University Finance Report: Retirement and Estate Planning Analysis

This report provides a detailed financial analysis and planning strategy for retirement and estate management. It includes a cash flow statement, accumulation of income from shares and rent, and superannuation account analysis for a couple. The report assesses the current financial situation, including income, expenses, and investments. It offers recommendations for improving financial well-being, such as superannuation strategies, non-superannuation strategies, and estate planning. The report projects cash flow, evaluates investment portfolios, and emphasizes the importance of personal insurance and regular portfolio reviews. The analysis considers inflation, tax implications, and the couple's financial goals to provide actionable advice for securing their retirement and estate plans.

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

1
RETIREMENT AND ESTATE PLANNING
Covering Letter
To Mark and Susan Saunders
48, Mayo Street
Melbourne
Sub: Covering Letter for the Report
Date: 21/09/2017
Respected Mr and Mrs Saunders,
In view of the interview we had earlier during our appointment, we had undergone interactions
regarding the various aspects with respect to the financial information in order to establish an
effective retirement planning investment portfolio. In line with the discussions we had
previously, the underline paper consists of the report in which every question has been answered
in view to the answers desired. Please have a go through it and feel free to revert in case any
doubt arises.
The report has tried to cover every aspect in lieu of the retirement planning.
Regards
Malcolm Johnson
Financial Consultant

2
RETIREMENT AND ESTATE PLANNING
Table of Contents
Answer to Question No 1................................................................................................................3
Answer to 1 (i).............................................................................................................................3
Answer to 1 (ii)............................................................................................................................4
Answer to 1 (iii)...........................................................................................................................8
Answer to 1 (iv)...........................................................................................................................9
Answer to 1 (v)..........................................................................................................................12
Answer to Question No 2..............................................................................................................13
Bibliography..................................................................................................................................19

3
RETIREMENT AND ESTATE PLANNING
Answer to Question No 1
Answer to 1 (i)
Statement Cash flow for the Year 30 June 2017
Particulars Mark Susan Total
Income
Salary
$
32,000.00
$
32,000.00
Superannuation contribution
$
3,200.00
$
3,200.00
Net Income from Business
$
125,000.00
$
125,000.00
Income from term deposit
$
1,000.00
$
1,000.00
Dividend Income
$
4,000.00
$
4,000.00
Total Income
$
125,000.00
$
40,200.00
$
165,200.00
Expenses $ -
Work related expenses
$
700.00
$
700.00
Donation
$
100.00
$
120.00
$
220.00
Total Expenses
$
100.00
$
820.00
$
920.00
Net Income/ Taxable income
$
124,900.00
$
39,380.00
$
164,280.00
Tax Payable
$
33,845.00
$
4,024.20
$
37,869.20
Medicare Levy
$
2,498.00
$
787.60
$
3,285.60
Gross Tax Payable
$
36,343.00
$
4,811.80
$
41,154.80
Franking credit
$
1,200.00
$
1,200.00
Net income after tax
$
88,557.00
$
33,368.20
$
121,925.20
Adjustments $ -
Living Expenses
$
45,400.00
$
14,600.00
$
60,000.00
Mortgage and loan repayment
$
29,888.00
$
9,612.00
$
39,500.00
Expected Cash Surplus $ $ $

4
RETIREMENT AND ESTATE PLANNING
13,269.00 9,156.20 22,425.20
Answer to 1 (ii)
Statement Showing Accumulation of Income from shares
Ye
ar
Opening Balance Growth Accumulated closing Value
201
7
$
100,000.00
$
6,000.00
$
106,000.00
201
8
$
106,000.00
$
6,360.00
$
112,360.00
201
9
$
112,360.00
$
6,741.60
$
119,101.60
202
0
$
119,101.60
$
7,146.10
$
126,247.70
202
1
$
126,247.70
$
7,574.86
$
133,822.56
202
2
$
133,822.56
$
8,029.35
$
141,851.91
202
3
$
141,851.91
$
8,511.11
$
150,363.03
202
4
$
150,363.03
$
9,021.78
$
159,384.81
202
5
$
159,384.81
$
9,563.09
$
168,947.90
202 $ $ $

