Top 10 super funds for 2016, top-performing asset classes, $1 million retirement, Age Pension cuts, retirement reckoner, how much super do you really need?
Happy New Year! At SuperGuide we have been busy updating the website to reflect the July 2017 super changes, and the January 2017 Age Pension changes. For most Australians, the radical changes to the rules mean revisiting retirement plans and working out whether your current strategies will deliver the retirement lifestyle you had hoped. Are your retirement plans still on track?
The highlights of this special SUMMER EDITION (JANUARY 2017) are:
- WHY WOMEN MUST SAVE MORE SUPER AND WHY POLLIES SHOULD CARE. Rather than tackling this important issue, the government and think tanks and business groups appear to be pushing a political agenda, at the expense of women’s retirement needs. See link below for why this is happening, and suggestions on what Australia can do about this issue.
- TOP 10 PERFORMING SUPER FUNDS FOR 2016 CALENDAR YEAR, AND FOR PAST 10 YEARS. Check out the top performers for 2016. Did your super fund make the list?
- ASSET CLASSES: INVESTMENT WINNERS FOR 2016 CALENDAR YEAR. A fascinating article for both SMSFers and members of large super funds. Discover the asset classes that delivered the top returns for the 2016 calendar year, and those that limped through the year.
- HOW MUCH DO YOU NEED TO RETIRE COMFORTABLY? We have updated this very popular article, and many readers will be surprised by the answer.
- HOW DO I APPLY FOR THE AUSTRALIAN AGE PENSION? Around 80% of retirees receive a FULL or PART Age Pension, which means this article is essential reading for Australians close to retirement
- RETIREMENT: WANT TO LIVE ON $100,000 A YEAR? See link below to find out how much super you’ll need.
- THE SUPER CHALLENGE: AT WHAT AGE SHOULD I RETIRE? With big changes in super policies, predicted lower investment returns and living longer, what age do you plan to retire?
- CRUNCHING THE NUMBERS: A $1 MILLION RETIREMENT, OR EVEN A $1.6 MILLION RETIREMENT. A lower, or higher, investment return on your savings in retirement can make a big impact on your annual retirement income, especially if you aspire to a $1 million retirement, and you want to retire early. We have updated our $1 million articles. In a separate article, we explore a $1.6 million retirement in response to the new $1.6 million transfer balance cap on super pension balances.
- SUPERGUIDE RETIREMENT RECKONER. Our very popular $1 million retirement articles prompted us to create, and now update, our Reckoner for couples and singles.
- FOR YOUR CONVENIENCE: UPDATES ON SUPER CHANGES AND HARSHER AGE PENSION TEST. The many super changes taking effect from July 2017 affect all Australians saving for retirement, or currently in retirement, while more than 330,000 Australians are immediately hit by the radical Age Pension changes which took effect from 1 January 2017. And for those SMSF trustees who have a related party LRBA in place, your deadline is 31 January 2017! See links below and expect future updates in next month’s newsletter.
Note: You can find these articles, and more, by clicking on the links below.
Many thanks for your interest and support.
Many of the superannuation policies in place ignored the unique life circumstances faced by half of the country’s population, thanks largely to a parliament run by male politicians who are remote from the day-to-day demands of a typical family, and due to a superannuation industry and trustee boards of superannuation funds dominated by older male leaders (and in some cases, female leaders) who may have successfully fought the early super battles but are not generationally equipped to tackle the next fundamental change necessary to the super rules. Read more
ARE YOUR RETIREMENT PLANS ON TRACK?
