L et’s talk about a client couple (of ours) who have been clients for many years now and have taken our advice to achieve financial independence.
In 2006, they were in their mid 40’s with two teenage children. At the time, they were both employed, one full-time and one part-time, earning approximately $63,000 and $34,000 a year, respectively.
They had no outstanding mortgage at the time and owned the family home, although they had some borrowed funds for investment and modest superannuation balances of around $100,000.
They also had a small car loan.
Now that their children were becoming more independent and with the wife returning to full-time employment, the couple was looking to increase their capacity for building funds to meet their retirement goals and travel extensively in the lead-up to and during their retirement.
They were keen to reduce their working hours from age 55 to 60 and begin to transition into full retirement closer to age 65.
The key challenge here was how best to manage their income, tax and investments so that they could achieve these goals.
The client faced the problem of managing their income and investments best to meet their retirement goals and fund extensive travel before and after retirement. They had no structured cash flow management plan and some existing investments but could not fully access their superannuation until after age 65 since they would still be working part-time.
As such, they needed to find ways to use their increasing financial capacity to ensure that they could save money for early retirement and travel.
Working Toward Financial Independence
We helped the client to achieve their financial independence using a comprehensive framework. Specifically, we set up an automated saving system and provided an opportunity analysis snapshot for them to understand better their current situation and what the future holds.
We then established a retirement pathway plan tailored to their needs and ensured they had sufficient income protection and disability insurance. We assessed the client’s risk profile, streamlined their investment process, and used their existing equity to invest in a diversified share portfolio.
We used salary packaging for tax efficiency and, later on, set up a self-managed super fund.
They were also pleased that they had taken the time to understand their situation better, allowing them to make more informed decisions as they went along.
The client now has the tools and resources necessary to make confident decisions about their future, considering the current environment and the ever-changing landscape of personal finance.
Closing in on Retirement
Fast forward to today, the clients have reached financial independence because they confidently planned for the future with a sound, structured roadmap. They have travelled extensively overseas and on trips in Australia and are now cutting back on work, looking forward to more travel and spending time with their family and new grandchildren.
Through our approach, together, we were able to help them reach their financial goals with a tailored financial plan. By continually revising and updating that plan, we have helped them make the most of their available resources.
If you’re thinking about how you’d like to achieve financial independence, book a quick chat here so we can explore your situation.
“Please note: The information provided in this blog article, including the case study, is for general purposes only and does not consider your personal objectives, financial situation, or needs. While the case study is based on a real-life example, the names have been omitted to protect the individuals’ privacy. It’s important to consider whether this advice is suitable for your individual circumstances before making any financial decisions. We strongly caution against taking any action on financial strategies mentioned in this article without first seeking professional advice tailored to your situation. If you’re considering a specific product or investment mentioned in this article, make sure to review the relevant product disclosure statement and target market determination to ensure the product is suitable for your particular needs and financial situation before proceeding. We highly recommend consulting with a professional financial advisor for personalised financial advice.”