5
RETIREMENT AND ESTATE PLANNING
6 168,947.90 10,136.87 179,084.77
202
7
$
179,084.77
$
10,745.09
$
189,829.86
202
8
$
189,829.86
$
11,389.79
$
201,219.65
202
9
$
201,219.65
$
12,073.18
$
213,292.83
203
0
$
213,292.83
$
12,797.57
$
226,090.40
Statement showing accumulated Income From rent
Yea
r value of Property Rental Income
2017 $ 320,000.00 $ 16,000.00
2018 $ 332,800.00 $ 16,640.00
2019 $ 346,112.00 $ 17,305.60
2020 $ 359,956.48 $ 17,997.82
2021 $ 374,354.74 $ 18,717.74
2022 $ 389,328.93 $ 19,466.45
2023 $ 404,902.09 $ 20,245.10
2024 $ 421,098.17 $ 21,054.91
2025 $ 437,942.10 $ 21,897.10
2026 $ 455,459.78 $ 22,772.99
2027 $ 473,678.17 $ 23,683.91
Mark
Statement showing Accumulation and income in Superannuation Account
Ye
ar
S&M SMSF AMP Super Fund Return
201 $ $ $

6
RETIREMENT AND ESTATE PLANNING
7 40,000.00 20,000.00 3,520.00
201
8
$
41,200.00
$
20,600.00
$
3,625.60
201
9
$
42,436.00
$
21,218.00
$
3,734.37
202
0
$
43,709.08
$
21,854.54
$
3,846.40
202
1
$
45,020.35
$
22,510.18
$
3,961.79
202
2
$
46,370.96
$
23,185.48
$
4,080.64
202
3
$
47,762.09
$
23,881.05
$
4,203.06
202
4
$
49,194.95
$
24,597.48
$
4,329.16
202
5
$
50,670.80
$
25,335.40
$
4,459.03
202
6
$
52,190.93
$
26,095.46
$
4,592.80
202
7
$
53,756.66
$
26,878.33
$
4,730.59
Susan
Statement showing Accumulation and income in Superannuation Account
Ye S&M SMSF Australian Catholic Super Return

7
RETIREMENT AND ESTATE PLANNING
ar Fund
201
7
$
20,000.00
$
90,000.00
$
5,140.00
201
8
$
21,600.00
$
91,600.00
$
5,316.00
201
9
$
84,100.00
$
154,100.00
$
12,191.00
202
0
$
84,600.00
$
154,600.00
$
12,246.00
202
1
$
86,600.00
$
156,600.00
$
12,466.00
202
2
$
169,200.00
$
239,200.00
$
21,552.00
202
3
$
169,200.00
$
239,200.00
$
21,552.00
202
4
$
169,550.00
$
239,550.00
$
21,590.50
202
5
$
169,660.00
$
239,660.00
$
21,602.60
202
6
$
170,120.00
$
240,120.00
$
21,653.20
202
7
$
252,260.00
$
322,260.00
$
30,688.60
202
8
$
271,194.60
$
341,194.60
$
32,771.41

8
RETIREMENT AND ESTATE PLANNING
202
9
$
272,837.40
$
342,837.40
$
32,952.11
203
0
$
293,414.80
$
363,414.80
$
35,215.63
The assumptions that have been undertaken for the computation of the data has been that
net profit from business, salary and all expenditure will grow by the CPI each year. The plant
and equipment is a depreciating asset and therefore can be assumed that it will have no value
when the business is sold The couple has private health insurance financial assumptions to be
used like making use of the current tax rates (2016) Inflation: 3.0% per annum, and all the rates
have been calculated on the basis of actual figures.
Answer to 1 (iii)
Name of investment Owner Cash
Fixed
interest
Propert
y
Australian
shares
Internationa
l shares Total
Australia share portfolio Susan 100,000
100,00
0
Bank acccount Joint 35,000 35,000
S&M SMSF Mark 18000 12000 0 10,000 0 40000
Susan 9000 6,000 0 5000 0 20000
AMP Super Fund Mark 2000 4,000 4000 6000 4000 20000
Australia Catholic
Super Fund Susan 18000 27000 13500 18000 13500 90000
Total of asset class in $
terms 82000 49000 17500 139,000 17500 305000

