In 1995 Bob (47) and Jane (47)* were earning a good income from their cattle property when Bob injured his neck in a work incident. Although Bob was able to return to work he felt it would be best to sell the property and pursue something less physical. Additionally, with three independent children they wanted to explore their dreams of travel.
A family trust was established with $1,100,000 to meet Bob and Jane’s desire for the majority of the property proceeds to pass to the next generation.
A further $250,000 was contributed to each of their superannuation funds. A partial tax deduction for this contribution helped to reduce a capital gain made from part of the property sale. As they had retained sufficient funds outside superannuation, they could take advantage of superannuation’s lower tax environment (15%).
At the time (1995), $400,000 was utilised to purchase a new and substantial home.
Bob obtained a 9 – 5 job on a salary of $60,000 and salary sacrificed $25,000 of this to superannuation which reduced his taxable income.
Bob and Jane’s investment strategy incorporated the three major asset classes of shares, property and bonds with an emphasis on defensive assets to dampen any volatility. This model put together by Alman Partners allowed the couple to live on $100,000/ year plus inflation which supported their everyday needs and travel dreams.
*Names have been changed to protect the individuals’ identity.