The Big Inheritance
A major transference of money from the current crop of retirees is now underway. Over the coming years, Baby Boomers will be passing on their remaining Superannuation wealth to their partners, children or in some cases grandchildren. This movement of money will provide the recipients immense opportunities to establish financial independence. My question to those that are either in this position or who are near this stage is; What are the tax implications of receiving such a payment and what are my options if I am lucky enough to inherit Superannuation Money?
Many will use this money to pay off their mortgage or use it to fund lifestyle pursuits. Alternatively giving your Superannuation a big kicker is a great way to boost your Super and get it growing at a higher trajectory for more wealth in retirement. All of the above have their merits however getting serious about your Superannuation will start your journey to self-reliance and prosperity in retirement and increased financial literacy immediately.
Many clients that I speak to are not engaged with their children in regards to their Superannuation money and their retirement incomes. We try to teach our children as much about the world, but somehow we are reluctant to share financial knowledge picked up over decades. Many clients are proud to leave their children a cash deposit but may have not given them something of more value: the knowledge of how to make money. We are not talking about what investments to buy, but the general knowledge of what happens in economic down turns, recessions and boom times and how to weather the storm and build resilience financially.
So who should make the first move, when it comes to financial literacy? Obviously, when children are young, their parents should be the ones to steer their children in the right direction. This may be introducing them to their planner, accountant or other trusted adviser when they begin to earn money. Alternatively once kids become adults with their own families, it is incumbent on them to start asking questions. Questions centred on experience, not about how much they have.
Start out by getting all of your information ready. How much do I have in Superannuation? Do I have lost Superannuation that can be consolidated? How does Superannuation work, why is it good and what are the drawbacks? How can it help me in retirement and what are the tax benefits I can achieve now? Armed with the facts, you are able to be positive about the way forward.
The most common thing that we hear when we meet with clients is “Why didn’t I do this years ago”. If that isn’t an indication to everyone to get started as soon as possible, then we aren’t listening and missing out now on opportunities to build our personal wealth.
Successful Superannuates will give you the best indication of what you can do and what course of action you need to take, their opinion should be headed because their story is rarely heard. There are more stories of success than stories of misery and everyone needs to get back to being positive about the future even if society presents challenges which it always does.