Women – your financial affairs, your future

This is general advice only This presentation was prepared by Bridges Financial Services Pty Limited (‘Bridges’). ABN 60 003 474 977. ASX Participant. AFSL Number 240837. This is general advice only and has been prepared without taking into account your particular objectives, financial circumstances and needs. Before making any decision based on this presentation, you should assess your own circumstances or consult a financial planner. The examples used are for illustrative purposes only. A Product Disclosure Statement(s) (PDS) for the product(s) outlined in this presentation is available from your financial planner which you should consider before deciding whether to acquire this product(s). You may also contact our Client Advisory Services on 1800 221 151 (free call) between Monday to Friday 9.00am to 6.00pm (Sydney time). To the extent permitted by law, Bridges, its officers, employees, agents, consultants, advisers and representatives are not liable for any loss or damage as a result of any reliance placed on the contents of this presentation.

Agenda The challenges facing women’s finances – let’s look at the facts How you can take control of your own finances and make sure you’re on track for a happy retirement “Most women run out of super after little more than a year after finishing work.” Fiona Reynolds – Chief Executive, AIST

Fact 1: Ageing population Life expectancy (average age at death) A young woman today who retires at age 67 will need to save 13% more than an otherwise identical man due to her increased longevity1 60% of Australians enter retirement with a partner, many spend the bulk of their super in the first 10 to 15 years of retirement2 Unfortunately, many become widowed and spend the later years dependant on the Age Pension1 Women Men Source: 1 Superannuation Savings Gap for Women Rice Warner 2 ABS

Fact 2: Marriage and divorce Number of marriages and divorces3 Marriage rates have declined and if we marry, it’s often not until later3 If and when we do marry, 1 in 3 marriages ends in divorce3 83% of young Australian women say they plan to live off their partner’s income in retirement1 Divorce for mothers with dependant children, can lead to several years where no savings are made2 Marriage Divorce Source: 1 John S Croucher, Professor of Statistics, Macquarie University 2 Superannuation Savings Gap for Women 3 ABS

Fact 3 – the wage gap "Families rely on mothers and wives for emotional support and care; families rely on women for labor in the home; and increasingly, families rely on women for income needed to raise healthy children and care for other relatives. Hilary Clinton Many women still receive lower pay than men for identical work leading to reduced superannuation contributions and an adverse impact on the final retirement benefits of women1 On average, women working full time earn 16.7 per cent less than men working full time2 Source: 1 Superannuation Savings Gap for Women 2 ABS 3 Hilary Clinton: Womens Rights are Human Rights Speech 1995

Fact 3 – the wage gap (continued) Women currently make up 45.4 per cent of the workforce1 2.5 per cent of Chairs in the ASX200 are women2 8.4 per cent of the Board Directors in ASX200 companies are women2 Source: 1 ABS 2 EOWA 2008 Australian Census of Women in Leadership, 2010.

Fact 4 – mothers and caring for others A mother is a person who seeing there are only four pieces of pie for five people, promptly announces she never did care for pie. Tenneva Jordan Women are more likely than men to become a carer at some time in their life1 Taking seven years out of the workforce costs women an average $70,000 in lost retirement savings2 Source: 1 ABS 2 estimated by the Australian Institute of Superannuation Trustees

The result… Women are two and a half times more likely to live in poverty in their old age than men1 AND the Age Pension is being reduced, with an increase in the income test taper rate and a gradual increase in the Age Pension age proposed in the 2011 Budget1 The average retirement payout for women at $73,000 is half that of men, ($155,000)2 Source: 1 Equal opportunity for women in the workplace agency 2 Financial Services Institute of Australasia

The good news Money makes life easier but I don't want to be rich, not at all. Cathy Freeman You CAN have it all. You just can't have it all at once. Oprah Winfrey Despite the relatively low incomes, most retired women reported being happier than they were when they were working We can show you some strategies to help you start managing your own finances You’ve already taken the first step! Source: Australian Institute of Superannuation Trustees

