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  • Writer's pictureAndre Dirckze

Case Study - Pre Retiree

Background: Jamie and Marion, a mature couple in their mid-fifties, sought financial guidance as they prepared for their imminent retirement. Their situation was marked by considerable complexity due to the voluntary redundancy packages they had received. They hoped that the payouts and their superannuation would be sufficient to provide a steady income during retirement. Additionally, they needed advice on planning a coastal lifestyle change and making provisions for their adult children to inherit their wealth and assets.

Overview: Jamie, aged 57, and his 56-year-old wife, Marion, had recently accepted voluntary redundancies after working for corporates for many years. They had already sold their home, which was located half an hour from the city center, and were in the process of renovating their inner-city investment property to turn a profit before embarking on a coastal retirement. When they initially met with the team at Wealth Effect Group, Jamie and Marion expressed a sense of unpreparedness for the important decisions they faced. They had retails superannuation funds from their previous employment, in addition to cash from their redundancy packages. Given their relatively early retirement, they were concerned that these resources might not last the distance of their coastal relocation and provide a steady income throughout their retirement.

Our Process: We acknowledged Jamie and Marion’s initial concerns and encouraged them to share their retirement goals. They were avid travellers and wanted access to an income that would allow for annual overseas holidays. They also identified a desire to temporarily relocate to their inner city investment property in order to be onsite whilst renovations were carried out, ahead of selling the property and permanently moving to a coastal address.

Their financial situation was complex , with dual redundancy packages, multiple superannuation funds, and the proceeds from their former residence's sale. Despite the numerous opportunities, they wanted to make decisions with a long-term perspective. As accredited SMSF Advisers, we provided financial guidance, utilizing various scenarios to help them visualize retirement options. We explored the feasibility of establishing a Self-Managed Superannuation Fund (SMSF) versus staying with industry or retail superannuation offerings. After thorough financial modeling, Jamie and Marion determined that an SMSF was their preferred superannuation solution. Jamie and Marion were also uncertain about what to do with cash in their personal names, stemming from their redundancy payments and the property sale. By aligning their short, medium, and long-term goals, we presented strategies such as paying off the investment property's mortgage, maintaining a cash reserve for renovation costs, and contributing surplus cash to superannuation to bolster their long-term retirement savings. Furthermore, they were concerned about the potential consequences if the sale of their inner-city renovation project fell short of funding their coastal relocation. To alleviate this worry, we guided them through the process of making non-concessional contributions to their SMSF from their personal cash holdings. Since Jamie and Marion were over 55 years old, these contributions could be accessed and withdrawn from their SMSF without tax implications. Our holistic approach to Jamie and Marion's financial situation also led to discussions on estate planning. Since all their beneficiaries were adult children, we guided them toward a withdrawal and re-contribution strategy within their superannuation, creating a more tax-efficient structure. This not only provided a short-term benefit by enabling more non-concessional contributions to their SMSF but also enhanced their access to capital for purchasing their coastal home if needed. With these strategies in place, the Wealth Effect Group team collaborated with Jamie and Marion to determine their desired annual retirement income. To meet these needs, we facilitated the initiation of pensions from their SMSF.

The Outcome So Far: Jamie and Marion successfully completed the renovations on their inner-city property using the allocated personal funds. Although the property sale did not fully fund their coastal relocation, their forward planning allowed them to withdraw additional funds from their SMSF without incurring tax. The pensions established within their SMSF are providing the necessary cash flow for Jamie and Marion to enjoy their desired retirement lifestyle, including annual overseas vacations. They have explored Europe and are now preparing for a South American adventure. Wealth Effect continues to conduct regular reviews of Jamie and Marion's evolving financial situation and assists with their investment portfolio, including risk management strategies to safeguard against significant market fluctuations. Consistent with Wealth Effects' comprehensive approach to financial planning, we also supported them in their estate planning needs, collaborating with an estate planning specialist to guide ongoing adjustments and facilitate updates where necessary. In Jamie's own words: "Before meeting with Wealth Effect Group's, my wife and I were concerned that we might not be able to sustain the retirement we had envisioned. It was a great revelation and relief to discover that, with professional guidance from Wealth Effect, we could achieve our goals." "The team offered us a straightforward and diversified approach to investing that helped us see that we could maintain our retirement income over the long term. We were able to pursue our dream, and now here we are, living it!" The information (including taxation) contained within this document does not consider your personal circumstances and is of a general nature only - unless otherwise stated. You should not act on it without first obtaining professional advice specific to your circumstances. If you'd like discuss your situation please click the link below to receive a free 45min Retirement Strategy Session with one of our Team.

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