DFP3: Superannuation and Retirement Planning - Client Consultation

This assignment presents a simulated financial consultation between a financial advisor and a client, Nathan, regarding superannuation and retirement planning. The consultation covers various aspects, including understanding Nathan's financial goals, risk tolerance, and current investments. The advisor provides recommendations on contribution splitting, salary sacrificing, and investment strategies to help Nathan achieve his retirement income goals and secure his family's future. The discussion also touches upon relevant tax implications and government regulations, such as the ability to contribute proceeds from selling a family home into superannuation. The assignment highlights the importance of proactive financial planning and seeking professional advice to ensure a comfortable and secure retirement.

Running head: SUPERANNUATION AND RETIREMENT PLANNING
Superannuation and Retirement Planning
Name of the Student:
Name of the University:
Author’s Note:

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SUPERANNUATION AND RETIREMENT PLANNING
Table of Contents
Section 1..........................................................................................................................................2
Section 2..........................................................................................................................................3
Section 3..........................................................................................................................................9
Section 4........................................................................................................................................10

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Section 1
Me: Hi Mr. Nathan. It has been a while that we last met.
Nathan: Yes
Me: In our last meeting you said that you had certain queries.
Nathan: I as well as my wife have been having certain issues regarding the advices that have
been given and therefore wanted to meet you in person.
You: I am aware of the same and therefore have come to meet you. I know that you have to
travel a lot for your profession and therefore you have a hectic schedule.
Nathan: Yes, that I have to but due to my friendly nature I don’t get tired much.
You: Being a sales representative, you are well aware of the cost benefit trade-offs and therefore
you are well aware of the uncertainties that are present in the market.
Nathan: Yes I am aware of that.
You: Well, then let’s not wait further and commence with the issues that are existent so that we
can discuss over the same and resolve the queries. It has to be noted that all the advices that have
been given has been in relation to your family and your retirement planning. Therefore, I would
make sure that the plans and policies are constructed in such a manner so that all your future
strategies are fulfilled. We shall even have a discussion about your wife and her future income
and plans as well so that a safe and comfortable future life will be achievable.

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Section 2
You: Initially it is essential to have an understanding of you and your family so that all the
aspects can be covered in a precise manner. It is known that there has been a rise in the cost of
living all over the world and therefore maintaining the lifestyle and the standard of living has
become essential. I would therefore like to know your aims and objectives so that I can record
them down and accordingly it would be better for me to construct plans and policies with the
help of which I can provide you with effective consultations.
Nathan: I love your attitude and therefore I have fixed this meeting so that all these issues can be
fixed. I would primarily would like to let you know that I work in a private organization and we
have a small child. My wife and I have the main aim of establishing our child and therefore we
are planning to save so that we have sufficient money with the help of which we can educate our
child. The other issue that we have in mind has been to save sufficient assets and money with the
help of which we can have a stable life even after retirement. We are well aware that expenses
will rise as we grow old as our medical expenses would rise. It is due to this fact that we want a
savings plan with the help of which we can incur all the expenses and even have some money in
hand with the help of which we can live a happy life.
You: This is the common goal for most of the middle aged couple. We can plan for the same.
However, for that to happen I need to know the costs and the income which you face along with
your health and certain personal information. I even need to know the current savings that you
have and what other investments have you made so that accordingly suitable plans can be
constructed.
Nathan: I would like to share all the details. However, it is of primary importance that all my
information remains confidential.

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You: Sir, this is my profession and therefore confidentiality is one of the main concerns for us.
We do not disclose any information of our client and this makes our client feel safe and secured.
Nathan: Very well then. I would actually like to let you know that highest percentage of
investment that has been made has been in superannuation. I feel it is the safest and the best
place to make investment as it would take care of my savings and would even help in retirement.
Superannuation is paid by the employer and I pay a certain part for myself as well in order to
increase my level of savings. My financial scenario is moderately good however, I am in need of
further rise in the level of income in order to take care of the future expenses.
You: Ok. Please specify your needs and the level of income that you desire.
Nathan: My wife and I have the main aim of establishing our child and therefore we are
planning to save so that we have sufficient money with the help of which we can educate our
child. The other issue that we have in mind has been to save sufficient assets and money with the
help of which we can have a stable life even after retirement. I want to ensure that all my
expenses are met with the help of which I have a safe and secured future life. I am need of an
insurance so that all the unprecedented events can be financially remunerated with the help of
which our child’s life can be secured. I want to maintain the same lifestyle and the standard of
living that we have now and therefore by calculating the time value of money the projected
amount that needs to be saved is needed so that accordingly the investments can be made. I am
keen towards investment and therefore ideal investment options are even commendable for me.
You: Thank you. I have understood the main concerns and therefore have an idea about what to
recommend with the help of which you can resolve your issues. I even need to know the plans
and future plans for your wife as she is a part of your life as well.

