancefinder.com.au/post/compare-life-insurance-australia/the-impacts-of-underinsurance-in-australia/

4 www.lifeinsurancefinder.com.au/post/compare-life-insurance-australia/the-impacts-of-underinsurance-in-australia/
5 www.lifeinsurancefinder.com.au/post/compare-life-insurance-australia/the-impacts-of-underinsurance-in-australia/
6

www.lifewise.org.au/insurance-101/understanding-the-risks

7 www.lifewise.org.au/insurance-101/understanding-the-risks
8 www.lifewise.org.au/insurance-101/understanding-the-risks
9

www.lifewise.org.au/insurance-101/understanding-the-risks

Important information
AMP Life Limited. This provides general information and hasnt taken your circumstances into account. Its important to consider your particular circumstances before deciding
whats right for you. Although the information is from sources considered reliable, AMP does not guarantee that it is accurate or complete. You should not rely upon it and should
seek qualified advice before making any investment decision. Except where liability under any statute cannot be excluded, AMP does not accept any liability (whether under
contract, tort or otherwise) for any resulting loss or damage of the reader or any other person.

What's worth more - your

belongings or your livelihood?

When you make a sacrifice, you're usually giving something up

with the expectation of future gain

Online source: Produced by AMP Life Limited and published on 16 March 2016. Original article.
Print source: By AMP Life Limited, originally published on 16 March 2016 on amp.com.au/insights
Salary sacrificing into your super is no differentyoure giving up ready access to your money in your take-home pay. But in return youre boosting your retirement
savings and saving on tax.
You can pay extra cash into your super from your pre-tax salary at the concessional 15% rate of tax1 up to a limit (or cap) of $30,000 for 2016/17 (or $35,000 if you
were 49 or over on 30 June 2016). Thats a considerable tax saving for most people on their usual marginal tax rate.
Meanwhile, to find out about the government's proposed changes to superannuation caps, check out AMPs budget round-up article. To find out more about annual
limits visit the ATO website.
Get your regular payment in place
With a new financial year, its a great time to get your salary sacrifice arrangement in place on top of the regular super guarantee payments made by your
employer. This way youll be able to maximise your concessional contributions and minimise your tax burden over the course of the next financial year.
Boost super, save on tax
Lets look at how salary sacrifice could work in practice.
Judith, aged 50, is a teacher earning $80,000 a year. She currently puts $385 per fortnight into her online savings account (approximately $10,010 a year) and wants
to start building up her retirement savings. She is considering whether to make:

an after-tax contribution into superannuation of $10,010 a year, or

an equivalent pre-tax (salary sacrifice) contribution.

1 Or 30% if you earn more than $300,000 a year.
After-tax contributions v salary sacrifice for Judith (2015/16)

Judiths income tax position:

After-tax contributions
Gross salary
$80,000
Less salary sacrifice contributions
Nil
Reduced gross salary
$80,000
Income tax, Medicare levy
($19,147)
Net salary
$60,853
After-Tax contributions to super
($10,010)
Take-home pay after contributions
$50,843
Net income tax saving
$5,318
Judiths super contributions position:
Super Guarantee contributions (9.5%)
$7,600
Salary sacrifice (pre-tax) contributions
Nil
15% contributions tax
($1,140)
Total net concessional contributions
$6,460
Plus non-concessional contributions to super $10,010
Total net contributions for year
$16,470
Additional net contributions into super

Salary sacrifice contributions

$80,000
($15,238)
$64,672
($13,829)
$50,843
Nil
$50,843
$7,600
$15,282
($3,439)
$19,489
Nil
$19,489
$3,019

In both scenarios, Judiths take-home pay is the same. But by salary sacrificing into super, Judith can increase her super contributions for the year by $3,019, even
after taking the 15% contributions tax into account.
Salary sacrifice checklist
Salary sacrifice isnt without pitfalls. Youll need to make sure you dont unintentionally go over your contributions cap or reduce your other entitlements.
Heres a handy checklist to make sure that youve ticked all the boxes.
1. Make sure that you can salary sacrifice

Does your employer allow salary sacrifice?

Are you under age 75?

2. Complete your employers standard salary sacrifice paperwork
You cant salary sacrifice income already earned.

You cant salary sacrifice income already earned.

Plan ahead to sacrifice bonus and leave payments.

3. Make sure your other entitlements arent affected

Check with your employer:

how your super guarantee is calculated

the definition of salary used to work out your payments.

4. Monitor your concessional contributions cap
Check all concessional contributions for the financial year. These include:

compulsory contributions paid by your employer such as the super guarantee

contributions from a previous role within that financial year

pre-tax contributions on top of your super guarantee

administration fees and insurance premiums paid by your employer

contributions allowed as an income tax deduction such as contributions you make if you are self-employed

notional taxed contributions if you are a member of a defined benefit fund