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The Bill implementing the majority of the super changes proposed in the 2021-22 Federal Budget has passed both houses of Parliament and awaits royal assent.

The Bill contains the following measures from 1 July 2022:

• changes to work test conditions
• extension of non-concessional bring-forward rule for people aged 67 to 74
• reduced eligibility age for downsizer contributions from age 65 to 60
• removal of $450 per month threshold for super guarantee

Remove work test requirement

Currently, a member aged 67 to 74 must satisfy a work test (or qualify for a work test exemption) to make voluntary super contributions (excluding downsizer contributions).

The Government proposed, in the May 2021 Federal Budget, removing the work test (or work test exemption) requirement for non-concessional contributions and salary sacrifice contributions from 1 July 2022.

This means that members no longer need to meet the ‘work test’ to be able to contribute to super in after-tax dollars (and salary sacrifice), up until age 74.

However, from 1 July 2022, the work test (or work test exemption) will still apply to personal tax-deductible contributions where a member is aged 67 to 74.

Extend NCC bring forward rule to clients under age 75

Currently, a member must be under age 67 at the start of a financial year in order to trigger the non-concessional contributions cap bring-forward rule in that year.

From 1 July 2022, the maximum age for the bring-forward rule will increase so that a member can trigger the bring-forward rule in a financial year where they are under age 75 at the start of the year.

This means that up to $330,000 can be contributed to super in after-tax dollars in one financial year and/or over a three year period – up until age 75.

Reduce minimum age to make a downsizer super contribution to 60

From 1 July 2022, the minimum age to make a downsizer contribution (measured at the time of contribution) will reduce from 65 to 60. This will allow some members aged 60 to 64 to potentially contribute $630,000 (or $1.26 million combined in the case of a couple) at one time to super by combining a downsizer contribution with the three year non-concessional contributions bring-forward rule.

Remove SG $450 income threshold

Currently, where an employee earns less than $450 in a calendar month, their employer is not required to pay superannuation guarantee (SG) on those earnings.

For SG quarters commencing 1 July 2022, this minimum SG threshold will be abolished and an employer will be required to pay SG on earnings less than $450 in a calendar month.

Source: Colonial First State, FirstTech Newsflash, 11 February 2022

The personal and professional displacement we all experienced during the pandemic has inspired many people to reassess what work means to them. Rather than let these questions linger, it could be productive to approach them with a more formal plan of action, introspection, and recalibration.

If your employer offers sabbatical benefits, now might be the time to use them. And if not, adopting a “sabbatical mindset” could help you to improve the Return on Life you’re getting from work. Your employer might even offer alternative benefits that help you explore without leaving your job.

Here are four ideas for a productive sabbatical that are adaptable to most working situations.

Keep learning.

Many companies have started offering continuing education programs to their employees. Talk to your HR department about what kinds of classes are covered and what kinds of skills you could develop to benefit both you and your current employer.

If you’re thinking about becoming a full-time student again, it’s still important that you focus on specific skills and professional goals. With those aims in mind, you can start exploring the wealth of adult education options available to you, whether that means in-person classes or virtual learning that will let you earn a degree or certification on your schedule. Working seniors might also be eligible for heavily discounted tuition at community colleges and local universities.

Volunteer.

Allowing for volunteer work during regular working hours is another corporate benefit that’s growing in popularity. Whether you’re supporting your employer’s greater mission or carving a few hours out for your own causes, giving back can open your eyes to the needs in your community and the wider world. If you want to go all-in, you might take a part-time position at a charitable organization or non-profit or join a work and travel program that immerses you in the lives of the people you’re helping. That perspective could shape the kind of work you want to do going forward, including a potential career change.

Start hustling.

Have you ever dreamed of being your own boss? Use a sabbatical to water that business idea you’ve never had time to focus on exclusively. Perhaps you could burnish your business plan by combining side-hustle time with some continuing education that will improve your CEO skills as well. You could also spend your sabbatical doing small trials of your goods and services or mastering the SEO skills you’ll need to zero in on your ideal customer base.

Reconnect your mind and your body.

