Mark and Diana: Navigating Retirement and Legacy with Confidence

Mark (60) and Diana (61) are just a year away from retirement, with a well-established portfolio including their family home valued at $2 million, Mark’s superannuation of $1.2 million, Diana’s superannuation of $700,000, a share portfolio worth $650,000, an investment property valued at $500,000 with $350,000 in debt, and $150,000 in cash. After years of hard work and diligent saving, they are concerned about how to efficiently draw income from their investments, plan for transferring their assets to their children, and support their grandchildren’s education.

• Income Efficiency: How can we ensure a steady and tax-efficient income throughout retirement?
•  Asset Transfer: What’s the best strategy for transferring our assets to our children while maintaining our financial stability?
• Wealth Distribution: How can we gift some of our wealth and support our grandchildren’s education effectively?

To address Mark and Diana’s concerns and help them achieve their goals, we implemented a strategic plan tailored to their needs:

1. Income Needs Assessment: We assessed their required retirement income and designed a drawdown strategy that allows for gradual reduction of their superannuation and other assets, ensuring capital lasts until around age 90.
2. Investment Property Sale: Recognizing the investment property’s poor growth prospects, we recommended selling it and using the proceeds to clear the existing debt. This decision improved their overall financial position and freed up capital.
3. Superannuation Optimization: We advised contributing $150,000 from their cash reserves into their super accounts as a non-concessional contribution. This move enhanced their superannuation balance while offering tax benefits.
4. Tailored Investment Strategy: Given their conservative risk profile, we restructured
   their investment mix to focus on income-producing assets, providing stability and
   generating sufficient income to meet their needs.
5. Support for Children and Grandchildren:
   • Weddings: We planned financial support for their children’s weddings by selling selected shares, specifically those with lower capital gains to minimize tax impacts.
   • Home Purchase: Assistance with their children’s home purchase was facilitated through the sale of some shares, retaining high-performing assets for future inheritance.
6. Capital Drawdown Plan: We developed a structured plan to manage their capital efficiently, ensuring funds are available for both immediate expenses and long-term goals.
7. Education Support: Investment bonds were set up for each grandchild’s private school fees. These tax effective bonds are invested in diversified portfolios, set to grow over the next decade to cover educational costs.

• Stable Income: Mark and Diana now have a clear plan for drawing a stable retirement income while preserving their capital until approximately age 90.
• Effective Wealth Transfer: Their strategy for selling shares and assets ensures a smooth, tax-efficient transfer of wealth to their children, aligning with their legacy goals.
• Educational Funding: Investment bonds for their grandchildren’s education provide a long-term, tax-efficient solution, ensuring future educational expenses are covered.
• Peace of Mind: With a comprehensive retirement and legacy plan in place, Mark and Diana can retire with confidence, knowing their financial future and family support are well-managed.