9
RETIREMENT AND ESTATE PLANNING
Total of asset class in %
terms 37.1% 22.2% 7.9% 62.9% 7.9%
The above table represents the returns from the share portfolio of Mark and Susan.
By observing the computations and taking help of various tools it can be determined that
if the couple has a fixed retirement income of $39, 275, then the balance of the superannuation
can sustain for them up to the age of 90 years for each one of them.
Answer to 1 (iv)
There are various strategies and recommendations that can be given out to the mark and
Susan in order to improve their lifestyle and level of income even after their retirement. They are
s given as follows:
Superannuation strategy:

10
RETIREMENT AND ESTATE PLANNING
As the couple are planning to retire they will have to pay extra tax if they withdraws
more than $195,000 in the 2016-17 financial year from the taxable component of their super
before-tax contributions. By distributing the contributions among the two they can construct their
super and both can withdraw up to $195,000 tax free. Any withdrawals above $195,000 are taxed
at 15%. The 2% Medicare Levy may also apply.
Non-superannuation strategy:
The taxable element of a benefit may be liable for taxation depending on whether the
coupe take their benefit before or after the age of 60, or, in the event of their death, when they
leave their benefits to a ‘non-dependant’ with respect to the tax laws.
Estate planning:
In accordance to the house that they possess, the couple wants to pay off the mortgage
before they retire and in order to do so they should keep an amount out of their annual income
for the payment of mortgage and should calculate the amount that can be paid before they retire
in order to close the mortgage and thereby pay the desired amount in order to close the mortgage
before retirement.
Personal insurance:
They are not in the idea of examining their insurance. The main objective of the couple is
to increase their savings for the intention of retirement and to achieve an income of $39,275 per
month by minimising the level of tax once they reach retirement. Their present scenario reveals
that if they sustain as their present situation, they will be not be able to meet their goal and hence
requires implementing the strategies in order to obtain $39,275 per month for their maintenance
of their current lifestyle even after their retirement.

11
RETIREMENT AND ESTATE PLANNING
From the information provided, it is evident that their estimated superannuation account
balances at retirement are based on their present scenario. This superannuation account balance
would be able to generate sufficient amount of returns when the couple reach their retirement
age. It is recommended that they concentrate on this without delay by undertaking this
recommendation.
It is recommended Mark and Susan that they both sustain their existing superannuation
funds because the investigation indicates that they offer various fees for consultation, however it
is suggested that they modify their options for investment to be more in line with their risk
profile that has been recognised.
If they still remain in their current asset allocation, along with the added investment into
superannuation they would be unable to accomplish their desired income after retirement. It is
thus sensible for them to undertake a slightly higher degree of risk than they have at this time
undertaken in order to have a better possibility of attaining their objectives.
As they will still have a increased surplus income, it is suggested that they should
undertake savings plan into a high income earning cash account to build up a buffer for
unprecedented events. It is recommended to keep a cash buffer and it is recommended as a
strategy that the couple with debt and investment property maintain a buffer in case of
unforeseen operating expenses that may arise, or rising interest rates on loans. It has been
estimated that that they will need $39,275 per month for their living up to the age of 90 years and
an earnings of 3% per annum net of inflation.
It is suggested to construct a strategy to review their insurances once they have
incorporated the strategies within their investment portfolio. Without undertaking this,

