DO YOU KNOW YOUR SUPER ENTITLEMENTS?
With the media reporting that the government might raise the retirement age and with some employers not paying the right super for their employees, it’s time that we all checked our super entitlements!
Have you lost some of your super?
It’s amazing how many people have super in accounts that they have forgotten about and even more amazing that this lost super totals around $12 billion! If some of that money is yours, it’s time to claim it and add it to your current fund. Check the ATO website and track down your lost super today!
Is your employer contributing the correct super into your fund?
Employees who don’t need to be paid super are few and far between, so it’s a fair bet that your employer should be paying super into your nominated fund. The problem is knowing how much super your employer should be paying!
Currently, your employer needs to pay 9.5% of your salary as super into your fund and they must make these payments at least every three months. It’s not enough to see your super on your pay slips, you must check your fund account to ensure that these contributions have actually been paid into your account.
If your employer is late paying these contributions into your fund, it will clearly affect your investments, so you need to check your fund account and make sure that these payments are being made regularly. It’s even more important that these contributions are made regularly, because by 2025, they will increase from 9.5% to 12%, helping to grow your retirement fund even faster.
What if your employer is not paying your super correctly?
If you believe that your employer should be paying your super contributions and they actually show on your pay slip, but not in your super account or they don’t even show on your pay slip, then you can contact the ATO and the Fair Work Ombudsman.
Since the ATO has a 12-month amnesty for employers to catch up with unpaid super contributions (starting on 24 May 2018), they are more likely to rectify the situation if you bring it to their attention; otherwise without this amnesty they will be heavily fined.
Employers not contributing the correct amount of super for their employees is an on-going concern for the government, which is why they have brought in this 12-month amnesty. It is expected that when this amnesty period ends next year however, that even larger penalties will be introduced for employer non-compliance. In addition, super funds will be required to report all super contributions to the ATO who will then be aware if the contributions are incorrect, late or not being paid at all. This takes the onus off employees themselves to follow up with their super, which is great!
However, you don’t want to become too complacent believing that the ATO will sort out any compliance issues. You should regularly check to make sure that your contributions are being paid into your account and also whether your fund is living up to your expectations. It is complacency that can turn a poorly performing super fund into a disastrous retirement, so always keep on top of your fund and if necessary, move to one that performs better over the long term.
WORKERS' COMPENSATION VERSUS INCOME PROTECTION
If you are relying on the Workers’ Compensation scheme as adequate cover against becoming disabled, you may be compromising the financial wellbeing of your family.
Workers’ compensation is designed to protect employers from employee workplace related claims. It’s not an all-purpose income protection cover as most illnesses and injuries occur outside the workplace and if you’re a sole trader or in a partnership you are unlikely to even be covered by workers’ compensation.
Where do illnesses and injuries happen?
75% of injuries in Australia happen outside of work# and from those that do suffer an injury at work, 36% do not receive any financial assistance*.
Over 2.6 million Australians aged under 65 are living with a physical disability^, with many including conditions like cancer, stroke, heart disease and depression that in most cases will not be covered by Workers Compensation.
Income Protection Cover
Income Protection cover can pay benefits of up to 75% of your income to help you and your family meet the cost of living if you are injured or ill. It is usually tax deductible, provides 24/7 cover, and whether the illness or injury happens at work is irrelevant.
There are other types of cover that you may wish to consider too, such as Critical Illness cover and Total & Permanent Disability. All are designed to help you financially if you can’t work due to illness or injury.
Get personalised advice that’s right for you
I would like to offer you a one-hour consultation to help you find the right insurance solution.
# AIHW (2008) Australia’s health 2008, Cat. no. AUS 99, Canberra
*Australian Bureau of Statistics, Work-Related injuries 2009 – 2010.
^http://www.abs.gov.au/ausstats/abs@.nsf/mf/4825.0.55.001/ accessed on 30 August 2012.
FINANCIAL WINDFALL? How to spend your bonus money wisely
It doesn’t matter whether your financial windfall comes in the form of a tax refund, work bonus or a small inheritance, this ‘bonus’ money can help you to secure your financial future if it's spent wisely. Let’s take a look at four ways you can use your bonus money to help secure your financial future and give you long-term benefits, rather than a short-term happy dance!
1. Pay off your debts
The interest on any unpaid credit card debts can quickly become out of control, so if you have one or more credit card debts that you can’t pay off, now is the time to clear that debt. Cash advances should also be paid in full immediately, as their interest rates are high and your debt can quickly skyrocket.
You can also pay out any personal loans (always check the terms first, as you may be penalised for early completion of these loans) and pay down your mortgage (check with your bank if you have a fixed interest loan, as you can only pay down a specific amount every year).
2. Start an emergency fund
This is where your bonus money can come in handy by giving you a sizable nest egg that is only accessed in an emergency. Look for a savings account with the highest interest rates you can find (although interest rates are low at the moment, any interest is better than none!) and keep enough money in this account so that you can pay all your bills and household expenses for at least three, if not six months. If your bonus money isn’t large enough to cover six months’ worth of bills, keep topping it up until you reach your target and then you can breathe easy!
3. Top up your super
Topping up your superannuation is a very ‘savvy’ strategy and involves making non-concessional contributions (after-tax) to a limit of $100,000 each financial year. However, if you are under 65 years of age, you can contribute up to $300,000 at a time by paying it forward, but you will need to find out if this applies in your situation.
