Make your retirement saving tax-effective

With the average Australian now spending in excess of 20 years in retirement, it's vital that you plan your finances to fund this stage of your life.

When it comes to your super, you generally have two options; you can take the money as a cash lump sum and invest it elsewhere, or keep it in super by rolling over to an income stream investment, like an account-based pension.

Income stream investments are very tax-effective for the following reasons:

• No tax is payable on earnings within the fund.
• If you start an income stream between the ages of 55 and 59, the taxable income payments you receive will attract a pension offset, which may enable you to receive thousands of dollars a year tax-free.
• At age 60, you can receive unlimited tax-free income stream payments and you don't have to include these amounts on your annual tax return. This could reduce the tax payable on your non-super investments.

Another benefit of income stream investments is that they could enable you to access (or increase your entitlement to) Age Pension benefits.

Given these advantages, you might want to invest non-super money into super to enable you to start a larger income stream.

What's more, you may be able to benefit from an income stream while you are still working

MLC has identified several strategies that could be used to save on tax and maximise your income in the lead-up to, and during, your retirement.

For more details go to MLC's Retire in Style brochure, get in touch with a financial adviser or call MLC on 132 652.