Planning retirement
The secret to securing a healthy income in retirement is knowing what lifestyle you want. With this in mind, here are some thought starters to help you plan for a comfortable retirement.
How much do you need to retire?
Everyone's different, so it's impossible to say exactly how much super you'll need for retirement. Some of the factors to take into account are:
- What age do you plan to retire at?
- What sort of lifestyle do you want?
- Have you paid off all your debts?
- Will you need additional money for other needs eg buying a new car or going on a holiday?
A general rule of thumb is that you need approximately 60% of your final pre-retirement salary each year for what could amount to 20 years or more.
A financial adviser can help to evaluate exactly how much money you'll need for retirement, and how you're tracking to reach that goal.
So to retire on your own terms, speak to your adviser or call us to be put in contact with one.
Ease into retirement
If you're over 55 and fancy building a bigger retirement nest egg without reducing your current income, a transition to retirement strategy could be right for you.
This involves contributing some of your pre-tax salary into super, while moving some of your existing super into a transition to retirement pension, and drawing a regular income from the pension to replace your reduced salary.
Even with the recent changes reducing the amount you can contribute to super in certain circumstances, our analysis suggests it can still be worthwhile.
Speak to your adviser, or we can put you in touch with one.
Lump sum or income stream?
If retirement is sooner rather than later for you, you may be wondering if it’s better to take your super as a lump sum or an income stream when you retire.
What you might not be aware of is starting an income stream investment (such as an account-based pension) within super, rather than taking your savings as a lump sum, can be much more tax effective. This is because:
- no lump sum tax is paid when the benefit is used to start the income stream
- no tax is payable on investment earnings in the fund
- prior to age 60, any taxable income payments attract a 15% tax offset and,
- when you reach age 60 you can receive unlimited tax-free income stream payments without having to include them in your annual tax return. This could also reduce the tax payable on your non-super investments.
Like to know more? Speak to one of our financial advisers about retiring on your own terms.