Also, if you earn less than $53,697 each year and make non-concessional contributions to your super, you will be eligible for the government co-contribution scheme, where the government contributes additional money to your super fund. Low income earners on $37,000 or less can benefit from a low income superannuation tax offset contribution from the government. If you want to top off your super with your bonus money, it’s best to talk to a financial adviser who can make sure that you don’t go over your limits and pay extra tax.
4. Open an investment portfolio
Making long-term investments in the share market is a risky tactic, but if you go in with your eyes wide open and find a fund manager who has a record for positive returns, you can start to grow a sizable nest egg for your future with your bonus money.
If you want financial advice on making the most out of your bonus money, call me (Amanda McCall) on 07 3356 6929 or book your appointment online.
7 TIPS FOR PROTECTING YOURSELF FROM SCAMMERS
It’s unfortunate that people feel the need to con others, but scammers are becoming increasingly sophisticated in their attempts to gain access to your personal details and your money. All of us are at risk of being scammed, but the elderly are particularly at risk as they often take people at face value, not realising that they are being scammed.
So what can you do to protect yourself and any elderly relatives from becoming the victim of scammers, whether online or via phone calls?
1. Know that scammers exist:
This is especially relevant for our elderly who tend to be happy to chat on the phone, increasing the probability of playing right into the hands of a scammer. So have a serious conversation with your elderly relatives about scammers, suggesting that they treat any emails or phone calls as a scam until proven otherwise.
2. Don’t send money to anyone:
Never respond to unsolicited requests for money or gift card payments online or over the phone and don’t send money or gift cards to anyone. If in doubt, always check with the organisation to confirm their requests.
3. Don’t open emails and attachments:
Emails can be fake and it’s common for forged invoices to be sent to people as email attachments, requesting online payments. Never pay a bill attached to an email, unless you can verify that it’s real, never open unsolicited emails and do not open any attachments in these emails as they can load malware onto your computer.
4. Be careful buying online:
Only make online transactions if the site is secure. Look for ‘https’ at the beginning of the URL in your browser with a small green lock icon, but even then it’s best to think twice and only buy from sites that are well known.
5. Never share information:
If someone asks you for your personal details online or over the phone, for example your bank account or credit card details, do not provide these details. If in doubt, close the site or put the phone down.
6. Don’t feel pressured:
If someone is pushing you to buy something online, send money or invest in a project, never allow yourself to be pressured into a decision. Limited time offers are often used by scammers to prevent you from taking the time to think about it or discuss the offer with someone else. If you feel pressured, put the phone down or close the website in your browser. Legitimate businesses with a good reputation should never use high pressure sales tactics.
7. Change your passwords:
Never use the same passwords on multiple accounts and always use strong passwords that are not easily remembered. Never share your passwords with anyone else and change them frequently. You can save your passwords in a spreadsheet or notebook to keep them safe.
In general, it’s better to lose out on a legitimate deal than to lose your money to scammers, so always be cautious if people ask you for money online or via the phone. If you are aware that scammers exist and that they can sound very convincing, then you can protect yourself from most scammers and remember - if it seems to good to be true, it’s probably a scam!
For help managing your financial affairs, call me (Amanda McCall) on 07 3356 6929 or book your appointment online.
BEYOND RETIREMENT - PLANNING FOR AGED CARE
Most people look forward to their retirement with relish, which is why organising your finances to fund your retirement is so important. Taking off around Australia, going on overseas trips and paying off the mortgage are popular retirement goals, but what about aged care?
Have you thought about paying for care when yourself or your partner are no longer able to care for themselves? What about dementia? How would you manage financially, if one of you was diagnosed with this condition? These are issues that no-one really likes to discuss but can be devastating from an emotional and a financial point of view if they do occur in the future.
If you have never considered the possibility of dementia in your family, you are not alone! In a recent survey, only 12% of older people in WA said that they have a financial plan in place in case one of them suffers from dementia. Of course, not everyone suffers from this condition as they age, but it’s fair to say that older Australians should have some sort of financial plan in place to cover any future deterioration in their health.
Timing is everything
If your partner needs care above and beyond what you can provide, it’s nice to know that you have a plan in place that you can fall back on. The last thing you want is to suddenly realise that looking after your partner at home is no longer possible, but you don’t have the resources to fund alternate care. It might even be the case that your partner needs full-time assistance following a fall and can’t be discharged from hospital into your care at home.
Another issue is trying to find the right facility, even if you have the funds because many aged care facilities have waiting lists. It will pay you to investigate your options and even tour some of these facilities, asking about their costs and services, then making a short list of your preferred facilities. We all hope that none of us will need aged care, but it’s always best to be safe rather than sorry!
Arranging your finances for your future
One point to note here is that if one of you needed to be admitted to an aged care facility, the other will still need to live at home. We all know that the costs of living alone aren’t much different to living as a couple (even if you do receive government support), so you should anticipate that your living expenses will possibly rise if one of you needs full-time care.
Another consideration is giving someone the power of attorney over your affairs if you are unable to make decisions about your care in the future. Your family may also be concerned about their inheritance if you enter aged care, which can be a serious concern for many families. Life directives are also another delicate subject, but they are important as they ensure that your wishes are upheld and take the pressure away from relatives who would otherwise need to make these decisions on your behalf. All of these matters you need to discuss with your family so that you can ease their burden and make sure that you have the right resources to fund any future health events.
If you are reaching retirement age or are already retired, why not make an appointment to see me (Amanda McCall) and we can make sure that you have everything covered for your advanced years. Phone 07 3356 6929 or book your appointment online.