Retirement Planning

Retirement financial planning is all about organising your assets and savings into a plan which will meet your goals for retirement.

It is startling to think that many people will go all the way to retirement blissfully unaware of the thousands of dollars in potential savings that they are passing up.  A low superannuation balance and reliance on the aged pension could see many older people living in poverty.  You might be retired for 20 years or more, therefore it’s essential to plan now for your future.  The key to successful retirement planning is generating enough income to pay for your desired lifestyle.

Some people may prefer to ease into retirement gradually by cutting back working hours and drawing some income from their super before they fully retire. At Dobbrick Financial Services we can help you do this with a ‘transition to retirement’ strategy.

Are you on track for Retirement?

We all have dreams and goals for the future.  Retirement planning is all about organising your assets and savings into a plan which will meet your goals for retirement.

As you get closer to retirement, the importance of your superannuation becomes much clearer. Fortunately, when you turn 55, new options are available that may help you to boost your super savings. Let’s look at where you are before we introduce you to some strategies to get you on track for retirement.In particular, we’ll look at Transition to Retirement.

Are you on track for retirement?

  • How much money do you currently have in savings?
  • Are you on track for a comfortable retirement?
  • How long will your savings last?

Use the ASIC Money Smart Superannuation Calculator to check your progress.

  • Do you want help getting your savings on track for retirement?
  • Do you have a savings shortfall?

We can help you try to boost your retirement savings by discussing strategies to boost your super!

Let’s look at some ways to help boost your retirement savings.

Strategies to boost your super savings

Superannuation offers one of the best opportunities to boost your retirement savings because super is taxed less than normal investments. There are several different super strategies you can consider but you don’t need to pick just one. As you’ll see, you can often achieve a better result if you choose more than one strategy.

Transition to Retirement

Available to over 55’s, Transition to Retirement is a strategy that involves taking some or your entire super and converting it into a pension, even if you’re still working. This allows you to:

  • Reduce the hours you work without necessarily reducing your income.
  • Use some or all of this pension to invest in super.
  • Take advantage of lower taxes to boost your retirement savings.

The tax benefits of Transition to Retirement

The real benefit of Transition to Retirement is that by taking money out of your super and putting it into the pension environment, any investment earnings you receive will be tax-free. Your return from this money will be higher than if it remained in your superannuation account.

What to beware of with Transition to Retirement

Although there are tax advantages, when you have a pension there is a minimum amount (draw-down) that you must take out each year. You need to be careful that this doesn’t deplete your super too quickly. One way to avoid this is through our next strategy – salary sacrificing.

Salary sacrificing

Salary sacrificing is when you reduce your salary in return for your employer making additional contributions to your super. Again this has tax advantages. Salary sacrificing means you can get the tax advantages of Transition to Retirement without depleting your super so quickly.

Voluntary contributions

The Government wants you to invest in your super. That’s why super is so tax friendly. If you sell an asset outside of your super, why not invest that money in your super? Due to the tax advantages, it is very hard for normal investments to match the returns you’ll get from super.

Combining super strategies as you near retirement

If you’re over preservation age, it can be very effective to combine the Transition to Retirement strategy with co-contributions and salary sacrificing. These strategies, used together can without doubt help you reduce tax, increase your savings and provide for your ongoing cost of living.

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A Dobbrick Financial Services Financial Planner will:

  • Summarise your current financial position and future goals;
  • Analyse any taxation or superannuation laws, or Centrelink rules that will apply to your situation;
  • Recommend investments that will help you achieve your goals;
  • Explain what you need to do next;
  • Highlight any fees payable;
  • Create a framework for future financial decisions and show you;
  • Provide advice how you can still earn a regular income once you’ve retired;
  • Recommend suggestions on how you can reduce your tax payable;
  • Explain how you can top up your income with Centrelink benefits; and
  • Provide insights on how to maximise your super – even after you’ve retired.

To be eligible to start an account based pension you need to meet certain conditions of release. This is generally when you’ve reached the age of 60 and retired or you have reached your preservation age. To invest in an account based pension you can only use superannuation savings that are considered unrestricted non-preserved.

For your superannuation benefits to be considered as unrestricted non-preserved you may meet one of the following criteria:

  • You have reached the age of 65;
  • You have reached the preservation age (see below) and permanently retired;
  • You have ceased employment after age 60; or
  • You are permanently incapacitated.

Your preservation age depends on where you were born:

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Meeting a condition of release to commence a pension will provide access to the tax advantages of an account based pension. Payments and investment returns in pension will be tax free.

Fund managers will have a minimum investment required in order for your account based pension to be set up.

If you have reached your preservation age but still currently in the workforce, you may be able to commence a Transition to Retirement (TTR) pension. This strategy allows you to restricted access your superannuation savings with attractive tax benefits. A TTR strategy involves commencing a pension whilst you salary sacrifice surplus income into a new superannuation fund. This is a complex area and we recommend that you seek professional advice to determine whether the strategy is right for you.

Dobbrick Financial Services - Retirement Planning

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Rochelle StoneRetirement Planning