Easing into retirement
Retirement should be one of the most exciting times of your life: a time when you get to fulfil all the ambitions your busy working life kept getting in the way of.
You might plan to spend see more of the world or your family. Perhaps you want to volunteer for the community or learn a new language. Whatever your retirement goals, we can work with you to give you the best chance of doing exactly what you planned.
Transitioning into retirement strategies
Developing a retirement strategy that suits you
Retirement should be one of the most exciting times of your life: a time when you get to fulfil all the ambitions your busy working life kept getting in the way of.
You might plan to spend your retirement seeing more of the world or your family. Perhaps you want to volunteer for the community or work hard at learning a new language.
Whatever your retirement goals are we can work with you to give you the best chance of doing exactly what you planned to.
The first place to get started on your retirement planning is working out its timing. When will you realistically be able to take that all important step and stop work?
The great news is that these days retirement doesn't need to be an all or nothing choice. There are so many things you can do to make sure you're in the right financial position before you give up work altogether.
You might, for instance, choose to keep working but at reduced hours. That way, you can take advantage of a transition to retirement pension (TRP) and draw on a little of your super to provide a tax-effective income stream that supplements your work income.
Alternatively, you might choose to build your retirement nest egg tax effectively by using salary sacrificing or pre-tax earnings.
Or you might even choose to combine these strategies to grow your retirement savings without reducing your income.
Alternatively, you might choose to take greater control of your retirement savings by setting up your own self-managed super fund (SMSF).
Only you can decide the best strategy for transitioning into your retirement. But whatever that strategy is, working with an adviser can help you achieve your financial goals.
After all, at MLC we've been helping Australians safeguard their future for more than 120 years.
Working part-time
Reducing your hours without reducing your income
More and more Australians are using part-time work as the first step in an effective retirement strategy.
That's because using part-time work in combination with a transition to retirement pension (TRP) can help you maintain your current level of income while scaling back your hours.
It also lets you test the waters to see whether you really are ready to give up work completely.
If you're over 55 you can use a TRP to draw on your super while you're still working. It lets you receive a portion of your super as a tax effective income stream which supplements your salary.
For instance, if you work full time and earn a salary of $80,000 (or $60,950 after tax), drawing a TRP of $26,251 a year might let you cut your work down to three days a week and still keep the same after-tax income.
| In year one | Before strategy | After strategy |
|---|---|---|
| Pre-tax salary | $80,000 | $48,000 |
| TRP Income | Nil | $26,251 |
| Total pre-tax income | $80,000 | $74,251 |
| Less tax payable1 | ($19,050) | ($13,301) |
| After-tax income | $60,950 | $60,950 |
1In 2009/10
Then again, a TRP's not for everyone. For instance, if you have investments outside of your super, you might be better off drawing on these rather than reducing your super savings.
If you'd like to find out more about how part-time work can help you ease into your retirement, speak to your adviser or contact us to speak to one of our phone-based experts.
Managing life changes
Retirement plans should account for things not always going according to plan
In retirement, as in our working life, things don't always turn out as we'd hoped.
In late 2008 the global recession impacted the super balances of many Australians, forcing many of them to put their retirement on hold or face the prospect of a substantially reduced income.
Unexpected events like premature retrenchment, divorce or even illness can also reduce our retirement savings, leaving us with less money and more stress than we'd counted on.
It's important you take into account not only what you plan to go right but also what might end up going wrong.
An adviser can help you prepare for the unexpected by helping you structure your portfolio with the right level of asset protection to cushion the downturns without missing out on the upside. They can also examine your insurances to ensure you're adequately protected for any eventuality.
What's more, an adviser can work with you to develop tax-effective strategies to protect your wealth and manage your debt.
Read a real-life story of how financial advice helped an MLC customer manage the ups and downs of retirement.