The Financial Planning Association of Australia The Financial Planning Association of Australia

How to manage the conflicted years to secure your financial future


The 35 to 50 age group represents the conflicted years.

Let’s face it, there’s a lot going on… you want to have a great lifestyle, you may be trying to get ahead on your mortgage, or preparing for your kids’ increased education costs. Not to mention you’ll be thinking about how much you need to put away for retirement.

As long as interest rates are low and provided you have a flexible mortgage structure, it is not unusual and indeed beneficial to direct surplus savings between extra principal payments off the mortgage (or into an offset account) and pre-tax contributions to superannuation, which are only 15%, considerably less than the marginal rate of tax. These strategies will help you in the long term for retirement.

Be careful though, not to direct too much too quickly into super, as you will not be able to access the money until age 60. However, the other side of the coin is that you will benefit from the effect of compounding returns, the sooner you start contributing to super.

If the money is invested in shares and property, you are more than likely to generate a return higher than current mortgage rates.

It is a common strategy to pay down your remaining mortgage debt at retirement from your super. Though you must also be aware that there are caps to how much you can direct into super, so there will be limitations to your ability to power up your super closer to retirement.

About funding school fees… if you have seven or so years before school fees start, then you can utilise a managed fund, insurance bond or share portfolio for this purpose, allowing for the risk associated with growing your capital. Remember school fees increase more than inflation at around 8% p.a, so you need to start putting away money early on.

It is not uncommon to want to have it all, and through the guidance of a CERTIFIED FINANCIAL PLANNER® professional, you can restructure your financial resources to optimise your position.  Many of the clients we see in this age group have no structure or financial plan to assess what’s really possible with their financial resources.

The financial planning process not only shows clients if they are on track but helps clients prioritise when there are trade-offs and take actions consistent with those priorities to have the best life possible. The earlier you start planning and being accountable to your plan, the sooner you will feel more confident with your overall financial situation, allow yourself to have choices in life, and have a secure financial future.

by Michelle Tate-Lovery CFP®
Director & Principal Financial Adviser at Unified Financial Services.