Simple Superannuation and Retirement Planning: The 7-Essential Things All Self-Employed People from Newcastle Must Consider Today

Work hard, put away for your future, buy that boat you’ve always dreamed of and set sail toward the golden sun. Seems simple right?

If you’re a salaried employee with an employer who is required, by law, to pay your super it certainly can be.

But what about those from Newcastle who are self-employed?

If you ‘run your own show’ so to speak – whether with a small business or as a self-employed contractor, it seems like there is an ever-growing list of things to do to keep your business running. From cashflow, to book keeping, from annual returns to insurances it really can be all-consuming.

Hence why so many small business owners from Newcastle fail to take the necessary (and relatively simple) steps to plan for their future, in particular their retirement. As a result, most do nothing at all and are left scratching their heads come retirement age.

As the saying goes the best time to plant a tree may have been 20 years ago, but the second-best time is most certainly right now.

It is with absolute certainty that I say it’s never too late to start planning for the life that you want when you are finished running your business. It may feel like you are too busy to stop and plan for something that’s years away but the time you put aside now may have the biggest impact on your future.

Small steps and actions today can have a huge impact on what tomorrow looks like – especially when compound interest is at play!

So that we can help set you up for a future of abundance and choice sounds more inviting than one filled with uncertainty and anxiety, here are 7 essential things all self employed and small business owners must consider today:

1. Are you planning to sell your business?

Many business owners plan to sell their business when they retire and use the funds to retire with. Depending on your business, it isn’t always the easiest thing to find a buyer – especially a buyer who is willing to pay what you want for your business.

A good first step is to discover the true monetary value of your business. This may help you decide on whether you are planning to sell or not.

The other thing to keep in mind is that the current value of your business may be extremely dependent on you as the face of the business. As a result, when you leave, this value may drop. Keep this in mind when you are planning your exit strategy and consider ways you can increase the value of your business, even after you are no longer the face of it.

2. Have you considered a Buy/Sell Agreement?

A buy/sell agreement is a legally binding agreement which binds the continuing owners of a business to purchase a departing owner’s interest in the result of certain events including if a business partner passes away. If you do not have one, business partnerships can change very quickly and may be out of your control.

This is a question we pose to many of our self-employed clients: “If one of your business owners was to pass away, how would you feel having their spouse telling you how to run your business?” The responses are mixed to say the least…

For some business owners, this is the most important question that needs to be asked and it helps our clients understand how important a Buy/Sell Agreement is to their freedom.

3. Find out how much you are going to need for your retirement?

The exact dollar number you need for retirement can be hard to determine.

The Association of Superannuation Funds of Australia [ASFA] estimates the budget you will need for your retirement each year depending on your preferred lifestyle:

Total per year as a single:

• To live a modest lifestyle, you will need approximately $27,902
• To live a comfortable lifestyle, you will need $43,687

Total per year as a couple:

• To live a modest lifestyle, you will need approximately $40,380
• To like a comfortable lifestyle, you will need approximately $61,909¹

It is important to remember that these numbers are a guide only. At NFPG, our experienced Retirement Specialists take your personal circumstances into account to determine where your lifestyle sits and help you find a more accurate budget for you.

4. Are you paying yourself first?

Don’t undervalue your hard work and countless hours that you put into your business! Paying yourself a fair salary will come in handy when you are financially preparing for your retirement.

Another question you may want to consider is are you paying yourself enough or any superannuation? If you are self-employed, you don’t have to pay yourself super, but it can be a good idea to help save for your retirement.

5. When do you want to retire?

The retirement age in Australia isn’t fixed so you can retire whenever you want. Having a goal age to retire by can help in the creation of your plan to make sure you stick to your preferred timeframe.

6. Have you included your partner and your family in your retirement strategy?

Your retirement strategy should be something you discuss with your partner and your family to make sure you are both on the same page and heading for the same goal.

This is especially important if you are planning to hand the family business down to your children. At this point it’s incredibly important to seek out professional advice from a certified financial planner, who can sit down with you and your family to help you plan for a family business handover. This will help all the right questions to be answered and ensure everyone is aligned on your future direction.

7. Have you taken the time to begin planning?

Planning takes time – it is never too early to start planning for your retirement. After all, retirement is the time where you can finally stop and live the life that you’ve been working so hard for. Starting your planning earlier will ensure you are on track to retire when you want to and avoids any stressful last-minute planning or decision-making.

So, what are you waiting for? Whatever your goals are for retirement – even if you’re not quite sure yet – a little bit of planning goes a long way.

 

At Newcastle Financial Planning Group our personable, experienced, financial planners can help you plan for your retirement with expert knowledge in superannuation, taxation and investment options.

If you are looking for the ultimate retirement lifestyle, or need help creating your retirement plan, book an initial appointment with one of our Business Retirement Specialists. We have offices located in Newcastle – The Junction (NFPG), Central Coast – Erina (CCFPG) and  Sydney CBD (SWA).