Heading towards retirement is a time of immense change and uncertainty.
Working towards and transitioning to retirement needs to be planned and managed carefully, whether you're a self-funded retiree, or trying to work towards it, we can show you how it can be done, and make this time of your life a time of excitement, being able to enjoying the fruits of your labour.
We're all aware of the limitations of compulsory superannuation which leaves us with the question, will I have enough money to live off for the rest of my life? With this in mind, what assets should I be investing in, how does inflation effect the value of my hard earned savings? Or is preserving what's been saved more of a consideration.
Saving for retirement can seem like a daunting task when you calculate just how much you need for a comfortable retirement and how long you have to accumulate it.
The sooner you start planning the better. Saving for a longer period of time rather than making a mad dash in the years before retirement will make reaching your investment goals that much easier. Not only will you benefit from compounding earnings on your investment, but early planning will also ensure you are taking maximum advantage of all the superannuation benefits that present themselves each year.
To discuss your particular needs as you approach retirement, call us and one of our planners can talk to you through your options and recommend an appropriate plan.
Upon reaching your preservation age, you can access your superannuation, it can be either taken as a lump sum or converted into a tax-effective income stream.
Account Based Pension (previously known as allocated pension)
An account based pension can only be purchased with money held in superannuation, it gives you control and flexibility over how much you access subject to a minimum payment each year based on your age. They pay regular income until the account balance is exhausted, furthermore all earnings generated are tax free.
There is no mortality risk, which means that if you die before the capital invested (plus any investment earnings) is exhausted, the balance is paid out to your nominated beneficiaries.
Investment assets held within your account based pension can range from term deposits to shares based investments or a combination of them both, it all dependants on your tolerance towards investment risk.
If you are concerned about the volatility of your account based pension due to the financial markets another option to consider would be to invest your accumulated super into a non-account-based income stream, where it will be guaranteed either for life, your life expectancy or a fixed term. These type of income streams are usually non-commutable, which means they can't be converted into a lump sum at a later date. While these type of income streams offer a guaranteed level of income, they are less flexible and offer lower long-term yields than market linked income streams.
A quest financial planner can talk you through the benefits of both style of income stream products.
You've worked hard all your life and are entitled to a long and enjoyable retirement.
So you don't want your investments to get in the way of Government support you'd otherwise receive.
Fortunately, there are ways you can make the most of your super without losing Government benefits.
For instance, using your super to start an income stream might let you qualify for Age Pension payments or even increase your entitlement to them.
That's because income stream investments are treated favourably under the income test Centrelink uses to assess your eligibility.
Every situation is different, and that's why it pays to speak to us, as we are well versed in Government payments. Contact us for a complimentary consultation.
