Meanwhile fears of inflation in the United States and alarm about unpredictable and escalating tariffs saw sharp falls on Wall Street during March, particularly in the final week.
In Australia, the events in the US, conflicts in Ukraine and the Middle East and the start of the federal election campaign have all made their mark. The S&P/ASX 200 reacted with an almost 5% drop during March.
The Australian dollar, in the doldrums all year, improved slightly during the month before ending lower at around 63US cents.
Economic growth was up 0.6% in the December quarter and 1.3% for the year and household wealth climbed 0.9% in the same period.Inflation rose 2.4% in the 12 months to February, a slight softening from the previous month’s increase of 2.5%.
Consumer sentiment recorded a 4% rise in March, according to the Melbourne Institute and Westpac Bank Sentiment index. The RBA’s decision to cut interest rates in February and a further easing in cost-of-living pressures have provided a clear lift.
How much super you need
Take some of the guesswork out of planning for the future. Work out how much super you’ll have when you retire, and if it will be enough to fund the lifestyle you want.
It’s never too soon to start planning for a better financial future.
Estimate how much super you’ll have
You probably know how much super you have now, but do you know how much you’ll have when you retire?
Use the Moneysmart retirement planner to estimate:
how much money you’ll have to spend each year once you retire
how fees, investment options and contributions will affect your retirement income
You can also use the planner to test out different scenarios and work out how to grow your super.
Estimate how much super you’ll have when you retire.
How much super you’ll need when you retire
The amount of super you’ll need when you retire depends on:
your big costs in retirement, and
the lifestyle you want
Most people can now expect to live well into their eighties. This means that if you stop working at 65, you’ll need retirement income for 20 years or more.
Your big costs in retirement
Think about any big costs that might be part of your retirement plans. For example:
paying off your mortgage
rent
renovating your home
travel
medical costs
The lifestyle you want
There are a few different ways to work out how much super you need for the lifestyle you want in retirement.
If you’re close to retiring use the budget planner to estimate how much money you expect to spend when you stop working.
If you own your own home, a rule of thumb is that you’ll need two-thirds (67%) of your pre-retirement income to maintain the same standard of living in retirement.
Some organisations provide information on retirement spending:
Super Consumers Australia has a set of retirement savings targets for people aged 55-59 and 65-69. They estimate how much you’ll need based on low, medium and high spending.
The Association of Superannuation Funds of Australia provides an ASFA retirement standard. This estimates how much money you’ll need, based on a modest or comfortable lifestyle in retirement.
Build up your super
Many things contribute to your income in retirement, including investments outside of super and assets such as your home, especially if you downsize.
How much Age Pension you are eligible for also has an impact on how much super you need.
If you decide it is important to build your super, there are some actions that can make a big difference over time. Think about:
consolidating your super into one account so you pay fewer fees
making extra contributions to grow your super
changing your super investment options
If you don’t have as much as you’d like, start taking steps to build up your super to boost your retirement savings.
Smart Tip: Throughout your working life, check your super at least annually. Check your fund has the correct personal details and tax file number (TFN). Review your employer’s contributions, and your account fees, investment options and insurance. If you’re not satisfied or don’t understand any details about your fund, call them and ask questions or you can speak to us, we are here to help.
If you need financial advice
Planning for your retirement is complex, and everyone’s situation is different. We can help you to build your retirement nest egg.
Source:
Reproduced with the permission of ASIC’s MoneySmart Team. This article was originally published at https://moneysmart.gov.au/grow-your-super/how-much-super-you-need
Important note: This provides general information and hasn’t taken your circumstances into account. It’s important to consider your particular circumstances before deciding what’s right for you. Although the information is from sources considered reliable, we do not guarantee that it is accurate or complete. You should not rely upon it and should seek qualified advice before making any investment decision. Except where liability under any statute cannot be excluded, we do not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person. Past performance is not a reliable guide to future returns.
Important
Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business nor our Licensee takes any responsibility for any action or any service provided by the author. Any links have been provided with permission for information purposes only and will take you to external websites, which are not connected to our company in any way. Note: Our company does not endorse and is not responsible for the accuracy of the contents/information contained within the linked site(s) accessible from this page.
Setting financial goals as a couple
Step one: what are your financial pain points?
When you start making plans, chances are you’ll both come across financial pain points. In other words, the areas that need some attention and possible alterations. These might include:
post-wedding or honeymoon debts
different earning capacities
different savings goals
different spending habits
disagreements you’ve had in the past
different ideas about couples bank accounts.
While it’s normal to have pain points like these, it’s important to recognise them for what they are and work on solutions.
Step two: separate individual goals from couple goals
While you’ll both have personal savings goals, it’s a good idea to talk about what these are and why they’re important to you.
