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Navigating the Transition to Retirement

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As you approach retirement, balancing work and financial security becomes paramount. The Transition to Retirement (TTR) strategy offers a flexible approach to ease into retirement while maintaining your lifestyle and boosting your superannuation savings.

Understanding the Transition to Retirement (TTR) Strategy

The TTR strategy allows individuals who have reached their preservation age (age 60) to access a portion of their superannuation through a TTR pension while still working. This approach provides an opportunity to supplement income or enhance super savings without fully retiring.

Benefits of Implementing a TTR Strategy

Supplementing Income While Reducing Work Hours

If you’re considering cutting back on work hours, a TTR pension can help bridge the income gap. By drawing from your super, you can maintain your standard of living without depleting your savings.

Additionally, from age 60 the income from a TTR pension is tax-free, potentially reducing your overall tax liability.

Boosting Super Savings Through Salary Sacrifice

Continuing to work full-time? You can leverage a TTR strategy by salary sacrificing a portion of your income into your super while drawing a TTR pension to replace the reduced take-home pay. This method can enhance your retirement savings and offer tax advantages.

Considerations and Potential Drawbacks

While the TTR strategy offers flexibility, it’s essential to consider:

  • Impact on Super Balance: Accessing your super early could reduce your retirement savings if not managed carefully.
  • Regulatory Changes: Stay informed about legislative changes that may affect TTR strategies.

Is a TTR Strategy Right for You?

Determining the suitability of a TTR strategy depends on your financial goals, work plans, and retirement timeline. Consulting with a financial adviser can provide personalised insights and help you make informed decisions.

How Cornerstone Wealth Can Assist

At Cornerstone Wealth, we specialise in guiding individuals through the complexities of retirement planning. Our team can help you assess whether a TTR strategy aligns with your objectives and develop a tailored plan to secure your financial future.

If you have any specific questions or need further assistance, feel free to reach out to us. We’re here to help you navigate your journey toward a comfortable and secure retirement.

Setting Fitness Goals in Retirement

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As your career goals begin to recede during the transition to retirement, you may find yourself setting new goals that will help you live your best life longer. Improving your fitness can help you reach those goals while also filling up some of that new blank space in your weekly calendar.

Whether you’re getting serious about exercise for the first time or looking to upgrade your existing routine, these three tips can help to improve your health, your mood, your retirement schedule, and your Return on Life.

Be SMART about your goals.

“I want to be healthier” is not a very good fitness goal. “I want to lose 10 kgs this winter” or “I want to run a half-marathon next year” are much better because they’re SMART: Specific, Measurable, Achievable, Relevant, and Time-Bound. No one can just “be healthier.” But you can track, measure, and manage your weight, what you’re eating, and how much exercise you’re doing during the week. You can make a bigger goal like that half-marathon more achievable by creating a training schedule that ramps up little by little until you’re ready for race day.

Set goals for tomorrow, not yesterday.

The relevancy piece is often the trickiest part of a SMART goal, especially for retirees. As you’re navigating the retirement transition, you may feel stuck between the person you were in your career and the person you are now that you’re no longer a doctor, CEO, or teacher. You might also feel pressure from friends, family, and social media to follow the latest fitness fads just because they’re popular.

Try to pinpoint fitness goals that will align with your priorities in this new stage of life and make your retirement more enjoyable. Being able to bench press a certain weight or run a certain distance might be less important to you now than improving your mobility so you can chase after your grandkids or volunteer as a youth basketball coach. Maybe taking gentle exercise classes would help you reach those goals better than buying a home gym. Or, if you want to devote part of your retirement to improving your performance at a favourite sport or activity, you could start working with a coach. Once you’re hitting the fairway more consistently you might feel inspired to set some new travel goals and play some of the world’s great courses. And if your spouse or adult children want to travel with you and round out your foursome, all the better!

Make fitness fun.

You know the old joke about the man who tells his doctor it hurts when he raises his arm above his head.

The doctor’s prescription: “Don’t do that.”

Your real doctor will probably tell you the same thing about any exercise you’re really struggling with. The “no pain, no gain” mentality that might have helped you reach fitness goals in your youth will probably result in more pain than gain after age 65. And there’s nothing SMART or smart about activity that’s making it harder for you to get out of bed in the morning.

Even worse, you probably won’t be having any fun. If you’re not enjoying your exercise routine, and if your workouts aren’t helping you progress towards achievable goals, then you’re going to stop doing them.

