Kevin and Jillian: Getting on Track for a Secure Retirement

Kevin (65) and Jillian (62) are a couple in their 60s with a steady income—Kevin earns $160,000 annually, and Jillian brings in $95,000. They own their home, which still has a $175,000 mortgage. With Kevin having $450,000 and Jillian $270,000 in superannuation, they are aiming to retire at ages 67 and 64, respectively. They have no children and are keen to ensure their finances are on track to meet their retirement goals. Their main concerns include paying off their mortgage, optimizing their superannuation and investments, and ensuring they have adequate personal insurance.

• Mortgage Repayment: How can we effectively pay off our $175,000 mortgage before retirement?
• Investment and Super Fund Review: Are our investments and superannuation structured to achieve our retirement income goals?
• Retirement Income: Will we achieve an indexed income of $52,000 per year in today’s dollars?
• Retirement Preparation: Are our personal insurances appropriate for our needs?

We implemented a comprehensive plan to address Kevin and Jillian’s concerns and set them on the path to a secure retirement.

1. Mortgage Management: We recommended refinancing their mortgage and to set up an offset account, directing surplus cash flow towards debt repayment and increasing their loan repayments. This strategy accelerated the payoff of their mortgage.
2. Superannuation Optimization: We optimized Kevin’s superannuation by withdrawing $360,000 (since he was eligible) and contributing it as a non- concessional contribution to Jillian’s superannuation. This move ensured Jillian’s super would be sheltered from Centrelink’s age pension means testing, likely qualifying them for a higher age pension amount when Kevin turns 67. We also set up a pension account with Kevin’s superannuation to remove all tax, with contributions being drawn down and re-contributed to super to claim a tax deduction.
3. Investment Diversification: We reviewed and diversified their investment holdings to align with their retirement goals. This involved salary sacrificing, particularly for Kevin, to maximize their superannuation contributions and tax benefits.
4. Insurance and Estate Planning: We reviewed their personal insurances, finding no need for additional coverage given their situation. We also updated their wills, binding death nominations (BDNs), and set up powers of attorney (POAs).

• Debt-Free Future: Accelerated mortgage repayment, with a plan to be almost mortgage-free before retirement.
• Enhanced Super Balance: Jillian’s super is now sheltered from means testing, increasing their future age pension. Kevin’s super is structured to minimize tax and maximize contributions.
• Income Security: Their diversified investment portfolio and tax-efficient strategies are on track to provide an indexed income of $52,000 per year in today’s dollars.
• Peace of Mind: With updated estate planning documents and streamlined personal insurance, Kevin and Jillian can focus on their retirement goals with confidence.