This will help you work on them, without compromising the goals you have as a couple. Examples of couple goals include:
buying a home together
renovating your home
buying an investment property
travelling overseas
Step three: create an action plan
With a better grip on your financial pain points and the goals you both want to achieve, it will be easier to start making practical plans.
Setting out a clear timeline can help you visualise your goals, and importantly, make sure you’re staying realistic about how and when you’ll achieve them.
It could be worth talking to a financial planner. We can help you set up the timelines and look at ways of boosting your goals.
Keeping motivated is important, but this often takes incentive. You could set up a separate bank account, that has good interest rates and bonuses. You might also want to consider a term deposit. These savings products offer fixed, competitive interest rates and you can choose a term to suit your needs.
You may also consider whether you want a joint account when opening a new savings account as a couple.
When you hit your milestones, there’s no harm in rewarding yourself. A nice dinner or weekend away can remind you that your couple goals are worth achieving.
Using an online budget planner will help you find out where you can save money, as well as how much. MoneySmart’s savings goals calculator is also a great tool to keep you on track.
Step four: get things moving
You may have already opened up a savings account, but have you thought about applying for a personal loan?
With the right repayment plan in place, personal loans can help you achieve those bigger financial goals, such as paying for the costs of starting a family, moving overseas, or even paying off the engagement ring.
If you’re looking at property instead, it’s best to start the conversation with your lender soon, so you can figure out how much you can afford and where you want to live.
When you apply for a home loan. you’ll want to be prepared. Banks and lenders take into consideration a lot of factors before they decide to approve applications. But the more organised you are, the easier it will be to get things moving.
Source: NAB
Reproduced with permission of National Australia Bank (‘NAB’). This article was originally published at https://www.nab.com.au/personal/life-moments/family/get-married/budgeting-couple
National Australia Bank Limited. ABN 12 004 044 937 AFSL and Australian Credit Licence 230686. The information contained in this article is intended to be of a general nature only. Any advice contained in this article has been prepared without taking into account your objectives, financial situation or needs. Before acting on any advice on this website, NAB recommends that you consider whether it is appropriate for your circumstances.
© 2022 National Australia Bank Limited (“NAB”). All rights reserved.
Important:
Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business nor our Licensee takes any responsibility for any action or any service provided by the author. Any links have been provided with permission for information purposes only and will take you to external websites, which are not connected to our company in any way. Note: Our company does not endorse and is not responsible for the accuracy of the contents/information contained within the linked site(s) accessible from this page.
What are tariffs?
Thanks to the decisive victory of US President-elect Donald Trump, we’re now set to hear a whole lot more of his favourite word.
It’s something of a love affair. On the campaign trail in October, he said:
To me, the most beautiful word in the dictionary is tariff.
Previously, he’s matched such rhetoric with real policies. When he was last in office, Trump imposed a range of tariffs.
Now set to return to the White House, he wants tariffs of 10-20% on all imports to the US, and tariffs of 60% or more on those from China.
Most of us understand tariffs are some kind of barrier to trade between countries. But how exactly do they work? Who pays them – and what effects can they have on an economy?
What are tariffs?
An import tariff – sometimes called an import duty – is simply a tax on a good or service that is imported into a country. It’s collected by the government of the country importing the product.
How exactly does that work in practice?
Imagine Australia decided to impose a 10% tariff on all imported washing machines from South Korea.
If an Australian consumer or a business wanted to import a $1,200 washing machine from South Korea, they would have to pay the Australian government $120 when it entered the country.
So, everything else being equal, the final price an Australian consumer would end up paying for this washing machine is $1,320.
If a local industry or another country without the tariff could produce a competing good at a similar price, it would have a cost advantage.
Other trade barriers
Because tariffs make imports more expensive, economists refer to them as a trade barrier. They aren’t the only kind.
One other common non-tariff trade barrier is an import quota – a limit on how much of a particular good can be imported into a country.
Governments can also create other non-tariff barriers to trade.
These include administrative or regulatory requirements, such as customs forms, labelling requirements or safety standards that differ across countries.
What are the effects?
Tariffs can have two main effects.
First, they generate tax revenue for the government. This is a major reason why many countries have historically had tariff systems in place.
Borders and ports are natural places to record and regulate what flows into and out of a country. That makes them easy places to impose and enforce taxes.
Second, tariffs raise the cost of buying things produced in other countries. As such, they discourage this action and encourage alternatives, such as buying from domestic producers.
Protecting domestic workers and industries from foreign competition underlies the economic concept of “protectionism”.
The argument is that by making imports more expensive, tariffs will increase spending on domestically produced goods and services, leading to greater demand for domestic workers, and helping a country’s local industries grow.
Swapping producers isn’t always easy
Tariffs may increase the employment and wages of workers in import-competing industries. However, they can also impose costs, and create higher prices for consumers.
