Financial Planning (Retrenchment)

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  1. 1. Financial Planning (retrenchment) Financial Planning (Retrenchment) Money Management Capital Gains Tax Women Market Education Death &Disability Short TermInsurance Business Entities Investments Retirement (Personal) Financial Planning (General) Financial Services Offered Trust, Wills& Estates
  2. 2. Financial Planning (retrenchment) IfIf tthe deal sounds too goodhe deal sounds too good tto be true it probably iso be true it probably is.. Seek objective adviceSeek objective advice BE CAREFUL!BE CAREFUL!
  3. 3. Financial Planning (retrenchment) RetrenchmentRetrenchment NOWNOW, more than ever before, prudent decisions have to be made ...
  4. 4. Financial Planning (retrenchment) RetrenchmentRetrenchment What will you get? What do you need? Planning for those needs Important indicators
  5. 5. Financial Planning (retrenchment) What will you get?What will you get? Provision by employer: Pension fund benefits Payment on termination of service Payment of accumulated leave Bonus pro rata Other rewards or gratuities Personal provision: Savings Policies Unit trusts Shares
  6. 6. Financial Planning (retrenchment) How are you going to cover these expenses? IncomeIncome Mortgage bond (market linked) Day-to-day expenses Car loan HP agreements Policies/Savings Overdraft facility Groceries Electricity Water Telephone Insurance Education costs NEED
  7. 7. Financial Planning (retrenchment) LiquidityLiquidity ((Contingency fundContingency fund)) For unforeseen expenses: Repairs to household appliances Illness For ad hoc expenses: Maintenance NEED
  8. 8. Financial Planning (retrenchment) Current situation at age 65 Working 31% Dependent on state pension 16% Financially independent 6% Dependent on family 47% Retirement PlanningRetirement Planning Planning for a financially independent retirement NEED REASONS: Income gap Inflation Longer life expectancy Cost of delay
  9. 9. Financial Planning (retrenchment) Life CoverLife Cover Loss of relatively cheap group life cover: Conversion a possibility? Probability of losing group life cover? Additional life cover from other sources sufficient NEED
  10. 10. Financial Planning (retrenchment) NEED Disability CoverDisability Cover Loss of group life cover: Can I retain my disability cover? Will a conversion of my group life cover include disability cover? What do I have at present? What is reasonable provision? Impact of inflation
  11. 11. Financial Planning (retrenchment) Medical CoverMedical Cover Loss of medical fund benefits Can I afford not to have medical cover? Can I afford membership of a medical fund? Role of medical insurance in bridging the gap NEED
  12. 12. Financial Planning (retrenchment) Planning to meet your needsPlanning to meet your needs A Qualified financial advice B Analysis of needs: now and in the future C Well structured portfolio
  13. 13. Financial Planning (retrenchment) OOLDLD MUTUALMUTUAL INTERMEDIARYINTERMEDIARY Client Services Legal Advice Actuarial Support Old Mutual/ Associated Companies Expertise in financial planning Excellent support A Qualified, objective financial adviceQualified, objective financial advice
  14. 14. Financial Planning (retrenchment) Tax AdviceTax Advice Minimise tax on your benefits Make tax-efficient investments Exempt from tax Average rates Marginal rates
  15. 15. Financial Planning (retrenchment) B Analysis of needsAnalysis of needs Financial Planning Protection of family and estate Wealth creation Life cover Health cover Disability cover Investment planning Retirement planning
  16. 16. Financial Planning (retrenchment) Analysis ofAnalysis of NeedsNeeds ((continuedcontinued)) Professional and/or computer-based financial planning analysis Structuring a package and adjusting it at the touch of a button Reviewing your will
  17. 17. Financial Planning (retrenchment) Contingency fund Income- generating investments Growth investments Life, disability and health cover C Well Structured PortfolioWell Structured Portfolio
  18. 18. Financial Planning (retrenchment) LiquidityLiquidity ((Contingency fundContingency fund)) Selling redundant assets Realising assets Role of your bank manager Realising retirement fund benefits income tax implications
  19. 19. Financial Planning (retrenchment) IncomeIncome R6 000 interest exempt from tax Maximise after-tax income Investment of R75 000 Monthly income Fixed deposit R906 R543 Participation bonds R953 R561 Income plan* R718 R642 Before tax After tax (Guaranteed) * Assuming a tax rate of 40%
  20. 20. Financial Planning (retrenchment) Important IndicatorsImportant Indicators Realising your pension fund benefits Realising your policies
  21. 21. Financial Planning (retrenchment) Cost of realising pension fund benefitsCost of realising pension fund benefits Financial peace of mind is not provided by contributions alone, but by compounding returns on contributions over time. Realising of pension fund benefits implies a loss of the compounding effect.
  22. 22. Financial Planning (retrenchment) Income gap at retirement - Pension vs Salary 40% gap 60% gap 70% gap Realising pension fund benefitsRealising pension fund benefits (continued(continued)) Income gap factor should be considered: Less years of service = smaller pension Money earned for, retirement should be invested for that purpose
  23. 23. Financial Planning (retrenchment) Implications of realising policiesImplications of realising policies Lapses Surrenders/Cancellations Loans Recommendations: Avoid lapses Consider making policies paid up
  24. 24. Financial Planning (retrenchment) Making your money workMaking your money work harder for youharder for you helping you every step of the way
  25. 25. Financial Planning (retrenchment) Salary Bonus Allowances Subsidies Medical cover Group life cover Retirement provision Disability cover ConclusionConclusion Employed Unemployed Lose Receive Need After-tax Lump sum UIF Benefits Income Growth Medical cover Life cover Disability cover Liquidity
  26. 26. Thank you Financial Planning (Retrenchment) Money Management Capital Gains Tax Women Market Education Death &Disability Short TermInsurance Business Entities Investments Retirement (Personal) Financial Planning (General) Trust, Wills& Estates