Once you’ve found a fitness routine that works for you, try to build in a little more enjoyment to help that routine stick. Invite your spouse or a friend along on your morning walks. Treat yourself to a big helping of your favourite dessert when you’ve hit a short-term goal. Take pride in the commitment you’re making to a healthier you and enjoy the journey along the way.

Are you thinking about setting some new retirement fitness goals? We’d love to hear about them and discuss how our Life-Centred Planning Process can support a happier and healthier you.

Make the Most of EOFY 2025 – Smart Strategies to Boost Your Financial Future

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With the End of Financial Year (EOFY) 2025 fast approaching, now is the perfect time to review your financial position, make the most of available opportunities, and set yourself up for a  stronger financial future.

To help you do just that, we’ve put together a checklist of important considerations—covering super contributions, tax strategies, budgeting tips, and estate planning reminders.

Boost Your Super Contributions

Make the most of tax-effective contributions to grow your retirement savings:

  • Concessional (pre-tax) contributions: Includes employer, salary sacrifice, and personal deductible contributions. Annual cap: $30,000.
  • Catch-up contributions: Use unused concessional caps from the past five years if your total super balance is under $500,000.
  • Non-concessional (after-tax) contributions: Annual cap: $120,000 (or more using the bring-forward rule).
  • Government co-contributions: Up to $500 for low/mid-income earners.
  • Spouse contributions: Up to $540 tax offset if your partner earns less than $40,000.

Don’t forget: If you want to claim a tax deduction on personal contributions, you must lodge the appropriate notice with your super fund and receive an acknowledgment.

Plan Ahead for the New Financial Year

  • Set clear financial goals: Break big goals into manageable steps.
  • Reassess your budget: Update for any lifestyle or income changes.
  • Establish an emergency fund: Aim to cover 3–6 months of living expenses.
  • Track your progress: Regularly review and stay accountable.

Extra Tip: Review Your Estate Plan and Stay Cyber-Safe

  • Ensure your will, insurance, and estate planning documents are up to date—especially after life events like marriage, children, or buying property.
  • Be extra vigilant about cybersecurity and scams around EOFY. Use two-factor authentication and always verify unusual communications.

Let’s Make EOFY 2025 Count

Whether you’re looking to boost your super, reduce your tax bill, or plan with more intention, the time up to 30 June present valuable opportunities. If you have questions or would like tailored advice for your situation, please don’t hesitate to get in touch—we’re here to help.

Oliver’s Insights: Trump 2.0 – Why investors should expect a somewhat rougher ride, but it may not be as bad as feared

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By Dr Shane Oliver – Head of Investment Strategy and Economics and Chief Economist, AMP Investments

Key points

  • The economic and financial environment today is more challenging than when Trump first took over in 2017: inflation is a bit higher, the budget deficit is worse, bond yields are higher and shares are more expensive.
  • He also faces constraints from: rising bond yields; not wanting a sharp fall in shares; a razor thin House majority; and a political mandate to get the “cost of living” down.
  • This could mean his more populist policies may ultimately be contained resulting in a better outlook for shares than many fear, albeit it will likely still be rough along the way.

Introduction

Donald Trump’s US election victory – that saw him win the popular vote (albeit only by 1.7%) with increased support from low income voters, various racial groups, women, the young, etc, with Republican’s having control of Congress – has shocked many. Particularly here in Australia where support for him was always low versus Harris. His detractors – and don’t forget 48.3% of American voters voted for Harris – see him as bad for the environment, diversity/equity and inclusion (DEI), inequality, democracy, the rule of law, global peace and the economy (via bigger budget deficits, inflation and trade wars). Weaker checks and balances this time around – including his inability to run again and more MAGA loyalists in his team suggesting a quick move to implement his policies – are seen as adding to such concerns. On the environment and DEI, it’s hard to argue otherwise as a majority of American voters have clearly put the economy ahead of the environment and DEI. But the old-fashioned “hip-pocket nerve” dominating in times of economic stress is nothing new – with the main issue in the US (Australia and elsewhere) being the rise in the cost of living and the fall in real wages over the last 4 years.

Share of voters saying each issue was the most important

Source: AP VoteCast survey

But environmental and social issues aside, his supporters see him reinvigorating the US and being great for world peace. As is often the case the truth is probably in between, but it could be rough along the way. Straight after the US election result we had a close look at the implications both for investment markets and for Australia in Donald Trump elected President of the US (again). This note looks at the differences between now and when Trump first took over in 2017 and the constraints he faces.

