Your 50s are the time which you can use to fine tune your financial plan that will likely mean you don't have to work any longer. Financial independence is so close you can just about smell the coconut palm trees! So that's got to be good has it not?!
In your 50s, it's time to stop thinking "someday I would like to be financially independent" and start to make plans to actually become financially independent.
Being financially independent means you have assets that will produce a sufficient level of income to meet your particular lifestyle expenses, and as everyone's circumstances are different, how much assets you will need will depend on how much money you want to spend.
But it's not just the income your assets will need to produce on an ongoing basis, it is likely you will need to purchase some non-financial assets e.g. a new motor vehicle. A comprehensive financial plan should not just include financial details, your plan should also include your lifestyle goals.
You need to ensure you have a reason to get up every day and go and do something that you have always said you would do if you didn't have to work. This may include playing golf all day; or volunteering at the local community centre; or building that back deck on your home that you have always wanted.
Whilst your own home is a cornerstone asset of any financial plan (you need somewhere to live!), your home is not likely to produce any income with which to meet your financial independence income.
Therefore you need to focus on accumulating financial assets now that will produce income for your financial independence.
Also, you need to make provision for accessing at least part of your financial assets, in order to purchase any personal assets required for your financial independence (e.g. A new vehicle) e.g. you can't sell a room of your rental property to buy your new car!
Tax is a major expense of your cash flow budget, and therefore the less tax you have to pay, the more income you have with which to accumulate your financial independence assets.
Tax planning strategies such as sacrificing part of your employment income to contribute to your superannuation investment account ("salary sacrificing") is a popular strategy for accumulating financial assets tax effectively.
At present, you can salary sacrifice up to $35,000 per year (including employer superannuation contributions) and contribute to your superannuation investment account which equates to $70,000 per year between you and your partner.
In addition, you are able to contribute up to $180,000 per year of your after-tax income (commonly referred to as "non-concessional contributions") into your superannuation investment account, which is preferentially taxed (up to a maximum of 15% of any earnings of the investment account).
Usually, your financial independence cash flow budget will include income from various sources, such as bank accounts, term deposits, allocated pension or annuity payments, investment property rental, et cetera.
But you also may be eligible for social security benefits, which may provide some significant benefits not just pension payments.
The commonwealth seniors health card provides various benefits and discounts, such as discounts on home council rates, public transport, health and medical services, et cetera.Any income or discount you receive that will mean you have to spend less of your own money, may be a significant factor in achieving your financial independence date, so it is important to understand if you are eligible, and exactly what you are likely to receive.
If you are serious about your future financial security and would like more information about our Financial Planning Services, please don't hesitate to Contact Us and arrange your FREE FINANCIAL ASSESSMENT today - because.... #everyoneneedsaplan!
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