For many executives and professionals, the decade between 50 and 60 can be one of the most financially significant periods of their career. Income may be at its highest, long-term incentive arrangements continue to mature, superannuation has often become a substantial asset, and retirement starts to move from a distant concept to something worthy of serious consideration.
Yet this stage of life often brings a different type of complexity. Career opportunities evolve, businesses restructure, ownership interests accumulate, family priorities change, and financial decisions made years ago can begin to have larger consequences. The strategies that helped build wealth in your 30s and 40s are not always the same strategies that will support the next twenty or thirty years.
The executives who navigate this period most effectively are not necessarily those with the highest incomes or the most sophisticated portfolios. More often, they are the individuals who pause to ask the right questions before an important decision, career change or life event forces the issue.
Here are five financial questions worth considering.
1. Am I using the superannuation rules designed for this stage of life?
Your 50s may present valuable superannuation opportunities, but many executives continue contributing at levels established years earlier.
Superannuation is often most powerful during the later stages of a career when earnings may be higher and retirement planning is becoming more immediate.
Contribution strategies that made sense at 40 may no longer be appropriate at 55.
For some individuals, unused concessional contribution caps may be available through carry-forward provisions. Others may benefit from non-concessional contribution opportunities, particularly following a significant liquidity event such as the sale of an asset or the receipt of a substantial bonus.
While rules apply, there may also be opportunities to make larger contributions under the bring-forward provisions.
For those over 55, downsizer contribution rules may also provide an opportunity to contribute proceeds from the sale of a home into superannuation, subject to eligibility requirements. Despite the name, participants are not required to purchase a smaller property.
It is equally important to understand the limits. Contribution caps, total superannuation balance restrictions and Division 293 tax can all affect outcomes for higher-income earners.
For many executives, the years immediately before and after age 60 can be an important period for superannuation and retirement planning decisions.
Superannuation remains a highly effective structure, but maximising its benefits requires an understanding of both the opportunities and the constraints.
When reviewing your circumstances, consider: Am I contributing based on today’s rules and circumstances, or simply continuing a strategy I established years ago?
2. Is my ownership structure still right, or is it simply what I set up years ago?
By your 50s, ownership structure can be just as important as investment selection.
Over time, many executives build wealth across multiple entities and ownership arrangements. A property may be owned personally, investments may sit in different names, and a family trust or self-managed superannuation fund may have been established years earlier for reasons that no longer apply.
Each decision may have made sense at the time, but the overall structure is not always reviewed as circumstances evolve.
As wealth accumulates, a different question may emerge: where should future savings and investments be held once superannuation contribution opportunities become limited or unavailable? For some individuals, this may prompt consideration of alternative ownership arrangements, including family trusts, companies or personal ownership structures. The suitability of any structure will depend on individual circumstances, objectives and the associated costs and obligations.
Ownership influences tax outcomes, estate planning, asset protection and succession arrangements. If structures no longer reflect current objectives, opportunities may be missed or unintended consequences may arise.
The challenge is that restructuring later can be costly. Capital gains tax, stamp duty and legal expenses may make changes far more difficult than addressing issues earlier.
That does not mean more complexity is better. Trusts, companies and self-managed superannuation funds all come with administration, compliance obligations and costs. The most appropriate structure will depend on individual circumstances.
A question to consider: Does the current ownership of my assets still align with my income, risk exposure and long-term intentions for my family? Is there a more appropriate arrangement I should be considering?
3. What happens to my family if my income stops tomorrow?
Your greatest financial asset may be your future earning capacity, yet many executives rely on insurance arrangements that have never been properly understood or reviewed.
When people think about wealth, they often focus on investments, property and superannuation. However, for many executives in their 50s, their largest asset remains their ability to generate an income in the years leading up to retirement or reduced working hours.
Senior careers often depend on factors such as health, travel capability, professional reputation and specialist expertise. A disruption to any of these can affect earning capacity significantly.
Insurance can play an important role in managing this risk. Income protection, total and permanent disability cover, life insurance and trauma cover may all form part of a broader risk management strategy.
Many executives have some cover through their superannuation fund, but default arrangements are often not designed around executive remuneration levels, personal liabilities or family commitments.
Reviewing policies before health conditions emerge can also be important, as cover generally becomes more expensive and difficult to obtain with age.
Consider: If my income stopped permanently next month, how long could my family’s current lifestyle continue without significant change? Is what I have in place still appropriate, or should I be considering something else?
4. Am I optimising this year, or the next twenty?
The greatest opportunities often arise when separate financial decisions are viewed as part of a wider strategy.
When we meet many new clients, we rarely see poor decisions. More commonly, we see sensible decisions made independently over time.
Superannuation is managed separately from investments. Insurance arrangements may have been established many years ago. Mortgages, business interests and ownership structures have evolved independently as circumstances changed.
The challenge is that financial decisions rarely exist in isolation.
A significant bonus may influence taxable income. Taxable income can affect superannuation contribution opportunities. Contribution decisions may influence broader wealth structures and estate planning considerations.
Viewed individually, each decision appears reasonable. Viewed together, opportunities often become clearer.
For many executives, the value of a review lies not in finding something dramatically wrong, but in ensuring that all moving parts are working together towards the same objective.
You may wish to consider: Has anyone ever looked at my financial position as a complete picture rather than as a series of separate decisions?
5. Do I understand when my Employee Share Scheme will actually be taxed?
Tax on employee share schemes (ESS) does not always arise when cash is available, meaning a tax liability can occur before shares can be sold.
Equity incentives have become a significant component of remuneration for many senior executives. Performance rights, options, restricted shares and long-term incentive plans can create substantial wealth, but they can also create complexity.
A common challenge is understanding when tax applies. Depending on the structure of the plan, the taxing point may occur at vesting, exercise or the end of a deferred period. That timing does not always align with the ability to sell shares and access cash.
This can create situations where tax becomes payable before there is sufficient liquidity to fund it.
Further to this, for executives who have built a large shareholding in the company they work for, there may also be capital gains tax implications when shares are sold. Understanding the tax position of both existing holdings and newly vested awards is important before making any decisions.
There is also the issue of concentration risk. When salary, bonuses and equity are all linked to the same employer, household wealth can become more concentrated than many executives realise.
Worth considering: For each share plan I hold, when is the taxing point, what tax is payable on sale, when can I realistically sell, and how much of my wealth depends on a single company?
Where to from here?
Executive Strategies works with executives, senior professionals, business owners and Australian expatriates whose financial affairs have become increasingly complex over time.
If these questions have highlighted areas of uncertainty, it may be worth reviewing your current position while time and flexibility remain on your side.
A strategic review can help identify how superannuation, investments, tax planning, ownership structures, insurance and executive remuneration arrangements interact, and whether they remain aligned with your long-term objectives.
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If you would like to explore how these considerations apply to your own circumstances, contact James Marshall at +61 (0)7 3007 2007, or email contact@executivestrategies.com.au.
Stratus Financial Group and its advisers are Authorised Representatives of Fortnum Private Wealth Ltd ABN 54 139 889 535 AFSL 357306. This is general advice only and does not take into account your objectives, financial situation, or needs, so you should consider whether the advice is relevant to your circumstances. Always read the relevant Product Disclosure Statements (PDS) before making any financial decisions.
*Please note: For financial advice and services relating to this matter that are not offered under the Fortnum Private Wealth AFSL, in accordance with our collaborative advice model, when required, such matters are referred to appropriately qualified professionals.