Transfer of wealth Whatever your stage of life, advice can make a difference SuperRefinancingRetirementEducationWealth protectionLeasing SuperInvestment plansLeasingHome LoansWealth protection RetirementLifestyleMortgagesEducation needsInheritancesLeasing RetirementLifestyleInheritances Super Investment plans Children’s education Car loan Family expenses Retirement planning Mortgage Children’s education Car loan Family expenses Earning capacity Social & leisure Living expenses Medical expenses Mortgage Renovation Car Starting a family Not much commitment Age 21 Age 30 Age 40 Age 50 Age 60

What does financial planning advice involve? Setting short and long term goals Savings – everyday account, term deposit Investing – shares, property, super Establishing your risk/return profile Determining your time horizon

High International shares Australian shares Property International fixed interest Return Australian fixed interest Mortgages Cash High Low Risk Types of ‘asset classes’

Lets look at Australian shares Part ownership in a company Over 1,700 companies listed on ASX Provide an income stream via dividends Provide growth via increase in value of company Flexible – a liquid form of investment Tax effective with franking credits

The growth of Australian shares, international shares and cash $1,000 invested since January 1985 Please note that past performance is not a reliable indicator of future performance. All returns shown include dividends and assume the dividends are reinvested. Performance of International shares is shown in AUD terms (assuming currency exposure is unhedged). Indices used: Cash - RBA Bank accepted Bills 90 Days; Aust. Equities - S&P/ASX 300 TR; Int. Equities - MSCI World NR AUD

Let’s look at property

What is a managed fund? A great way to achieve diversification Investors’ funds pooled Range of investments/different asset sectors Professionally managed Income and growth Regular savings plans

Sources of retirement funding Employer super pension Age pension Account-based pension Money to live on (funding your lifestyle) Other investments Annuity

What is super? Another investment strategy – a managed fund for your future Low tax environment so savings accumulate faster Government provides incentives to invest in super Annual contribution limits apply Tax-free benefits from age 60 BUT preservation rules apply and there are restrictions on how much you can contribute

How to invest in super Super guarantee – 9.25 per cent compulsory contribution from your employer Salary sacrifice contribution – made from your pre-tax salary so not only will it boost your super but reduce your taxable income Personal contributions – made from your after tax money Super co-contribution – if eligible, for every dollar you contribute to super, the Government will match it with a co-contribution of $0.50, up to certain limits Spouse contributions – made on behalf of a no or low income earning spouse that qualifies for a tax offset

Something for everyone Whatever your situation, there is a strategy to help your super grow. Let’s look at Government’s super co-contribution Salary sacrifice

Super co-contribution Women often earn less= lower super balances = lower retirement payouts Super co-contribution Earn less than $48,516? Make a contribution to super Receive up to $500 from the Government A helping hand from the Government The Government has proposed changes to the super co-contribution scheme with effect from 1 July 2012. While not yet law, the proposed figures have been used.

Super co-contribution rates

A sacrifice? Not really Salary sacrifice allows you to use pre-tax money to contribute to super Super contributions are taxed concessionally at up to just 15* per cent rather than your marginal rate (which can be as high as 46.5 per cent) Your salary is reduced by the amount you sacrifice to super You could actually drop down a tax bracket *In the 2012 Federal Budget, the Government proposed increasing the contributions tax rate to 30 per cent for individuals earning over $300,000 pa.

Salary sacrifice opportunity *The contributions tax rate is30 per cent for individuals earning over $300,000 pa.

Let’s look at salary sacrifice a bit closer Marianne is 35, earning $55,000 and has $40,000 accumulated in super Even though retirement is 25 years away, Marianne is worried her 9.25 per cent SG will not be enough Via salary sacrifice she contributes an extra 4 per cent to super, that’s just $27 a week (after tax).

Let’s look at the difference SG and salary sacrifice $473,500 SG only $368,350 Difference $105,150 Assumes: Earning rate of 7% and tax rate of 31.5%. SG and salary sacrifice paid quarterly.

Making the most of your super How many funds do you have? Does your fund have your tax file number? Does your investment strategy suit your time horizon? Have you nominated a beneficiary?