The market reaction becoming more nuanced

Trump’s key policies are to continue the 2017 personal tax cuts, cut corporate tax, impose a 10-20% general tariff and a 60% tariff on China, deregulate and cut bureaucracy, slash immigration and deport people, potentially reduce Fed independence and reverse Biden’s climate policies. The market response to Trump’s victory is becoming a bit more nuanced:

  • US bond yields are up 0.8% since mid-September partly on fears his policies will drive higher inflation, budget deficits & Fed interest rates.
  • This has seen the $US surge to its highest in more than a year.
  • Bitcoin and other crypto currencies have surged (notably Dogecoin) as Bitcoin broke its downtrend since March and on expectations Trump would be supportive of crypto (along with Elon Musk’s appointment to co-run the “department of government efficiency (DOGE)).
  • But global shares are starting to have a tougher time with US shares reversing 50% of their post-election surge and non-US shares have been underperforming on concerns US tariffs will be bad news, albeit it hasn’t held Australian shares back which have hit a record high.
    There is good reason for this more nuanced response from shares.

Big differences compared 2016

Some point to the Trump 1.0 experience of 2017-20 as being okay economically (apart from Covid which wasn’t Trump’s fault, albeit the US response was messy). Through that period shares rose in 3 years out of the 4 for an average gain of 17% pa. Aside from the reality that the world was a bit more peaceful in the 2017-2020 period compared to now, the economic and financial environment today is a bit more difficult.

  • Inflation is a bit higher: underlying inflation was running around 2% in 2017 with long term inflation expectations around 2.5%, whereas now they are both around 3% with inflation psychology a bit less anchored than it was then after the blow out over the last four years.

Source: Bloomberg, AMP

  • Unemployment is bit lower: it was around 5% in early 2017, whereas now it’s just above 4% suggesting the jobs market is tighter.
  • The budget deficit is worse: in 2017 the budget deficit was around 3% of GDP and gross Federal debt was around 105% whereas they are now pushing 7% and 125% of GDP respectively.

Source: Bloomberg, AMP

  • Bond yields are higher: when Trump was elected in 2016 the US 10-year bond yield was 1.8% as disinflation was all the rage, but it’s now 4.4% reflecting the somewhat higher inflationary environment, higher Fed interest rates and the higher budget deficit. Similarly, Australian 10-year bond yields were 2.4% back then versus 4.6% now.
  • Shares are more expensive: when Trump was elected in 2016 US shares were trading on a price to consensus 12 months ahead earnings expectations of 17.2 times having just recovered from a rough patch in 2015-16 that saw a 14% correction, but it’s now around 23.7 times after several years of good gains. Don’t forget that just as shares rose strongly over the 2017-20 period under Trump 1.0, they also rose strongly over the last four years under Biden with shares up 3 years out of 4 for an average gain of 16% pa.
  • This means US shares are now offering a zero-risk premium over bonds: the gap between the earnings yield using consensus expected 12 months ahead earnings and the 10-year bond yield was around 3% when Trump was elected in 2016, but it’s now slightly negative. It’s a similar story for Australian shares but at least it’s still positive. Similarly, Eurozone shares are now less attractive than in 2016, albeit they offer far more attractive valuations than US shares do.

Source: Bloomberg, AMP

Put simply and taken together this means that the economic and investment environment is more challenging than it was in 2016 at the time of Trump’s last victory. This in turn suggests that the upside in share markets is potentially far more constrained than it was in 2016. This in turn will impose some constraints on Trump which hopefully will constrain his worst policy making.

Constraints on Trump

While the constraints on Trump are not as numerous as was the case in 2017-2020, they are still significant and may help limit his worst populist tendencies. The key constraints are:

