What lies ahead?

Everyone is talking about the cost-of-living crisis. The big question is just how bad will things get before they get better and will the Reserve Bank’s efforts to control inflation by lifting interest rates, prompt the local economy to slide into recession.

It’s a difficult question. The share market is providing no clues with most companies providing better than expected results despite a lift in the price of most supply goods, a fall in consumer spending and a pessimistic outlook.

At the same time, monetary policy such as the reserve bank lifting interest rates and making home loans more expensive seems to be working at odds with fiscal policy with the Federal Government cutting income tax to get more money into the hands of workers.

What will be the net result of this merry dance is anyone’s guess.

While most Australians are looking to the July 1 tax cuts as a way of boosting much needed take home pay to help pay the bills, some Australians are thinking what should I do with this extra take home pay. Pay more off the mortgage or invest it or put it into super.

Without doubt if you are over 55 years of age, I argue you should be putting it into super and as you will read, helpfully at the same time as putting these lower tax rates in place, the Federal Government has increased the amounts you can contribute to super.

I walk you through the numbers to show you just how much better off you will be if you do put the money into super.

For those who keep a close eye on the dividends they receive, and that should be everyone, the more alert will have noticed that when the ANZ Bank sent out their last dividend statements, the expected franking credit was greatly reduced.

What is happening here? Perhaps more importantly, do you really know what a franking credit is, apart from putting extra cash in your superannuation account, whenever you receive a dividend? IN this newsletter I explain it in very simple easy to understand language.

Meanwhile, I had the great pleasure of attending a delightful private dinner in Melbourne last week, and was pleased to be able to listen to former Federal Treasurer, the Honorable Peter Costello, make some very general, off the cuff comments about the economy and life in general.

While I don’t normally repeat private conversations, I’m sure Peter won’t mind my repeating what I thought were some very insightful comments on the economy and the world generally.

Just to remind those who may have forgotten, Peter was Australia’s longest serving Federal Treasurer, as held the job from March 1996 to December 2007, during which he brought down 12 Federal budgets, and so is someone well worth listening to

Finally, potential clients always enter my office with the same look on their face. They are worried about their retirement and whether they will be able to successfully make the transition into what should be the best years of their lives.

While I can sort out their finances and make sure they are in the very best position financially, it is up to them as individuals to make sure they embrace the years ahead and make the most of life.

However, as I’ve been doing this for twenty years, I thought I would give you my tips on how to avoid what I believe are the six big mistakes people make in planning the non-financial aspect of their retirement.

Remember if you need help sorting out the financial side of your retirement, please don’t hesitate in contacting me.

Patricia Howard

0427 429 817

Patricia@patriciahoward.com.au