A Financial Planning Case Study About Change – Stephanie’s Story

A Financial Planning Case Study About Change – Stephanie’s Story

By Kristopher Meuwissen

*Names and certain details have been changed for privacy

Stephanie first came to us right before the onset of COVID-19 – potentially the worst timing to get things organised as the whole world was about to change and everyone’s livelihood thrown into chaos and disruption.

Obviously not having a crystal ball, Stephanie and ourselves went ahead as per usual, carefully taking into account her work situation (full time at that stage), her personal circumstances (single, approaching 60, never wanting to retire but still having debts that needed paying off), and her goals for the future (pay off the credit card of a whopping $9,000 and do some serious planning to get everything organised by age 65).

The Strategy

We went through Stephanie’s situation with a fine-toothed comb and developed a strategy that, utilising her age and working status, would see Stephanie’s short term goals such as paying off her credit card met immediately, but also a longer-term plan that would allow her to still continue to grow her super until she was ready (if she ever wanted to!) to retire.

Stephanie had a basic industry super fund that wasn’t meeting her goals and expectations of a super fund. There wasn’t much reporting or ability to check in on her funds, which is something that Stephanie really valued as a priority. As such, we found a super fund that would allow her to log in and see her balance, assets, returns, and everything else at a glance, as well as provide her frequent reports to help her feel more in control of her super.

This new fund also had more flexibility regarding rolling between accumulation and pension phase – something that would be crucial for our recommendation for Stephanie.

As Stephanie had reached preservation age and was still working, she had the ability to do something very much like the superannuation equivalent of having her cake and eat it too – commence a Transition to Retirement Pension account, and then roll it back to accumulation once she had withdrawn some funds.

By withdrawing the maximum 10% payment from this TTR account, it would allow Stephanie to meet her goal of paying down her credit card all in one hit, and still being able to put some of those funds aside for emergencies (an essential on-hand cash reserve that she didn’t have to begin with).

The super fund would then be rolled back to accumulation phase so Stephanie could continue to receive her employer super guarantee payments and grow her super until she was ready to retire and use it.

Simple, right?

Well it would’ve been had the coronavirus not reared its ugly head and stuffed up Stephanie’s (and everyone else’s) situation completely.

Stephanie, being in hospitality, went from working full time to no longer being paid by her employer, and sadly had to begin receiving the JobSeeker payments from the government to help keep her afloat until she could start working again.

Losing her job compounded all of Stephanie’s problems, meaning she got behind on her credit card payments and only saw that balance increase. This credit card debt was a huge source of worry and stress for Stephanie, and not having an income for a period of time then only being on reduced government assistance meant she was forced to rely on this more than she wanted to.

Now, we here at Wealtheon like a challenge, and this curveball was no exception. We went into full on planning mode and developed a new strategy that would allow Stephanie to still meet her goals (which hadn’t changed) whilst taking into account this strange new world.

Realising that the TTR strategy would count as income and therefore stuff up her JobSeeker payments leaving her in the lurch for cash flow, we recommended that instead of a TTR strategy, Stephanie take advantage of the government’s COVID-19 Super Access option.

By withdrawing the $10,000 from her industry fund account to pay off her credit card and retaining the rest in her bank account for emergencies or unexpected expenditure, she would meet her goal of paying down her credit card, whilst still allowing her to continue receiving the JobSeeker payments.

On top of this, we had to review Stephanie’s insurance situation, as COVID-19 presented a whole new health risk, particularly as she was in the high-risk bracket. Stephanie let us know that because of this she would like to keep her existing cover held in her industry fund, and we recommended that she do so.

To still meet Stephanie’s goals of having a fund that gave her control and great reporting as well as diversification of investments, we recommended that she open a new accumulation fund with a different super fund as in the previous recommendation.

This way, she could roll the majority of her funds over to the new account giving her the ability to invest as she pleases, and still retain her insurance cover in the industry fund with a minimum balance, keeping her safe and insured during the heightened risk of COVID-19.

Six Months Later

Six months later, and despite all the crap that’s happened in the world and economy, Stephanie is a raging success story.

Despite having taken out the $10,000 government COVID-19 payment, paid two sets of super fund administration and investment fees, our fees, AND insurance premiums all from her super accounts, Stephanie now has more in super than she did when she first sat down with us.

Not only that, but Stephanie has met her goal of paying off her credit card, now has an emergency cash fund in her bank account and has a clear plan in place well before age 65.

Stephanie’s story really highlights that no matter what’s going on in the world, it’s always the right time to start planning your finances and future. Change is inevitable and constant, but it can also be amazing.


Have some questions? Want to know how it applies to you? Want a review of your personal situation? Click here to book a Free 15 Minute Discovery Session, give us a call on 1800 577 336, or email us at hello@wealtheon.com.au.

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