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Retirement and Estate Planning
Retirement planning is the accumulation of wealth to provide income and financial security in retirement.
Estate planning focuses on wealth preservation and wealth transfer.
When do you need financial advice?
How can we help?
With a dedicated technical research team Morgans' advisers are kept up to date with legislation changes.
If you are planning your retirement, just reducing your working hours, or thinking about an estate plan, we can help.
Retirement planning
Effective retirement planning involves both tax efficiency and strategic investments. Beginning retirement planning early is crucial as it allows for ample time to prepare. Ensuring that your retirement income is tailored to align with your specific needs and goals is paramount. During retirement, income typically originates from three primary sources: superannuation, which includes pension income streams and lump sum withdrawals; non-superannuation assets, encompassing returns from shares, property, cash, and fixed interest; and Centrelink benefits, such as the age pension. Our expertise can guide you in structuring your retirement income stream to best suit your financial requirements.
Estate planning
Estate planning serves the vital purpose of safeguarding your family's wealth through the strategic distribution of assets to chosen beneficiaries. Achieving this objective necessitates a thorough assessment of each beneficiary's individual circumstances, ensuring that the inheritance positively contributes to their financial well-being without adverse repercussions.
Central to effective estate planning is the establishment of a current and legally binding will. Beyond the will, it's essential to consider additional instruments such as Powers of Attorney, medical directives, testamentary trusts, and business succession plans. Particularly regarding superannuation, which falls outside the purview of a will, proactive steps such as nominating beneficiaries and establishing binding death nominations are crucial to ensure that your intentions are honoured in the distribution of superannuation death benefits.
Implications for SMSFs
With respect to self managed superannuation funds, trustees and members effectively have ultimate control in the distribution of death benefits within your fund.
It is important you prepare a strategy for the payment of benefits to members' chosen beneficiaries and incorporate the facilities to implement this strategy in your trust deed. It will also be necessary to make preparations for the wind-up of the fund in the event of the deaths of all trustees and members.
Centrelink issues
Centrelink benefits are available for eligible seniors who have retired or are about to retire. Eligibility is based on two tests – the Incomes Test and the Assets Test. Your financial position (combined if a couple) is taken into account for these two tests, and eligibility for benefit payments is determined by the outcome of these tests.
We recommend you visit the ‘Retirement years' page on the Services Australia website. This page is a very useful guide to help individuals understand income support, what additional services and supplements are available and how you can make a claim. It also discusses residential aged care for those who are looking at their options for retirement homes.
News & Insights
Assessing the Australian Banking Landscape
The major domestic banks are a core holding in the portfolios of many Australian investors. All four of them have outperformed the broader market since the start of 2024.
Our banks analyst Nathan Lead recently had a close look at the valuations of the banks to see if their recent share price strength could be justified by fundamentals. His conclusion was that it could not, particularly given an outlook for flat if not declining earnings (at least in the short term) driven by weaker net interest margins and higher costs. In his view, all four of the major Australian banks (and Bank of Queensland) are now trading above their intrinsic value, with CommBank and Bank of Queensland looking especially stretched. Dividend yields, so often an argument for investing in banks, are relatively low compared to history, as well as to their own term deposit rates and hybrid capital yields.
We think now is a good time to consider trimming some positions in the banks. Nathan does not have an ADD rating on any of the major banks, rating all of them HOLD except for Commonwealth Bank (REDUCE). With Bank of Queensland also rated REDUCE, the only bank Nathan sees as offering value at current levels is the smaller and arguably higher-risk Judo Capital (ADD).
Looking at the major banks in turn
ANZ (HOLD)
ANZ's Australian loan growth has outperformed its peers over the past 6 months. It is awaiting final approvals to complete the acquisition of Suncorp Bank. Our forecasts are above consensus for this year and next, but this may be because other analysts have not properly factored in the acquisition.
