Making it last
How much do I need to retire? It's one of the most common questions asked by those approaching the end of their working life.
While the answer varies from person to person, there are a few simple tips to ensure you're on track for the lifestyle you want in retirement. And one of the best ways to ensure you'll have enough is to seek financial advice.
A very long retirement
Going the distance
As a nation, we're keeping more active, staying healthier and living longer than ever before. So retirement no longer necessarily has to be about winding down. These days it can be a whole exciting new chapter in your life.
But making sure you have enough money to last you through your retirement is crucial to making sure you get the life you deserve when you've finished work.
To give you some idea of just how much you should plan for, men who reach the age of 65 now have an average life expectancy of 83. For women, it's 88.
So if you're 65 you should bank on funding your lifestyle for at least 18 to 23 years without work. And if you're lucky enough to beat the law of averages you might need a whole lot more.
That means you should take action now to make sure you'll have enough to enjoy a long retirement.
Fortunately, there are already lots of choices you can make.
For instance, who says you need to retire at 55, 60 or even 65? You might find you're relishing your working life more than ever and you'd like to keep at it.
If that's the case you might consider working part-time and supplementing your salary with a transition to retirement pension, or TRP.
You might also consider contributing some of your pre-tax salary into super while maintaining the same level of post-tax income using a TRP.
There are many ways you can make your savings last, and an adviser can help you.
To find out more, ask one of our experts or speak to your adviser.
Protect your kids and your future
Why insuring your children ensures your retirement
Retirement is all about having the financial freedom to do what you want to do.
So how would you cope if you were once again responsible for bringing up the kids?
It's a scenario we don't like to think about but one which we probably should - the chance that you may lose one of your grown up children to accident or illness.
It might mean you'd become responsible for bringing up your grandchildren at a time when you can least afford it.
That's exactly what happened when newly retired couple David and Susan Jones lost their son Rodney to a brain haemorrhage. David, a former steelworker, had just taken a redundancy package and the two were planning to travel around Australia.
Because Rodney was young and didn't think about life insurance, he left a wife and three children without any means of support. Like any grandparents would, David and Susan found themselves looking after Rodney's family.
The financial impact on David and Susan was devastating. And the quality of life of Rodney's children was also impacted by having to live off their retired grandparents' savings.
While it's not something any of us like to think about, it's comforting to think that talking to your children about taking out insurance today will protect you and your family for the future.
Our advisers have a range of strategies which can help you protect the ones you love without missing out on your retirement goals.
Income stream or cash payout?
Why a pension might help you get the most from your super
A super benefit is often the largest lump sum payment you'll ever receive. So when you turn 55 or over and stop working it can be tempting to withdraw it all.
But if you do, you might be giving yourself a greater tax burden including the possibility of having to pay lump sum tax on the whole amount of your super. If you then invest the money you've withdrawn in your own name, tax may be payable on any earnings at your marginal rate.
A smarter option may be to start an income stream with your super. By doing this, you're not liable for lump sum tax, or for tax on any earnings your money makes while it stays in the fund.
You'll also get a 15% offset for any payments you receive before you turn 60. If you've already turned 60, your payments will be tax free and you don't have to declare them in your annual income tax return. So choosing to have your super paid through an income stream can help cut down on the amount of tax you pay on your other investments.
If you're over 55, you can even access your super as an income stream without retiring, through a transition to retirement pension.
And, taking your super as an income stream could help you qualify for (or increase your entitlement to) Age Pension payments.
If you'd like to know more, your adviser can help guide you through a range of options and help you choose one which best suits your needs.
Managing market downturns
Getting your strategy right can minimise the impact of market slumps
It's no secret investing in cash can be a great tactic for reducing risk in your portfolio. It's for that reason every thorough retirement strategy should make some allowance for cash.
When the GFC hit in late 2007, a lot of investors were tempted to move their savings from shares to the perceived safety of cash, such as fixed-term deposits.
But if you'd abandoned Australian shares at the bottom of the market in 2008 you would have missed out on the massive gains they enjoyed in 2009 - on average more than 50 per cent!
An effective strategy should be based on the understanding that while markets don't rise all the time, if you concentrate on quality and diversity the long-term trend is more likely to be upwards.
An adviser can help you cut through fashion and hype to build an investment strategy based on the fundamentals.
If you'd like to learn more speak to your adviser today or contact us and we'll put you in touch with one.