  • The so-called bond vigilantes – the starting point of higher bond yields and higher public debt means a greater risk of a bond market panic if the deficit outlook gets worse, than was the case in 2017. Back then debt interest expenses on general government debt in the US were around 6% of spending whereas it’s now pushing 10.5% which is worse than Italy. A further sharp rise in yields would threaten US economic growth (with the housing market already back under pressure) and lead to intense political pressure on the Trump Administration to curtail the tax cuts. Much like occurred with the brief UK Truss Government.
  • The share market – Trump is still likely to regard the share market as a barometer of his success and would prefer to see it go up. This was evident in 2018 when the near 20% slump (19.8% to be precise) in the US share market from its high in September to low on Christmas Eve 2018 partly in response to the then trade war unnerved him and saw him pivot to the Phase One trade deal with China. In other words, he can tolerate some weakness in shares but once it approaches bear market levels (20% or more) he gets nervous and backs off.
  • Conservative Republicans and the mid-terms – The Republican’s razor thin majority in the House means that it will only take a few budget hardline Republican members to insist Trump scale back his tax cuts or fund them via more spending cuts. What’s more 2026 will be another election year and if Republicans are struggling due to a backlash against his policies – e.g. due to cuts to Federal services due to the efforts by Musk’s DOGE to slash government spending or higher inflation flowing from a tariff hikes or a bigger budget deficit or higher interest rates – it will intensify pressure on Trump to tone it down.
  • Mandated spending – while Musk has claimed he will cut $US2 trillion out of the Federal spending this is harder than it looks. The total budget is $US6.75 trillion and about two thirds of that is in defence, social security and health and it’s doubtful voters will support that being slashed. Which leaves only $US2.25 trillion to play with.
  • Trump’s mandate – while Trump had a strong victory it was mainly around improving the cost of living and controlling immigration. The former likely goes to containing spending (but without slashing it such that ordinary American’s see their cost-of-living rise via higher health and education expenses) and deregulating but not to huge tariff hikes as this will add to the cost of living via higher prices. On this it’s noteworthy that various surveys show that worries about globalisation and trade ranked very low on the list of concerns that voters had. So it’s doubtful that American’s will be supportive of a rise in their cost of living flowing from a sharp rise in tariffs.

Concluding comment

Taken together these constraints may ultimately serve to nudge Trump more towards Reagan like supply side reforms and less towards populism with a focus on tariffs. Which could ultimately be a good outcome for investment markets. That said it could still be a rough ride along way – possibly including another perhaps bigger version of the 2018 fall in shares before Trump moderates his policies. But overall, while the starting point for shares is not nearly as positive as it was in 2017 the outlook may not be as bleak as some fear, with global shares likely to provide constrained but still okay returns.

This article was sourced from AMP Investments and published with permission.

Don’t Let Fears Get in the Way of Your Goals

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Money makes just about everyone nervous. And as we’re approaching major life transitions, it can be hard to keep our money worries in check. But when you’re working with an adviser and following a Life-Centred Financial Plan, many of your financial fears are no more real than the fear itself.

Let’s pull back the curtain on two common financial fears that could be negatively impacting your Return on Life.

Fear of Investing

When you make any investment, you’re taking on risks. That’s why many folks who are skeptical think the share market is just a big casino where the house always wins. Because they’re worried that their investments won’t pay off, they prefer to “play it safe” by keeping most of their money in the bank. They might even apply this “safe” mindset to other aspects of their lives. Why “invest” in a gym membership when your fitness resolutions have always failed? Why “gamble” on yourself by starting your own company when the odds seem stacked against you?

Unfortunately, in both finance and in life, there’s no growth without risk. The give-and-take between buyers and sellers that causes market volatility is also what creates value and, for disciplined investors, increased wealth in the long run. Your Life-Centred Financial Plan is designed to account for, weather, and even take advantage of these quantifiable and manageable risks.

You can also plan to make more effective investments in other aspects of your life. For example, ditching resolutions for incremental SMART goals – Specific, Measurable, Achievable, Relevant, and Time-Bound – can help you face your fears and start achieving more.

Fear of Spending

In addition to following a diversified investment strategy, living within your means and keeping debt under control are often keys to financial success. But frugality that’s rooted in fear can turn a good habit into a bad relationship with money.

Folks who spend their working days only working for more money often miss out on too many of life’s most meaningful moments. An obsession with “hitting a number” that will magically create financial security can distort a person’s retirement timeline. Some people work longer than they have to and miss out on that sweet spot between leisure time and good health. And even if they do “hit their number,” seniors who were afraid of spending when they were earning a monthly paycheck are often terrified to open their wallets once they start living off a fixed income. These retirees often struggle to switch from a saving mindset to a reward mindset. As they did when they were picking up all those extra weekend hours, they put off dream vacations and creature comforts. They figure they’ll start spending more and doing more “when the right time comes.”

Sadly, for many folks who are too afraid to follow a financial plan and use their money to enjoy life more, that “right time” never comes.

Who ya gonna call?

Don’t let these kinds of scary stories keep you up at night. Let’s schedule a catch-up to put your financial fears to rest and help you feel more confident about 2025.