Making the most of retirement

Financial advice for retirement

Investing in your 60s and accessing super income streams are key to your financial security and living the life you want in retirement. So, bring on the grandkids, barbeques, golf games and leisure – congratulations, you’ve made it to retirement! But, just because you’ve stopped working doesn’t mean your nest egg has to.

Guidelines to super milestones

Your super doesn’t automatically convert to a pension upon your retirement. You can cash your super as a lump sum or enjoy a regular income stream by transferring it to a tax-free retirement phase product. You must meet one of three conditions to meet to withdraw money from your fund:

  • Age 60 – and leaving your job with an employer
  • Under 65 – permanently retiring from the workforce (working less than 10 hours per week) and have reached your preservation age.
  • Age 65 – you can automatically withdraw your super even if you’re still working

Your personal circumstances are important when making a decision but remember: you can mix options to suit your needs and lifestyle. This is your time.

Turning your super into income

Transferring your super to a retirement phase account within your super fund, another fund or life insurance company will provide you with regular income during retirement. However, the transfer balance cap of $1.6 million limits the amount of your super that can be transferred to “retirement phase” (pension phase). The good news is that on an amount up to $1.6 million, you’ll:

  • Pay less tax – your investment earnings are tax-free, and for most people over 60, income payments are also tax-free
  • Enjoy regular cash flow – your money may last longer if you withdraw it in stages as an income stream, rather than all at once (although most funds allow you to make lump sum withdrawals from your pension account if you want to).

Withdrawing your super as a lump sum

Lump sum withdrawals are usually tax-free if you are over 60. Partial lump sums can also be withdrawn. A lump sum withdrawal on retirement can help you:

  • Manage your debts – reduce or clear the mortgage and other debts
  • Invest outside super – look at low-fee savings accounts and term deposits.

Managing your health and wealth

Hopefully you have a succession plan in place, but even if you don’t it’s never too late. This is the time to ensure your wishes are documented and ensure you’ve thought about services to help you in your later years – from aged care to medical needs. Remember, succession planning is much more than estate planning – especially if you have an SMSF. A good estate planning lawyer can help you correctly document all the components integral to your estate and wishes for managing your health and wealth in your later years.

Getting the right advice

Sound financial advice can help provide you some certainty and support in this new phase of your life. It’s more practical and less emotional to consider strategies now, rather than waiting until you really need to. You are still in the driver’s seat to get the best advice and ensure your wishes can support you and your loved ones as you age – and to make the most of those retirement dreams. Sunsets in Tahiti anyone?

Helpful resources

My Aged Care – a good starting point to access Australian Government funded services