Real life scenarios

Financial advice can provide value in a range of scenarios. Let’s look at some of the strategies you could employ to improve your position.

Eleanor – boosting retirement

Eleanor is 55, is happy to continue working another 10 years but wants to boost her retirement savings without losing any of her income.

Eleanor’s financial adviser does some financial modelling and suggests she implements a transition to retirement (TTR) strategy. This involves rolling over her super balance into a TTR pension while sacrificing a portion of her pre-tax money into super.

While her before-tax salary falls, she supplements this with income from pension payments so her income after tax remains the same.

The benefit of this strategy is that Eleanor only pays 15% tax on the money she sacrifices into super, rather than her marginal tax rate. At the same time she receives a 15% tax offset on her pension payments.

Once Eleanor reaches age 60, this strategy becomes even more beneficial, with all of her income from super becoming tax-free.

Eleanor’s situation is looking good as she can reduce her pension payment amount and boost her retirement savings further. She’s all set for the retirement she was hoping for.

Ted and Sally – Protecting their family

Ted and Sally had just had a baby when they went to see their financial adviser about setting up a trust to save for their baby’s future. But with the added responsibility of a child, their adviser suggested they also implement an insurance plan to cover them against accident, injury and death.

Tragically, two years down the track Ted suffered a massive stroke and couldn’t work. Sally also had to remain at home to continue caring for him and their child, which left them with no income to pay their mortgage repayments, let alone keep on track with their investment plan.

Fortunately, having worked closely with their adviser to work out their risk insurance needs, Ted’s trauma cover paid out a benefit of $515,000, which covered the costs for ongoing medication and treatment, and meant they could eliminate the mortgage.

They still had a long road to recovery but at least they didn’t have to lose everything they’d worked so hard for financially.

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