Retirement and Estate Planning
Retirement planning is the accumulation of wealth to provide income and financial security in retirement.
Estate planning focuses on wealth preservation and wealth transfer.
When do you need financial advice?
How can we help?
With a dedicated technical research team Morgans' advisers are kept up to date with legislation changes.
If you are planning your retirement, just reducing your working hours, or thinking about an estate plan, we can help.
Retirement planning
Effective retirement planning involves both tax efficiency and strategic investments. Beginning retirement planning early is crucial as it allows for ample time to prepare. Ensuring that your retirement income is tailored to align with your specific needs and goals is paramount. During retirement, income typically originates from three primary sources: superannuation, which includes pension income streams and lump sum withdrawals; non-superannuation assets, encompassing returns from shares, property, cash, and fixed interest; and Centrelink benefits, such as the age pension. Our expertise can guide you in structuring your retirement income stream to best suit your financial requirements.
Estate planning
Estate planning serves the vital purpose of safeguarding your family's wealth through the strategic distribution of assets to chosen beneficiaries. Achieving this objective necessitates a thorough assessment of each beneficiary's individual circumstances, ensuring that the inheritance positively contributes to their financial well-being without adverse repercussions.
Central to effective estate planning is the establishment of a current and legally binding will. Beyond the will, it's essential to consider additional instruments such as Powers of Attorney, medical directives, testamentary trusts, and business succession plans. Particularly regarding superannuation, which falls outside the purview of a will, proactive steps such as nominating beneficiaries and establishing binding death nominations are crucial to ensure that your intentions are honoured in the distribution of superannuation death benefits.
Implications for SMSFs
With respect to self managed superannuation funds, trustees and members effectively have ultimate control in the distribution of death benefits within your fund.
It is important you prepare a strategy for the payment of benefits to members' chosen beneficiaries and incorporate the facilities to implement this strategy in your trust deed. It will also be necessary to make preparations for the wind-up of the fund in the event of the deaths of all trustees and members.
Centrelink issues
Centrelink benefits are available for eligible seniors who have retired or are about to retire. Eligibility is based on two tests – the Incomes Test and the Assets Test. Your financial position (combined if a couple) is taken into account for these two tests, and eligibility for benefit payments is determined by the outcome of these tests.
We recommend you visit the ‘Retirement years' page on the Services Australia website. This page is a very useful guide to help individuals understand income support, what additional services and supplements are available and how you can make a claim. It also discusses residential aged care for those who are looking at their options for retirement homes.
News & Insights
We think the US economy is currently experiencing solid growth, with data from the Chicago Fed National Activity Index indicating an annual growth rate of just above 2%. This aligns with projections from other parts of the Federal Reserve System, such as the New York Fed. The New York Fed’s weekly Nowcast, updated every Friday, estimates that for the second quarter of 2025, the US economy is growing at an annualised rate of 2.34%, surpassing the 2% mark. This robust growth is consistent with our model’s view that the US economy is now performing strongly. However, we anticipate a slowdown in the second half of 2025.
On 18 June the Fed released its Summary of Economic Projections with the Federal Reserve’s forecasting US GDP growth to drop to 1.4% in 2025, down from their March estimate of 1.7%. Looking further ahead, growth is expected to pick up slightly to 1.6% in 2026 and 1.8% in 2027, aligning with the long-term trend growth rate of around 1.8%. We believe this recovery trend could be even higher, driven by reduced regulation under the second Trump administration and aggressive tax write-offs for companies building factories in the US, allowing 100% write-offs for equipment and buildings in the first year. This policy should foster stronger systemic growth.
The Fed expects that as the economy slows, unemployment is projected to rise to 4.5% from the current level of 4.2%. Inflation, measured by the Consumer Price Index (CPI), is running at 3.5% this year, approximately 50 basis points higher than the Personal Consumption Expenditures (PCE) index of 3.0%, with 1.6% of this inflation attributed to tariffs. The Fed expects PCE Inflation to ease to 2.4% in 2026 and 2.1% in 2027. The Federal Reserve anticipates cutting the effective federal funds rate, currently at 433 basis points (according to the New York Fed), by 50 basis points by the end of 2025, followed by an additional 25 basis points in each of the next two years. This aligns with our own Fed Funds rate model’s current equilibrium federal funds rate of 3.85% . The Fed Outlook supports our scenario of a slowing US economy and rate cuts in the second half of 2025 and beyond. A falling US dollar is then expected to exert upward pressure on commodity prices, benefiting Australian Equity markets.
Taking questions during the Press Conference after releasing the Fed statement ,Federal Reserve Chair Jay Powell, addressed the certainty and uncertainty surrounding the inflationary effects of tariffs. Initially, at the start of 2025, the inflationary impact of tariff policies was unclear, but three months of favourable inflation data have provided this clarity, indicating that the inflationary effects are less severe than anticipated. Powell noted that the Feds own uncertainty on the inflationary effects of tariffs peaked in April 2025, and the Federal Reserve now has a clearer understanding that the inflation effects, are lower than initially expected.
