Individual Solutions - Finsolnet

By: The Financial Solution Network  09-12-2011
Keywords: Financial Planning, Retirement Funding

Objective

To match available financial resources with financial needs for death, disability, employment, retirement and retrenchment in the best possible way; taking into account the effect on disposable income, tax and your estate.

Ongoing and Integrated

Optimising income, tax, investment and estate planning is an ongoing process. It requires continuous fine tuning as personal circumstances, legislation and the available planning options change.

Scenario-Specific

Financial planning must optimise the financial resources and solution for each of the following scenarios:

  • Employment remuneration
  • Death
  • Disability
  • Retirement
  • Retrenchment

Financial Planning Disciplines

Financial planning has to optimise and integrate a number of inter-related financial decisions. The financial planning model must take into account the effect of every decision on each of the following disciplines.

Disciplines Objective
Tax Planning Minimise income tax by utilising all available deductions to increase remuneration value
Remuneration Planning Optimise the reward for labour by ensuring the best possible remuneration structure
Investment Planning Maximise investment retuns within a predefined risk mandate, providing for diversification and flexibility within an acceptable time frame
Death and Disability Planning Provides for fate. Quantification of capital and income requirements
Estate Planning Limit estate growth, reduce existing estate duty liabilities and ensure effective ultimate estate distributions
Retirement and Retrenchment Planning Maximise the capital vs. income withdrawal of available benefits

The Planning Process

Step Considerations
Define the assumptions and quantify the financial need Financial requirements:
  • Net after-tax income required
  • Investment returns and projections
  • Inflation expectations
  • Risk mandate
Identify the available resources These include:
  • Investments in properties and shares
  • Assurances
  • Retirement funding benefits such as pension fund, provident fund, deferred compensation and retirement annuities
  • Accumulated leave and other employer funded gratuities, such as retrenchment benefits
  • Possible future accruals, such as share options, inheritances, etc.
Compare the various planning options using interactive computer modelling Analyse the alternative scenarios taking into account:
  • Disposable income
  • Tax implications
  • Estate duty
  • Capital accumulation/growth
Optimise the results Match the best financial solutions to:
  • Personal preference
  • Practical considerations
Implement the plan
  • Initiate action
  • Monitor progress
  • Adapt to change

Keywords: Financial Planning, Retirement Funding

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