Living in Retirement
and maintaining your lifestyle
Over the past thirty-two years with the number of legislative, CentreLink and tax changes, retirement planning has become a very complex issue to understand for most Australians who prefer to have someone they can trust and rely upon to assist them with these matters. We are able to help our clients achieve the best outcome for their retirement income by using the assets they have together with maximising their CentreLink or Vet Affairs age pension entitlements and minimising the effects of income tax.
Retirement Income - During your working life you receive regular income in the form of a salary or business income. In retirement, this regular income stops, so you need to draw on your savings to meet your lifestyle costs. You set up your savings so you still receive regular payments, just like a salary. This is called a ‘retirement income stream’. The type of income stream you can start at retirement depends on whether your savings are inside or outside of super.
RETIREMENT INCOME STREAMS
Account-based pension Payment of your superannuation savings in regular periodic amounts is usually called an ‘account based pension’ or ‘allocated pension’. An account based pension starts when you transfer your superannuation savings into a new account, called a pension account, and start to draw down on the money in a series of regular payments.
You can elect how much income you want to receive (above the specified minimum) and can continue to receive regular income until all of your super savings are exhausted, or you pass away. If you die, the balance of your savings is paid to your nominated beneficiary or to your estate.
How are your income and savings taxed?
If you are a member of a taxed super fund and age 60 and over, all the income from your pension account is tax free. If you are under the age of 60, a portion of your income may be tax free. Any amount that is taxable typically attracts a 15 per cent tax offset. Investment earnings and capital growth on your pension account are not taxed.
Will you have enough?
Each year, Australians are living longer due to improvements in medicine and changes to lifestyle. There is a one-in-two chance that one member of a couple age 60 today will live to age 90. So even if you plan your retirement income strategy using today’s average life expectancy, there is a good chance you’ll live beyond this age.
Guaranteed income, for life
A range of products has been developed to provide you with a secure income during your retirement, every year for the rest of your life. Some of the guarantees are designed so that they continue to pay you an income even if your own savings run out, and – if you choose – it will continue to pay this income to your spouse even after you die. We can help you determine whether this type of product is right for your needs.
This document contains general advice only. You need to consider with your financial planner, your investment objectives, financial situation and your particular needs prior to making any strategy or products decision.
This information is correct as of April 2016
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