True, foreign producers trying to sell goods under a tariff may reduce their prices to remain competitive as exporters, but this only goes so far. At least some of the cost of any tariff imposed by a country will likely be passed on to consumers.
Simply switching to domestic manufacturers likely means paying more. After all, without tariffs, buyers were choosing foreign producers for a reason.
Because they make selling their products in the country less profitable, tariffs also cause some foreign producers to exit the market altogether, which reduces the variety of products available to consumers. Less foreign competition can also give domestic businesses the ability to charge even higher prices.
Lower productivity and risk of retaliation
At an economy-wide level, trade barriers such as tariffs can reduce overall productivity.
That’s because they encourage industries to shift away from producing things for which a country has a comparative advantage into areas where it is relatively inefficient.
They can also artificially keep smaller, less productive producers afloat, while shrinking the size of larger, more productive producers.
Foreign countries may also respond to the tariffs by retaliating and imposing tariffs of their own.
We saw this under Trump’s previous administration, which increased tariffs on about US$350 billion worth of Chinese products between 2018 and 2019.
Several analyses have examined the effects and found it was not foreign producers but domestic consumers – and especially businesses relying on imported goods – that paid the full price of the tariffs.
In addition, the tariffs introduced in 2018 and 2019 failed to increase US employment in the sectors they targeted, while the retaliatory tariffs they attracted reduced employment, mainly in agriculture.
Economists’ verdict
Tariffs can generate tax revenue and may increase employment and wages in some import-competing sectors. But they can also raise prices and may reduce employment and wages in exporting sectors.
Do the benefits outweigh the costs? Economists are nearly unanimous – and have been for centuries – that trade barriers have an overall negative effect on an economy.
But free trade does not benefit everyone, and tariffs are clearly enjoying a moment of political popularity. There are interesting times ahead.
Source: https://theconversation.com/what-are-tariffs-243356
Estate planning gives you a final say
Planning for what happens when you pass away or become incapacitated is an important way of protecting those you care about, saving them from dealing with a financial and administrative mess when they’re grieving.
Your Will gives you a say in how you want your possessions and investments to be distributed. Importantly, you should also establish enduring powers of attorney and guardianship as well as a medical treatment decision maker and/or advance care directive in case you are unable to handle your own affairs towards the end of your life.
At the heart of your estate planning is a valid and up-to-date Will that has been signed by two witnesses. Just one witness may mean your Will is invalid.
You must nominate an executor who carries out your wishes. This can be a family member, a friend, a solicitor or the state trustee or guardian.
Keep in mind that an executor’s role can be a laborious one particularly if the Will is contested, so that might affect who you choose.
Around 50 per cent of Wills are now contested in Australia and some three-quarters of contested Wills result in a settlement.i
The role of the executor also includes locating the Will, organising the funeral, providing death notifications to relevant parties and applying for probate.
Intestate issues
Writing a Will can be a difficult task for many. It is estimated that around 60 per cent of Australians do not have a valid Will.ii
While that’s understandable – it’s very easy to put off thinking about your own demise, and some don’t believe they have enough assets to warrant writing a Will – not having one can be very problematic.
If you don’t have a valid Will, then you are deemed to have died intestate, and the proceeds of your life will be distributed according to a statutory order which varies slightly between states.
The standard distribution format for the proceeds of an estate is firstly to the surviving spouse. If, however, you have children from an earlier marriage, then the proceeds may be split with the children.
Is probate necessary?
Assuming there is a valid Will in place, then in certain circumstances probate needs to be granted by the Supreme Court. Probate rules differ from state to state although, generally, if there are assets solely in the name of the deceased that amount to more than $50,000, then probate is often necessary.
Probate is a court order that confirms the Will is valid and that the executors mentioned in the Will have the right to administer the estate.
When it comes to the family home, if it’s owned as ‘joint tenants’ between spouses then on death your share automatically transfers to your surviving spouse. It does not form part of the estate.
However, if the house is only in your name or owned as ‘tenants in common’, then probate may need to be granted. This is a process which generally takes about four weeks.
Unless you have specific reasons for choosing tenants in common for ownership, it may be worth investigating a switch to joint tenants to avoid any issues with probate.
Having a probate is favourable if there is a refund on an accommodation bond from an aged care facility.
Rights of beneficiaries
Bear in mind that beneficiaries of Wills have certain rights. These include the right to be informed of the Will when they are a beneficiary. They can also expect to hear about any potential delays.
You are also entitled to contest or challenge the Will and to know if other parties have contested the Will.
If you want to have a final say in how your estate is dealt with, then give us a call.
i Success rate of contesting a will | Will & Estate Lawyers
ii If you don’t, who will? 12 million Australians have no estate plans | Finder
