It is hard to make time to sort things out for later in your life, but it is worth taking the time now. You might have overlooked crucial aspects that you need to deal with. There’s no time like the present to start preparing for your golden years. Here are four ways to help you get started…
The following four ways will help you prepare for later in your life. And you will find out some tips to make sure you’re financially prepared.
The income you earn from interest usually comes from bank accounts, annuities, loan repayments, fixed deposits and bonds. Bonds don’t follow the performance of equities. They are a great way to give your portfolio some protection. Fixed deposits, on the other hand, are low-risk investments. They are great to lock into when interest rates are high. So, if you’ve been saving, spend some time working out how much interest you earn per year.
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If you have less than five years before you retire, keep at least five year’s income in low-risk asset classes, such as cash and money market instruments. Preference shares (or prefs) are another alternative for dividend income. If you go this route, redeemable prefs are better than perpetual prefs because they have a fixed date at which the company pay your capital back. Perpetual prefs, on the other hand, have more equity type characteristics and you have no claim to your capital unless specified credit events arise.
Over the years, the rules for Wills have changed so you need to check if yours is still valid. If not, you need to draft a new one. Do a complete estate plan at the same time. You need to ensure there’s sufficient cash in the estate to pay costs, taxes and charges on death benefits from retirement funds. CGT, coupled with estate duty, can result in taxes of up to 30% of the value of the estate to be payable on death after the allowance of the primary rebate.
Pull out all your life insurance policies and retirement funds to check that your beneficiaries are correct. If, for example, you’ve gotten divorced or one of your beneficiaries has passed away, you’ll need to change these details. But be warned, even if you’ve listed your best friend as a beneficiary, your dependants will get preferential treatment. According to the law, changing the beneficiaries on a policy in your will isn’t enough. For this change to be binding, you’ll need to change this via your insurance company too.
Remember, life and retirement policies are “deemed property” unless they have an investment value. This means they’ are not part of your estate until you meet certain conditions, such as reaching a certain age or dying.