Past my 40s and not as secure as I'd like to be?

Being in or past my 40s might involve a bit of soul-searching and the balancing different priorities. For example, I may need to care for my ageing parent, attempt to grow my career or business, or put up with the increasing demandingness of it, or if I'm a parent, attempt to helpfully support a child.

With all these responsibilities, it’s common to neglect my own financial well-being, including the building of my longer-term savings. Better securing my future might still be a choice. Here are some tips that might help me financially make the most of my 40s and beyond.

I might consider making a plan 
It might be time to review my plan or time to get one. A financial plan may help me get and stay on MY track by identifying a longer-term goal of mine and a step I might choose to take to reach toward it. It helps to have it based on a specific need or priority of mine, and to have it as realistic as possible. Perhaps by working with a professional adviser, I may be a little better able to tailor a plan that optimizes my ability to invest and save for an important thing more tax and income efficiently.

I might look to grow my savings and security
My 40s and beyond might be my peak earning years. Data from the Australian Bureau of Statistics shows that in 2016, employees aged 45 to 54 earned $1,479.90 in average weekly total cash earnings, the highest of all age groups.

This may be a good decade then, subject to whatever other pressures are on me, to ramp up my savings by funneling some of my income into my superannuation through salary sacrifice, for instance. It will probably help me to do my homework and speak with a financial adviser to find out what my options might be - especially with regard to accessibility of funds.

I might give my super a health check
A quick super health check may help me increase my retirement savings. For example, by choosing a different investment option or risk level that actually suits me, I may be able to earn better returns on my super over the longer-term. If I have multiple super funds, consolidating my accounts may mean I could save on fees - being careful to consider the affects on my personal insurances in these supers.

Super can be a difficult subject to get my head around, so again a professional financial adviser might be better to help me bolster my super.

I might attempt to avoid lifestyle creep
As a HUMAN I might have a tendency to inflate my standard of living as I earn more and can afford more things like a better house or car, or more holidays.

While it’s only natural for me to want the finer things in life, it’s wise not to get caught in a cycle of upgrading my lifestyle with abandon. I’ll likely end up with little to no financial gain if my spending rises as quickly as my income. It might help a lot to stick to a plan I've developed with my financial adviser and stay a bit better focused on a financial goal of mine.

I might, where possible, consider investing more
My 40s onward may be a good time to invest more – or diversify my existing investments – to help me grow my long-term savings and work to stay ahead of inflation. Although leaving my money in a fixed-income vehicle like a term deposit may reduce my risk of losing money, inflation might erode the value of my capital.

When I decide to invest more, or more assertively, it might help a lot to keep in mind that it’s important to choose instruments that suit my risk appetite and time horizon. Developing a strategy with my financial adviser might make it less painful to achieve a return required to reach a financial goal of mine - understanding that no-one has a crystal ball.

My 40s onward is very likely to be a juggling act of different priorities, and they might also be a great opportunity to set up a new, healthy, financial habit. By putting a well thought out plan into practice, balancing a financial responsibility of mine may be that little bit less difficult.

It might help me to seek advice
Getting professional financial advice may help me optimize a 'windfall' of mine. Along with my adviser I might choose to review my finances, achievements to date, regardless of their size, lessons hard won, and work on a financial plan based on a need or priority of mine, and work toward achieving a goal of mine.

Call Hugh and Nick on 03 9471 0080

Australian Bureau of Statistics, May 2016, ‘Employee Earnings and Hours’. Accessible at: http://www.abs.gov.au/ausstats/abs@.nsf/mf/6306.0.

New Year, New Job – What’s your resolution?

New year is a common time for making a lifestyle change, however, for a resolution affecting your financial health, it’s often when starting a new job. If you aren't starting a new job, you might PRETEND you are.

Along with a change to your daily routine that tends to come with a new job, it can help to put in place positive changes for your finances too. Here are some useful tips:

Plan around your pay cycle
While most companies pay monthly, it may be at a different time to what you’re used to. Updating your direct debits and bill payments to reflect any change in pay dates is a good time to look at what you’re actually paying for and whether savings can be found.

If your new job pays fortnightly, this is a great opportunity to modify your mortgage repayments. Paying half your monthly mortgage as a fortnightly repayment lets you squeeze in one extra monthly repayment each year – potentially saving thousands in interest over the course of a loan.

Why waste a pay increase?
As a job change sometimes come with a pay increase, there is an opportunity to save more while maintaining the lifestyle you’ve become accustomed to. One of the most tax-effective investments might be making an additional concessional contribution into your super. Using your before-tax pay, it’s usually taxed at just 15 per cent instead of your marginal tax rate. 

Individuals may contribute up to $25,000 during 2019/20 as concessional contributions to super.

Check your Insurance
As you move through your career, priorities change and with a mortgage and children comes the need to protect your income. Changing jobs is a chance to check your insurance – inside and outside of super – and make sure it matches your financial situation.

Seek professional financial advice
A financial adviser can help with a new budget based on your new salary along with investment strategies to ensure your new job gives you a boost today, and in the future. The time you spend chatting might be a great investment.

Superannuation
With many people predicted to have more than 10 jobs in their lifetime, having a super fund that can move with you from job to job and into retirement has never been more important. After all, losing track of just one super fund can cost you thousands in retirement.

Not all super funds can do this though, and once you’ve done your homework to find the fund that best suits your investment profile and insurance needs at the right cost – it’s often a good idea to stick with it. This gives you peace of mind throughout your working life that your retirement savings won’t get lost and you won’t be paying unnecessary tax and fees when the time finally comes to retire.

There are other considerations, too, when looking at your super arrangements between jobs.

Most plans have different default insurance. If you roll your super from one fund to another, your existing insurance will usually lapse when you do so, while your new fund may not provide the cover you need or expect.

There are transaction costs associated with selling and buying underlying investments, which you need to be mindful of when transferring to a new super plan.

If you’re a 'Choice' member – that is, you’ve actively chosen where you want your super invested, changing funds may mean your previous options are no longer available, and this could have a significant impact on the growth of your super. 

For help with your super, savings and more, contact our professional financial adviser today on 03 9471 0080 or service@rireservoir.com.au. 



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