Helen and David's Story

Helen and David

Helen, 63, and David, 64, saw a ClearView Financial Adviser and told her that they planned to retire the following month. With a total of $400,000 to invest, they wanted a yearly income of at least $35,000 to cover their living expenses.

The problem

David and Helen had always invested their money in bank accounts and term deposits.

Their adviser explained that if they continued to invest all their money like this in retirement, their returns were likely to be low and their investments would not receive favourable treatment from the Centrelink income and assets test. She showed them that, if they invested $400,000 in a term deposit at 5.15% p.a., they might only earn $20,600 in income and $9,615* in Centrelink Payments.

This would give David and Helen a total annual income of $30,215, which is almost $5,000 short of their income requirements. Their only option to cover their living expenses would be to draw on their capital.

* This assumes that David and Helen have no other assets, are home-owners and rates used are effective from 20 March to 30 June 2007.

The solution

Their ClearView Financial Adviser suggested that Helen and David invest $150,000 in a Term Allocated Pension, $200,000 in a Superannuation Pension and $50,000 in a Term Deposit.

This increased the couple's returns and also increased their Centrelink benefits to $15,465, giving them a total annual income of $35,643. That's over $5,000 a year more as a result of the ClearView Financial Adviser strategy. Note however this assumes the minimum income draw-down so their overall income achievable can be improved even further.

Note: From 20 September 2007, the reduction applied under the assets test will be improved which will result in an even higher Age Pension amount payable to them from 20 September 2007.

Your ClearView Financial Adviser will help you work out what's right for you.

Customers' names have been changed to protect their privacy. This story has been created to illustrate a specific concept and how our Advisers may be able to help you. Neither the full basis nor all assumptions of their recommendations are disclosed. The information contained in this material is based on laws applicable as at 1 July 2007 and legislative changes may have occured since that date.