Start taking control of your financial future Get a budget - look at your last month’s spending and find areas where you can save Get familiar with internet banking – it’s easy to track your money quickly. Have a look at your loans and credit cards – are you paying too much interest? Start reading the finance section of the newspaper. There’s lots of great free websites too! Come and see me to have a full review of your financial situation.

Helpful websites

Teach your children to be financially smart Teach small children to make small purchases and count out their cash Buy a piggy bank or set up a bank account so they can watch their money grow Help your children set goals and save for the things they want Reward children for doing small chores around the house so they can learn the value of money early

Protecting your wealth

Are you one of the 95 per cent? 95 per cent of families do not have adequate levels of insurance What would happen if you became unable to work for a period of time? How would you pay the bills? A financial planner can assess your insurance needs and recommend appropriate coverage levels *The Lifewise / NATSEM Underinsurance report - Feb 2010

That’s the plan, but what if “Don’t let it end like this, tell them I said something” PanchoVilla You become seriously ill You are badly injured in an accident You cannot work again You (or your partner) die prematurely

On a typical day in Australia 18 Australian families lose a working age parent every day. 235,790 working age parents suffer a serious illness or injury every year 17,000 are forced to stop working, either permanently or for an extended period of time Over one million working-age parents with dependents will be impacted by death, serious accident or illness More than one in five families will be impacted by an insurable event in their working lives *The Lifewise / NATSEM Underinsurance report - Feb 2010 (based on 2008 figures)

Protect your wealth and lifestyle Objectives - your disaster safety net Maintain your income and your business Preserve your living standards Time to recover and rebuild Maintain financial objectives and security Protect your dependants, when you’re no longer there “I don’t want to achieve immortality through my work; I want to achieve immortality through NOT DYING” Woody Allen

Term life insurance Protection for your family/dependants Lump sum to cover debts and income Maintain family’s future standard of living May be available through your super fund Consider for spouse/partner as well

Total and permanent disability (TPD) Lump sum benefit Payable if permanently unable to work Need sufficient for income and lifestyle needs over your lifetime Typically packaged with term life insurance Strict policy definitions of incapacity

Trauma insurance Lump sum benefit Specified diseases - strict definitions Need for non-Medicare treatment Money to live on while you recover

Income protection insurance Pays an income to live on Variable timeframe and waiting period Maintain savings plans/debt repayments Maintain your living standard Tax deductible premiums

How to find the best policy Don’t just choose on premium cost Check definitions, inclusions, exclusions Consider claims record Match features to your needs Seek the advice of your financial planner

We can help you Develop a financial plan / investment / retirement strategy Buy and sell shares and other investments Alert you to opportunities and threats Select the most appropriate insurance Improve and protect your living standards

Estate planning essentials

Overview Three options with capital Three essential documents

The three options with capital Spend it before you go! Leave it to your chosen beneficiaries to spend! Put in place structures to: maintain and expand capital base by prudent investment minimise capital dissipating because of: divorce and relationship breakdown beneficiaries making bad business decisions provide assistance to chosen beneficiaries, future generations and even charities

The three essential documents Enduring power of attorney Enduring guardianship Will

1. Enduring power of attorney Management of financial matters Powers can be very wide OR very narrow Anyone who has assets should have one You get to choose who makes decisions for you if you can’t

2. Enduring guardianship Lifestyle decisions if incapacitated Where you live What medical treatment you receive What services you receive Can give directions such as view on life support Can appoint one or more people

3. Your Will You decide where your assets go If no Will – then intestacy Simple Will – nominates your Executor and specifies who gets your assets Don’t need to understand complexities just understand that there are options

Make sure everything is up-to-date Estate assets and non-estate assets change Families and family dynamics change Needs and responsibilities change Laws change Goals and objectives change

Summary Enduring power of attorney – have one! Enduring guardianship – have one! An up-to-date Will – have one! Ensure your Will is sophisticated if: You want beneficiaries to view inheritance as an investment You want the beneficiaries to have a tax efficient investment vehicle You want to protect the inheritance

Like to see someone Ask at your Greater Building Society to make an appointment with a Bridges financial planner or an estate planning specialist The initial appointment is complimentary and obligation-free

Women – your financial affairs, your future