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? Read more
In this article we provide the retirement lump sums necessary if you want your annual income (and the savings that support that income) to last 22 years or 35 years, and also if your retirement savings generate investment returns of 3%, 5% or 7% a year. Read more
The SuperGuide Retirement Reckoner allows you to discover what $1 million in retirement can deliver you in an indexed annual income over retirement (including PART Age Pension). You can change scenarios, such as retiring at age 56, 61, 65, 67 or age 70. You can opt to have the money last until age 87 or age 100, and you can assume your retirement money is generating investment returns of 2%, 3%, 5% or 7%. Read more
Selecting a retirement age, even if you plan to continue some form of work during retirement, can be a difficult decision. In some cases, individuals don’t get a choice about when to retire due to health issues, or due to redundancy in later years and then difficulty finding another job. Read more
Any Australian resident hoping to receive the Age Pension must actively apply for this government-funded benefit. You don’t automatically receive the Age Pension when you reach a certain age, or when you satisfy the other eligibility requirements. You must complete special Centrelink forms and submit those forms to Centrelink (Centrelink is part of the Department of Human Services). Read more
Every five years, the latest data is released on average life expectancies, that is, how many years you’re expected to live, on average. The table contained later in this article contains the most up-to-date information on expected lifetimes. Read more
LATEST SUPER RETURNS AND TOP-PERFORMING FUNDS
Investment returns across all super funds for the 2016 calendar year ranged from a low of 4.2% to a high of 10.1%, according to figures released by Chant West. Read more
The median superannuation growth fund gained 7.7% in value for the 12 months to December 2016, and 2.3% for the month of December, according to rating company, Chant West. In terms of long-term performance this means the median growth super fund has delivered five calendar years of consecutive positive investment returns. Performance tables are set out later in this article. A calendar year is 12 months from 1 January to 31 December. Read more
Infrastructure investments and Australian listed property were the stand-out performers for the 2016 calendar year (1 January 2016 to 31 December 2016), according to rating company, Chant West. Read more
HOW MUCH SUPER DO YOU REALLY NEED?
As a starting point, have a go at Trish Power’s six-step retirement planning process: the results should give you some food for thought. Read more
A common belief is that if you want to live on more than $60,000 a year then it will not be possible to claim the government-funded Age Pension. Not necessarily true. Read more
I am often asked the question ‘how much super is enough for a worry-free retirement?’, and we regularly update our special SuperGuide articles on this topic for our readers. In this article, I’m answering the question: what does a $1 million retirement look like? Read more
What does a $1 million lump sum deliver in retirement when your savings earn 3%, or even 2%, a year during retirement? Read more
The majority of Australians won’t need $1.6 million in today’s dollars to have a comfortable retirement, but a significant minority of Australians have planned for, are planning for (or at least hoping for) such a retirement lifestyle. Read more
Before I receive dozens of emails stating that $1 million can indeed last forever, let me start with the following statement: If you live off only the earnings from your invested capital then your capital can indeed last ‘forever’. The dilemma facing all investors and retirees is balancing the desired lifestyle (and maintaining that lifestyle over 20 to 30 years) with protecting capital, and potentially leaving some wealth behind for your children or other dependants. Read more
In Australia, we have very few guaranteed income products. Annuities are the main type available, apart from defined benefit pensions available from some larger corporate super funds and older public sector funds. Read more
FOR YOUR CONVENIENCE: SUPER & AGE PENSION CHANGES
A summary of the superannuation changes is set out in this article. You can also read more detail on each super change by clicking through to supporting articles. Read more
Taking effect from 1 July 2017 (although if you have more than $1.6 million in super you will need to take action well before 1 July 2017), the Coalition has introduced “a $1.6 million superannuation transfer balance cap on the total amount of superannuation that an individual can transfer into retirement phase accounts.” The cap applies to “both current retirees and to individuals yet to enter their retirement phase.” Read more
More than 330,000 Age Pensioners have had their Age Pension entitlements cut, with at least 100,000 of those affected Australians losing all Age Pension entitlements, which took immediate effect from 1 January 2017. The higher than predicted numbers is due to some miscalculations by the federal government: it looks like many thousands more are affected by the January 2017 changes than first anticipated, due to the lower-than expected assets test thresholds. Read more
Since 1 January 2017, the UPPER assets thresholds was cut dramatically, which meant more than 330,000 Australians have now lost Age Pension entitlements. At the same time, the LOWER assets threshold was raised which meant an extra 50,000 Australians received the FULL Age Pension. Read more
This article deals specifically with SMSF limited recourse borrowing arrangements (LRBAs) financed by related parties, rather than financial organisations. For fixing related party LRBAs, the ATO extended the final date to 31 January 2017 (previously 30 June 2016). Read more
On 19 December 2016, the federal government released the 2016/2017 Mid-Year Economic and Fiscal Outlook (MYEFO), which was jointly presented by federal treasurer, Scott Morrison and minister of finance, Mathias Cormann. Read more