12
RETIREMENT AND ESTATE PLANNING
assessment of the risk of being over or under insured and probably unable to meet their
demanded long-term objectives and goals if something happens to anyone of them increases. It is
even suggested that assessment of the investment portfolio is undertake from time to time in
order to compare their return with respect to the market and undertake changes if deemed
necessary with respect to the market in order to maintain their stable income. The couple should
even maintain sufficient balances for their children especially the one who is still undertaking
education in order to financially stabilise them in case anything happens to the couple.
Answer to 1 (v)
The recommendations that have been provided in the above answer can be well explained
with the help of the expected cash flow model for the couple.
Projected Statement of Cash Flow for the year ended 2017/18
Particulars Mark Susan Total
Income
Salary
$
32,000.00
$
32,000.00
Super annuation
contribution
$
3,520.00
$
5,140.00
$
8,660.00
Net Income from Business
$
125,000.00
$
125,000.00
Income from Rent
$
16,000.00
Income from term deposit
$
1,000.00
$
1,000.00
Dividend Income
$
4,000.00
$
4,000.00
Total Income
$
128,520.00
$
58,140.00
$
186,660.00
Expenses
$
-
Work related expenses
$
700.00
$
700.00
Donation
$
100.00
$
120.00
$
220.00
Total Expenses $ $ $

13
RETIREMENT AND ESTATE PLANNING
100.00 820.00 920.00
Net Income/ Taxable
income
$
128,420.00
$
57,320.00
$
185,740.00
Tax Payable
$
35,147.40
$
7,432.80
$
42,580.20
Medicare Levy
$
2,568.40
$
1,146.40
$
3,714.80
Gross Tax Payable
$
37,715.80
$
8,579.20
$
46,295.00
Franking credit
$
1,200.00
$
1,200.00
Net income after tax
$
90,704.20
$
47,540.80
$
138,245.00
Adjustments
$
-
Living Expeneses
$
45,400.00
$
14,600.00
$
60,000.00
Mortgage and loan
repayment
$
29,888.00
$
9,612.00
$
39,500.00
Expected Cash Surplus
$
15,416.20
$
23,328.80
$
38,745.00
Answer to Question No 2
It has been observed earlier that Mark and Susan have the intention of maximising their
income before they retire. They have sufficient amount of superannuation fund as well as salary
and income in the current period of time and therefore they have the intention of undertaking an
investment plan that would reap significant amount of revenue in a socially responsible manner.
The couple hence has a strong willpower to make sure that they undertaken investments in a
communally responsible manner. They are even in the idea of ensuring that they abstain from
investing in organizations that have an impact on the society and the environment adversely.
There are certain organizations like the tobacco, liquor and chemical industries that have adverse
impact on the society and the environment and hence look to stay away from such investments.

14
RETIREMENT AND ESTATE PLANNING
On the other hand, the couple are even concerned that undertaking investments in a
socially responsible manner might create revenue or return that may be relatively lower in value
than other investments. Hence, it has become essential to ascertain the couple about the meaning
of investing in a socially responsible manner. An investment would be regarded as socially
responsible because of the nature of the operations undertaken by the organization where the
investment activities would take place. The general themes for communally responsible
investment includes not to take investments in organizations associated with tobacco gambling
and liquor industries and undertaking investments in firms who are engaged in efforts for cleaner
technology, environmental sustainability and communal justice. Such investments can be
undertaken with the help of investments in individual or singular companies or undertaking
investments through exchange traded funds and mutual funds that are communally conscious.
This investment practice has been expanding significantly and has been used widely as
there has been entry of new funds that pooled investment vehicles that are available to the retail
investors. The investors even have the advantage of making use of the exchange traded funds and
the mutual funds as an additional benefit in order gain access to companies from all over the
world from various industrial sectors. It is the responsibility of the investors to go through the
investment prospectus of the companies where the investment would be undertaken in order to
gain a fruitful idea about the aspects that would make them realise that they are investing socially
responsibly. There exist two intrinsic goals of undertaking investments socially and they are
financial gains and social impacts. Both the aims may not go hand in hand as the investments
that present it to be socially responsible may not give out effective returns to the investors.
Hence, it is the responsibility of the investors to evaluate the financial outlook of the investments
they want to undertake.