Once you’ve unplugged from your traditional 9-to-5, you might feel compelled to completely revamp your daily routine. Consider making more time for exercise and mindfulness. Try a new sport or fitness activity. Take morning walks with your spouse. Spend a few minutes at the beginning and end of the day praying, reflecting, or keeping a gratitude journal. Or just block off  fifteen minutes in the afternoon for a cup of coffee, a good book, and an inspiring view.

Upgrading your routine might not seem essential to answering the professional questions that led you to your sabbatical. But whether you return to your old job or start working towards a new career, self-care will be essential to avoiding more burnout and maintaining your sense of purpose. Once you’ve found a routine that energizes your mind and your body, you’ll be able to structure other essential tasks around it, which can lead to higher productivity and a greater sense of fulfilment.

Are you considering a sabbatical or a career change? Are you concerned about how that change could affect your financial goals? Let’s talk about how Cornerstone Wealth’s Life-Centred Planning process can help you chart the best path forward.

In a recent study, half of Americans said their expenses are equal to or greater than their income (1). The statistics for Australians are likely to be quite similar. Revolving credit, particularly credit cards, is an increasingly significant part of the equation.

The phrase “credit card debt” usually triggers red flags when we’re talking about long-term financial planning. And in fact, the average US household now carries $15,654 on their cards, and pays $904 annually in interest (2).

But debt, in and of itself, isn’t good or bad.

Instead of making a value judgement about how you use debt, when working with clients we like to understand:

• What is your debt story?
• What are your attitudes about debt?
• Why do you feel the way you do?
• How are your debt levels affecting the “Return on Life” your money provides?

Having a deeper understanding of the above helps us do a better job positioning your money to work more effectively for you.

What’s the big picture?

Our current high debt levels reflect a previous generation of low interest rates, an active housing market, a robust credit market, and relative peace and prosperity. This meant more consumers with more plastic and more loans.

Again, debt is not bad in and of itself, especially in a healthy economy. But from 2007-2009, many highly-leveraged people and companies were vulnerable to foreclosure and bankruptcy during the Global Financial Crisis.

People who were born between the Great Depression and World War II grew up in the daily realities of war and lean markets. Unsurprisingly, this group tends to avoid using credit cards when they can. Instead, they rely on the cash in their hands and the cheque-books they balance with pen and paper.

That credit-aversion seems to have skipped the Boomer generation, who, generally speaking, happily used credit cards and home-equity loans.

The current generation of young workers—Millennials—seem to be warier about carrying debt than their parents were.

Young people are entering the workforce at a time when household income is struggling to keep pace with the cost of living. They believe taking on debt would only widen that gap. In particular, the costs of medical care, housing, and food continue to grow faster than income (2).

Many underemployed Millennials are living at home into their late-20s, so they aren’t using credit cards to finance luxury items or buy first homes. Even for millennials who do find good jobs after university, many start their adult lives in the red because of student loans.

Millennials are less enthusiastic about investing in the markets. Growing up during the Great Recession shook their faith in the economy. Growing up in the shadow of 9/11 and terrorism, they’ve only known a world unsettled by global unrest.

Millennials are also a more conscientious consumer group than their parents were. They want to spend their time, and their money, on things that help to make the world a better place. They consider personal fiscal responsibility to be part of a greater good.

What’s your story?

While looking at big picture debt trends is useful for predicting where the economy is headed, your Life-Centred Plan is about you. Now would be a great time to take a minute to consider:

• How do you feel about debt?
• Why do you think that you feel the way you do?
• Are you comfortable with your current level of debt?
• Is your current level of debt causing any problems with one of your loved ones?
• Do you pay off your credit card balances in full every month?
• How do your attitudes about debt align or differ with those of your parents? Why do you think that is?

We encourage you to reach out to us and we can take a closer look at your financial situation and help you get on a more comfortable path. Together, we can create a financial plan that will improve your “Return on Life”.

Sources:
1. Half of Americans are spending their entire pay-cheque (or more) http://money.cnn.com/2017/06/27/pf/expenses/index.html
2. Nerdwallet’s 2017 American Household Credit Card Debt Study https://www.nerdwallet.com/blog/average-credit-card-debt-household/