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Nathan: She is looking to work once again and therefore she would earn as well with the help of
which the overall income will increase as well.
You: Is there anything that you want to share?
Nathan: Not that I can recollect. In case I remember any I would surely make you aware.
You: Thank you for the update. I have assessed your scenario and would like to inform you that
you both are quite young and the income that you have is adequate to construct an effective
future plan with the help of which all your expectations will be met. I have understood that you
care a lot for your child and his development has been one of the concerns. I would like to let
you that with the advent of time, the expenses for your child education will increase and
therefore sufficient money is needed. The expenses will increase as the child goes to college and
in case you are looking to send your child abroad then the expenses will increase as well. By
assessing the risk tolerance nature, I can understand that being young you are ready to take risks
and the extent of risk is significantly high. You are ready to take the risk as you know that in
case of any loss, you have the time to bring back the money you have lost. I have even come to
know that as you grow older the risk taking ability would reduce as well.
Nathan: I think whatever you have mentioned, more or less is correct and now that you know
what we are looking for please advise us the strategies that would be ideal and effective for us.
You: As you are planning to retire at the age of 60 you will have to pay extra tax if you withdraw
higher than $195,000 from the taxable component of your super before-tax contributions. By
splitting the contributions with your wife you can build up your super and both may withdraw up
to $195,000 tax free. Withdrawals above $195,000 are taxed at 15%. The 2% Medicare Levy
may also apply.

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The taxable component of a benefit may be subject to tax relying on whether you take your
benefit before or after the age of 60, or, in the event of your death, when they leave their benefits
to a ‘non-dependant’ under the tax laws.
You may need to take advice from your solicitor with respect to estate planning with the help of
which proper wills can be constructed. You should even be aware of the taxation issues and
therefore should be aware that sales of their investment property, which would be subject to the
capital gains as well. The amount will be dependent on the sale price as well as the time of sale.
It is not a worry at the moment as you have not proposed to sell. To further secure your wishes in
the event that either of you were to die I recommend that you update your binding death benefit
nominations in your superannuation.
Nathan: I would like to know what other recommendations you are looking to provide with the
help of which all my goals and objectives would be met.
You: I feel both of you should start to plan to save, which involves increased rate of interest and
therefore need to contribute a minimum of $500 every month. You should even consider
constructing an ‘enduring’ power of attorney, and an ‘enduring’ custodian and thereafter make a
binding nomination within the superannuation for the legal representative. With the help of all
these you would be able to maintain a positive cash flow with adequate available funds. This
would even increase the amount that is available in your superannuation at the time of retirement
from $80,000 to $1.3 million.
You should even achieve your retirement income goal of $80,000 annually after paying tax when
you reach the age of 65. It is essential for you to manage the distribution of your assets as well at
the time of death. I would even recommend you to sacrifice your salary with the help of which

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future income can be enhanced as well. I would even like to inform you that your wife can
sacrifice as well and thereby more returns can be attained in the future as well.
I even recommend splitting of the contribution in two accounts simply due to the fact that this is
a tax saving strategy. The splitting of the contribution would provide double benefits as well with
the help of which the extent of returns would increase. If your wife pays some of her inheritance
amount in your account, this will be beneficial as well simply due to the fact that you would
receive better returns in accordance to your wife.
Nathan: I want to know the process which is used in order to calculate the projected account
balances that you have recommended?
You: The calculation is done on the basis of the future value of money. The expenses that have
been addressed by you are properly understood and accordingly an estimated expense for the
coming time is taken into consideration and the income is calculated with the future time value
with the help of which the projected account balances are calculated. I feel that the target of $1.3
million will be exceeded and this will be good for you as a contingency will be created for the
future.
Nathan: I have heard that the government has passed new rules to permit the retirees to
contribute their proceeds from selling their family home into super. Can we do the same?
You: This can be an effective plan for both of you. But this is only permissible after retirement
and therefore the plans and the advices that have been provided from my end currently are more
suitable at the current time period. In the coming future at the time of retirement if you feel that
there is a need for more income you can sell the property and put in your super. I hope these

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aspects are sufficient enough to satisfy you and accordingly you can incorporate the same with
the help of which all your goals can be attained.

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Section 3
You: I have expressed all your concerns with respect to your plans and goals. Are there any
aspects with respect to which you are looking for a revision?
Nathan: I have received your information and recommendation and at the current point of time I
am not getting any aspect where I can ask for a revision. However, after assessing what you have
said at a later point of time in case I find any queries I would surely get back to you. I am happy
with what you have expressed and look forward to another meeting in case I have any doubt.
You: I would be happy to help.

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Section 4
You: I would like to thank you for giving me the time and the opportunity to share my
experience that can be of any help to you for your future plans and issues.
Nathan: It is me who is feeling obliged.
You: Have I been able to cover all the issues?
Nathan: More or less yes. I cannot remember anything as of now.
You: I would like to meet you once a year so that I can resolve and even recommend with new
and better products and policies. You can even contact me over phone at any point of time.