15
RETIREMENT AND ESTATE PLANNING
Investing with the help of being socially responsible are even known as sustainable, ethical
and green investing. The socially responsible investors seek to promote ideals and concepts that
they strongly believe in. The strategy of achieving this process can be undertaken with the help
of the three simple approaches;
1. Investments in the government and organizations that the investors have trust and even
believe the ideal hold to the values of significance to the investors. These are inclusive of
the consumer protection, environment, rights of the employees, religious beliefs, human
rights and other factors. The highlighted area of concern is even known as ESG
(Environment, Social and Governance). The investment in ESG would determine that the
investments undertaken by the investors are done socially responsibly. Furthermore
social responsible investing even includes shareholder advocacy and communal
investing,
2. The advocacy of the shareholders actually means the socially responsible investors are
proactively manipulating and motivating the corporate decisions that can have a huge
damaging effect on the society. The numerous objectives of the advocacy of the
shareholders is to pressurize those bodies into enhancing their strategies and practices and
behave as good and proper citizens, and on the other hand looking for long term returns
and effective financial performance. The aims and objectives are achieved with the help
of various mechanisms like filing the resolutions for the vote of the shareholders,
awarding and educating the public, dialogue and attracting the media in order to address
the issue, which would additional pressure on the companies so that they undertake
activities that are socially responsible.

16
RETIREMENT AND ESTATE PLANNING
3. Communal Investing has been one of the swiftest expanding social responsible
investment segments and has several billion dollars in the managed funds. With the help
of these investments, the capital of the investors are distributed towards the societies,
which are under the conventional financial lending organizations and provides recipients
of the access to low interest loans within the investment capital and earnings but even
provides priceless communal services that are inclusive of healthcare, education, housing
and child care.
The approach of socially responsible investments seeks to undertake investments in the
stocks and bonds of the organizations that promote specific causes and actions that would benefit
the society and discards the investments that undertake offending actions. The investors has the
opportunity to go through the various steps and actions that are essential and undertake plans that
would be effective for the development of the socially responsible investments. The investors
can undertake a market analysis and evaluate the companies that are working for the social
development. Before undertaking an investment, it is essential to go through the prospectus of
the firm in order to gain idea about the mission, vision and objectives of the firm and the actions
undertaken by the firm through their services and products and that has been beneficial for the
society as a whole. The investors should even consult with their fund managers in order to gain
some idea about the fact about where to invest and which companies are having the idea of
sustaining the environment and the society with the help of their work.
The other issue that has aroused has been whether undertaking investments in a socially
responsible manner lead to lower levels of income generation. There have been various
arguments with regards to this topic as it is seen that incorporation of the non-financial factors
like the ESG within the process of investment leads to lower level of investments as the level of

17
RETIREMENT AND ESTATE PLANNING
opportunities of investment in this arena is low and the probability of income generation reduces.
There exist high chances that socially responsible investments may lower the level of return
generated. Conversely, with the advent of globalization and liberalization, it has been viewed
that investors are becoming aware of this scenario day by day and have decided to undertake
investments in this arena. Hence, there has been entry of various companies on this arena thereby
creating the opportunity that effective level of returns can be generated from such investments.
There have been various mechanisms like the comparison of the index of the traditional
investments and socially responsible investments along with comparison of mutual funds and
how the stocks behave in the market due to volatility in the market. The use if these mechanisms
and techniques have brought forth the fact that The head finding with respect to socially
responsible investments reveal that socially responsible investing does not bring about lower
returns on investment. This is a key discovery with respect to the fact that it offers help to
individual investors and institutional fund trustees that they can seek after a program of socially
responsible investing with the desire that returns on investment will be identical to the
conventional options of investment.
It is essential to make a note of the fact that whether SRI lowering the return on investment
can never be finished. One of the factors has been there is exists a complex empirical question
and there would be various disputes over the data quality and the level of returns. The investors
who are against the socially responsible investment are of the perception that any other thing
other than financial factors would have an impact on the return on the investment and this would
lower the benefit for the investors. However, it can be said that by looking at the current
scenarios that there are various organizations that are undertaking socially responsible activates
and have been able to generate significant amount of returns that is similar to the traditional

18
RETIREMENT AND ESTATE PLANNING
forms of investment. It is in the hands of the investors to analyse the market as well as to
examine the past financial performance of the company where they want to undertake
investments in order to gain useful returns out of them. A proper scrutiny of the various elements
of the organization would be influential for bringing out results that are desirable for the
investors. Hence, the couple Mark and Susan if deemed necessary can undertake such
investments.

