My end of financial year discussions with clients approaching retirement

My end of financial year discussions with clients approaching retirement 1280 720 Ellen Leary

Maximising opportunities in superannuation is always centre stage in my discussions with clients as we approach the end of the financial year and another year closer to their hard earned retirement. There are a large amount of legislative changes coming into effect from 1 July 2022 that Jason and Tao covered off in an earlier article and these will create even more opportunities for clients to boost their retirement in FY23. But before these changes come into place there are still some fantastic opportunities that I love to see my clients make the most of prior to June 30.

Carry-forward unused concessional contributions – Boost your super balance

Carry forward rules allow you to make extra concessional contributions in a financial year above the concessional contributions cap, without having to pay extra tax. This is an arrangement that involves accessing unused concessional cap amounts from up to 5 previous financial years.

This is a great way to boost retirement savings, but an advisor can also discuss with you how this may provide a tax benefit if an asset has been sold in the financial year and triggered a capital gain.

To use your unused cap amounts you need to meet 2 conditions:

If you meet the conditions as outlined by the ATO, then it could be a great opportunity to have a discussion with an advisor on how you can boost your retirement savings.

Re-contribution strategies for estate planning purposes – Put the next generation in the best possible position

One of the key benefits of superannuation is that withdrawals are tax free once you have reached age 60. In addition, the balance of your superannuation that is in ‘pension phase’ will receive all investment earnings tax free too. This makes for a very tax efficient retirement, but complacency can create a lingering issue. I love to make sure no stone is unturned with clients as it is this diligence from an advisor that can lead to an even better retirement than expected and a head start for future generations.

This is where an advisor can help with optimising estate planning through a re-contribution strategy. If eligible, clients may be able to reduce or remove the ‘taxable component’ within their superannuation and increase the ‘tax-free’ component that can pass to beneficiaries, saving thousands for the next generation.

Re-structuring of superannuation to maximise Centrelink benefits (for couples) – The opportunity that can take clients by surprise

It is not uncommon to see an age gap of five or more years between members of a couple and believe it or not, this provides a great opportunity to maximise Centrelink benefits. This is because if one member of a couple is not yet eligible for the pension as they are under 67 years of age, then their superannuation assets do not come under the means test. This provides an opportunity to “super split” by targeting an allocation of personal and re-contribution strategies to reduce the super balance of the older spouse and increase the balance of the younger.

Ellen Leary is an Executive Advisor at Viridian Advisory. Based in Burnie, Tasmania, Ellen has a passion for helping her community and providing financial advice that empowers her clients to achieve their life’s aspirations.

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