The Fed view supports our own scenario of a slowing US economy in the second half of 2025, allowing for Fed rate cuts . This in turn should then lead to a falling US dollar, which we in turn expect to drive rising commodity prices.
The second half of 2025 will be an interesting time for everyone. Geopolitical uncertainty prevails. How will all of this impact the Australian investor and in particular, their wealth and retirement savings? Whether you are an accumulator, saving for short- and long-term goals, or a retiree, hoping for a comfortable retirement, the ability to manage this uncertainty will be key.
When we published the previous Your Wealth – First Half 2025, the Division 296 Bill (Div296) was also facing uncertainty. The Bill was eventually blocked in the Senate prior to the Federal Election. The Labor Party succeeded in winning so it’s Ground Hog Day for Div296. The Government doesn’t have the numbers in the Senate to pass the Bill without support from other parties. The Greens are the likely negotiating party but will undoubtably have their own agenda. Regardless, there is a high probability this legislation will be passed once Parliament resumes.
Our message to our clients is to wait until we know more details and to not act in haste.
In addition to our Feature Article which provides further insights on Div296, this edition also Spotlights the Aged Care changes due this year, with the start date pushed back to 1 November.
We hope readers enjoy this edition of Your Wealth.
Morgans clients receive exclusive insights such as access to our latest Your Wealth publication. Contact us today to begin your journey with Morgans.
This morning, I was asked to discuss Sarah Hunter’s presentation from yesterday. Sarah, the Assistant Governor and Chief Economist at the Reserve Bank of Australia (RBA), delivered a detailed and competent discussion on the conventional view of tariffs’ impact on the international economy. She highlighted that tariffs typically increase inflation and reduce economic output, a perspective echoed by the OECD in a similar presentation overnight. Sarah’s analysis focused on the potential shocks tariffs could cause, particularly their effects on GDP and inflation.
Drawing on my experience as an Australian trade commissioner and my work in Australian embassies, I found her presentation particularly interesting. My background allowed me to bring specialist knowledge to the conversation, which I believe gave me an edge. Notably, I observed that the RBA seems to lack analysts closely tracking individual policymakers in the Trump administration, such as Scott Bessent, whose views on tariffs and competition differ from the general assumptions. The conventional view assumes a world of perfectly competitive countries adhering to international trade rules and unlikely to engage in conflict—a scenario that doesn’t align with the current global trade environment, especially between China and the United States.
China, operating as a Marxist-Leninist economy, aims to dominate global markets by building monopolies in areas like rare earths, nickel, copper, and other base metals. It maintains a managed exchange rate, despite promises to the International Monetary Fund for a freely floating currency. If China allowed its currency, the RMB, to float, it would likely appreciate significantly, increasing imports and reducing its trade surplus. This would create a more balanced international trade environment, potentially reducing the need for other countries to impose tariffs. However, major institutions like the OECD and RBA seem to misjudge the nature of this trade shock, relying on outdated assumptions about global trade dynamics.
The international community also appears to overlook specific U.S. policy intentions, such as those articulated by figures like Peter Navarro and Scott Bessent. The U.S. aims to use tariffs selectively to bolster industries like pharmaceuticals, precision manufacturing, and motor vehicles. This misunderstanding leads public institutions to perceive unspecified risks, as reflected in Sarah’s otherwise able presentation. Because the RBA and similar institutions view the world as fraught with undefined risks, they are inclined to keep interest rates low, responding to perceived threats rather than an equilibrium model.
Interestingly, data from the U.S. economy contradicts the expected negative impacts of tariffs. The Chicago Fed National Activity Indicator, a reliable gauge of economic growth since the 2008 financial crisis, shows U.S. growth above the long-term trend for the first four months of this year. This suggests resilience despite tariff-related shocks. Ideally, growth will slow later this year, prompting the Federal Reserve to cut rates, facilitating a soft landing and a decline in the U.S. dollar to boost global commodity prices. However, this nuanced outlook wasn’t evident in yesterday’s presentation.
Moreover, the anticipated rise in U.S. inflation due to tariffs isn’t materialising. Scott Bessent recently noted that U.S. CPI inflation is lower than expected, with core inflation shown as the (16% trimmed mean) at 3% for the past two months . Core inflation excluding food and energy CPI is only at 2.8%. This suggests that Chinese suppliers are absorbing tariff costs to maintain market share, rather than passing them on as higher prices. Recent Chinese data supports this, showing a slight decline in manufacturing confidence and coal consumption, indicating reduced factory output and electricity use. This points to a modest slowdown in China’s economy. So far the expected negative effects on U.S. prices and output are not occurring.
In summary, the fears expressed by institutions like the RBA and OECD about the Trump administration’s trade policies appear overstated. The U.S. economy is not experiencing the predicted declines in output or increases in inflation. While these effects may emerge later, the current data suggests that the risks are not as severe as anticipated, highlighting a disconnect between theoretical models and real-world outcomes.