19
RETIREMENT AND ESTATE PLANNING
Bibliography
Bahari, A., 2014. Islamic Estate, Retirement and Waqf Planning. IBFIM.
Ball, R., The Guardian Life Insurance Company Of America, 2015. Interactive systems and
methods for estate planning related activities. U.S. Patent 8,930,253.
Bhate, N. and Bansal, A., 2015. Personal Financial Planning: A Review. Altius Shodh Journal of
Management & Commerce.
Blum, M.E., Post, G.V., Hunter, J.R., Novak, S.W., Woodard, L., Holliday, A.L., Davis, L.G.,
Clark, E.K., Moon, C.R., Stephenson, L. and Haley, L.L., 2014. THE ESTATE PLANNER’S
ROLE IN BUSINESS SUCCESSION PLANNING: A TEN STEP GUIDE.
Carr, N.A., Sages, R.A., Fernatt, F.R., Nabeshima, G.G. and Grable, J.E., 2015. Health
information search and retirement planning. Journal of Financial Counseling and
Planning, 26(1), pp.3-16.
Clifford, D., 2017. Estate planning basics. Nolo.
Drew, M.E., Walk, A.N. and West, J., 2015. Conditional allocations to real estate: An antidote to
sequencing risk in defined contribution retirement plans. The Journal of Portfolio
Management, 41(6), pp.82-95.
Eggers, T., 2015. Retirement planning for farm families. Ag Decision Maker Newsletter, 16(5),
p.4.
Erlanger, H.S., Hughes, B.S. and Weisberger, J., 2014. Estate Planning Under Wisconsin's
Marital Property Act.

20
RETIREMENT AND ESTATE PLANNING
Fisch, J.E., Turner, J.A. and Center, P.P., 2017. Robo Advisers vs. Humans: Which Make the
Better Financial Advisers?.
Fleming, R.B. and Davis, L.N., 2016. Elder law answer book. Wolters Kluwer.
Gibbs, M., Bellamy, C., Arnold, M., Nansen, B. and Kohn, T., 2013. Digital registers and estate
planning. Retirement and Estate Planning Bulletin, 16(3), pp.63-68.
Hopkins, J.P. and Lipin, I.A., 2013. Viable solutions to the digital estate planning dilemma. Iowa
L. Rev. Bull., 99, p.61.
Horton, D., 2017. Tomorrow's Inheritance: The Frontiers of Estate Planning Formalism. BCL
Rev., 58, p.539.
James III, R.N. and O’Boyle, M.W., 2014. Charitable estate planning as visualized
autobiography: An fMRI study of its neural correlates. Nonprofit and Voluntary Sector
Quarterly, 43(2), pp.355-373.
James III, R.N., 2015. The new statistics of estate planning: lifetime and post-mortem wills,
trusts, and charitable planning. Est. Plan. & Cmty. Prop. LJ, 8, p.1.
James III, R.N., 2016. An Economic Model of Mortality Salience in Personal Financial Decision
Making: Applications to Annuities, Life Insurance, Charitable Gifts, Estate Planning,
Conspicuous Consumption, and Healthcare. Journal of Financial Therapy, 7(2), p.5.
Keown, A.J., 2013. Personal finance: Turning money into wealth. Pearson.
Lipson, M.L., Lipson, M.L., Evans, R.B., Evans, R.B., Lipson, M.L., Lipson, M.L., Evans, R.B.
and Evans, R.B., 2017. Pittinos Financial Advisers, LLC. Darden Business Publishing Cases,
pp.1-10.