Dear Friends,
Flexible by Design
Over the years many of you will have heard me repeat this quotation from my dear friend and mentor John Thomson: “I can’t change the direction of the wind, but I can change how I set my sails.” I have carried that attitude forward by always seeking to build flexibility into our financial strategies.
One thing is certain; governments cannot help ‘tinkering’ with the rules and legislation – particularly around wealth creation. That means we must stay ahead of their game.
Thus, the message which follows is the first of a three-part series for Grow designed to look at the opportunity provided by Carry-Forward Concessional Contributions. Next month we re-visit an old friend – the Insurance Bond; next we examine in some depth the “please don’t panic” recession I predicted in August.
Carry Forward Concessional Contributions:
Most of us who are eligible do not ‘use’ (save) the full amount available to us as concessional super contributions, which for 2026/27 is $32,500. This is understandable and possibly difficult to justify contributing extra given that an employer already contributes 12% of your income – unless like me, you are a ‘super nerd’.
However, if you have a windfall, such as an inheritance, sell a property or get a significant payout, this gap between what you have contributed, and the maximum available ‘space’ can be used and possibly even carried forward – so you may be able to contribute up to five years’ worth of ‘back pay Concessional Contributions’ into the tax favourable super environment. If you have under $500,000 in super you may be able to direct this to your partner as well.
Let us imagine you earn $150,000/pa. Your employer's Super Guarantee (SG) super contribution is $18,000 – but this year, you have space of another $14,500 in available top up Concessional Super Contributions you could make this year.
Furthermore, in simple terms, if your super balance is under $500,000 and you have $14,500 x 5 previous years unused Concessional super Contributions you could make a top up Concessional super contribution of $87,000 – and in so doing reduce your taxable income to $63,000. At the same time you will be reducing your tax bill by approximately $28,290 (including Medicare levy) while boosting your super.
This is exciting, even for most non ‘super nerds’
We have been recommending this approach for years and wrote a media release (thank you Dylan Holliday) number 160 devoted to this strategy, last year. We recognised the winds of change back then.
The key to a financially secure retirement is putting as much as you can into super, as soon as you can, for as long as you can. If you have some extra cash, this strategy can help your long-term savings enormously. Take for example, a couple who at age 40 have boosted their combined super to $1m. Using the ‘rule of seven,’ which in simple terms predicts the impact of compound interest, by the time they retire they should have approximately $5m, inclusive of additional SG contributions (assuming they work full time and receive good wages).
In rough figures, this equates to a minimum annual retirement income of $250,000 per annum tax free in retirement – forever – or at least to an approximate age of 110!
So, the benefits of this approach to a windfall are clear.
Family referrals:
I have been delighted to receive a few referrals for a chat from families. Some have turned into clients, some have gone to test the market, and others have said it is too soon. I welcome all these approaches. If we can help someone grow and protect their wealth, I am delighted. My door remains open always.
Insurances:
Life insurance is a very odd product – except when you need it. As an Independent Financial Planning practice, we do not charge commissions, however we do provide advice that has helped numerous clients whether they lose a partner or one is diagnosed with a serious health condition such as MS.
We see insurance as a necessary protection for families and will always raise it at the appropriate time. In our experience nobody ever says they wish they had less insurance after a claim, and it is hard (on your own) to work out exactly how much you need to replace a financial contribution. That is part of our advice offering.
Our family holiday
I wanted to let you all know that Julie and I will be taking a six-week break from early October to mid-November. After such an exciting year which has involved one beautiful daughter’s wedding, our other daughter and her husband presenting us with a gorgeous grandson, joining Caveo Partners and welcoming so many wonderful new clients to the ‘Marinis way’, we decided it was time for a holiday!
It will be business as usual for you all as I have complete trust in the team, and like Douglas MacArthur “I shall return!”
Cyber Safety
Thieves are all over the internet, as you know. Please do not ever respond to a financial services advertisement on Facebook – often they appear harmless, such as ‘Get a free super check-up’ or ‘Compare your super’! What happens is you unwittingly end up getting scammed out of your retirement savings. The same goes for unsolicited phone calls – often pretending to be from the bank or your super company. Keep an eye on: www.cyber.gov.au/protect-yourself
As part of our ongoing commitment to protecting your personal and confidential information, we will soon be introducing password protection for sensitive documents sent via email. This additional security measure will help ensure that documents can only be accessed by the intended recipient. To make the process as secure and convenient as possible, passwords will be provided separately via SMS in the near future. We appreciate your support as we continue to strengthen the security of our communications and safeguard your information.
As always, if I or any of the team can be of assistance, please don’t hesitate to reach out either via (08) 8130 5130 or admin@marinisgroup.com.au
Yours sincerely
Theo Marinis CFP®, B.A., B.Ec., CPA., MCIFAA
Financial Strategist
Authorised Representative
