Many Australian’s will spend 20 years in retirement.
Partnering with FinAdvice Financial Planning helps you carefully invest and build your wealth, maximising your pre-retirement savings, helping make those years in retirement comfortable.
Matters to consider before retiring are:
- Timing – your age, and when in the tax year you, will leave the workforce.
- How much money you need to be saved to fund life after full-time work.
- How do you pay for your retirement?
- Are you permitted to access your Superannuation?
- Do you qualify for the Age Pension?
- What debts you have.
- Whether you will completely retire, or just cut back your hours.
- Can you make a last effort to save before you retire?
- The tax consequences are of retiring.
- How you will keep busy during retirement; what will your hobbies and interests cost?
- What significant expenses will you have after your retirement (holidays, new car, home renovations, and unexpected expenses)
- The level of comfort you would like when you retire.
Most people plan on enjoying a comfortable retirement where the following is affordable;
- household goods,
- private health insurance,
- a reasonable car,
- good clothes,
- a range of electronic equipment, and domestic and
- occasional international travel.
It is suggested you will need the following annual income upon retirement*:
At age 65 an annual income of:
- Single Person, Modest Lifestyle: $28,165
- Single Person, Comfortable Lifestyle: $44,146
- Couple, Modest Lifestyle: $26,570
- Couple, Comfortable Lifestyle: $41,910
At age 85, an annual income of:
- Single Person, Modest Lifestyle: $26,570
- Single Person, Comfortable Lifestyle: $41,910
- Couple, Modest Lifestyle: $37,977
- Couple, Comfortable Lifestyle: $58,069
Source: ASFA Retirement Standard (December quarter 2019, national)
Your Superannuation investments will generate your retirement income by way of paying Pension Payments. In certain circumstances, you may be eligible to receive Aged Pension payments in addition to your Super produced pension payments.
Maximising your Retirement Income – Transition to Retirement
The income generated by your super account will depend upon the balance you hold in super, and the underlying investment products.
If you are aged between 55 and 60 and are still working, you can maximise the money held in your super account by employing a Transition to Retirement (TTR) strategy.
A TTR strategy will:
- allow you to keep a consistent income while reducing your work hours, or
- increase your super, saving on tax while you keep working full time
Benefits of TTR
- Continue to receive super contributions, helping replace the money you take out.
- Reduce your tax — If you are 60 or older, your TTR pension payments are tax-free. If you are 55 to 59, your pension is taxed at your marginal tax rate (however you receive a 15% tax offset).
- Ease yourself into retirement — by cutting your hours of work back before you retire completely.
Disadvantages of TRR
- By starting to draw down your super early, you’ll have less money when you retire.