Commonwealth (REDUCE)
Trading at 2.7x book, it is the elevated valuation of CBA that keeps us on a REDUCE rating. It has been trying to protect margins during a period of intense home loan competition, which has resulted in its loan book growing less than others. CBA is the highest quality bank for our money, but we just think it's overpriced.
NAB (HOLD)
We have higher forecasts than the street because we think net interest income growth will be higher and loan losses lower than market expectations. We do expect cash earnings per share to decline this year, though, as costs increase.
Westpac (HOLD)
Westpac has been growing its Australian loan book at a similar rate to that of NAB (0.9x system). The shares have done well, which we believe stretches the valuation enough to make it hard to see further share price upside.
If you agree that the time is right to trim some of your positions in banks, you might want to think about alternative equities with broad exposure to the Australian economy and decent dividend yields. Within the insurance sector, consider QBE. Or within Diversified Financials, our analysts prefer GQG and WH Soul Pattinson.
Morgans clients receive exclusive insights such as access to the latest stock and sector coverage featured in the Month Ahead. Contact us today to begin your journey with Morgans.
We all know that the world is changing rapidly, and this has seen a flow-on impact on how society thinks about charitable giving. Social media, technological change and our day-to-day cost of living means that Not-for-Profits need to think differently to ensure they remain relevant to this new socially conscious generation and how Not-for-Profits invest their funds to continue to benefit their ongoing mission and values.
According to the 2020 Australian Communities Report, Australian givers are looking for a more personalised experience and to build relationships with organisations that they donate to or partner with. This may mean being practically involved in the organisation (volunteering) or even as simple as understanding the impact that their donation makes.
The 2019 Community Trends Report shows that Australians seek transparency and impact from charitable organisations. The key issue that Australians want transparency over is administration costs with seven in ten Australian givers rating this as an extremely important charity essential. Most believe that charity administration costs should comprise 20% or less of the organisation’s total revenue. For those younger Australian givers, having a website is also seen as an important part of the engagement and communication process when dealing with a charity.
The report also highlighted how much the cost of living is impacting on Australians’ ability to donate to charities. More than half of Australian givers agree that the cost of living and changes to housing prices have significantly or somewhat decreased their ability to give to charities.
Some key takeaways from these reports that NFPs should consider:
• Focus on local causes as Australians prefer to support charitable organisations with a local/national focus
• Consider how your charity can highlight a specific issue that people can directly donate to, rather than just raising awareness generally of an issue
• Ensure you can provide givers with a detailed breakdown of where donations are allocated
• Consider how you currently report on the impact donations are having on your charity’s goals and mission, can you improve or change the way you report?
• Simplify your organisation’s mission and ask “will this help achieve our purpose?”
• Where possible, invest in developing effective leaders and communicate leadership wins of the organisation to donors
Investment Watch is a quarterly publication produced by Morgans that delves into key insights for equity and economic strategy. This latest publication will cover;
- Asset allocation – Migrating toward a risk-on strategy
- Economic strategy – The view from the FED
- Equity strategy – Preferencing cyclicals and small-caps
- Updated Morgans Best Ideas
- … and much more
Morgans clients receive exclusive insights such as access to our latest Investment Watch publication. Contact us today to begin your journey with Morgans.
Preview
In recent months, debate has shifted away from ‘recession risks’ towards expectations for a ‘soft landing’ or even the possibility of a ‘no landing’ scenario for the US economy. Inflation has remained on a mild downward trend, there is better visibility on the US rate cutting cycle and China’s increased stimulus is reducing downside risks both domestically and globally.
These are all ingredients supporting the market’s migration toward a risk-on footing. We saw this in the February reporting season via a broad rotation from expensive defensives toward more economically leveraged cyclical industrials and small-caps. We discuss opportunities to put cash to work in global equities, real assets, and fixed income. In Australian equities we favour the healthcare, financials, retail, travel, resources and energy sectors, and we also call out several small-caps via our Best Ideas report.
