Retirement Strategies

Car on the road Planning is key when it comes to retirement. Begin with the end goal in mind – decide how you want to retire then plan for it.

The concept of 'transition to retirement' is to prepare for your retirement and help you smoothly move from one era of your life to the next.

The ultimate aim is to make sure you have financial security when you decide to retire, and that the income you receive once you stop work doesn't dramatically change or negatively impact your life.

Financial Framework know how to build the strongest retirement possible, and specialise in transition to retirement planning strategies.

Pensions can be a large part of the 'transition to retirement'. In Australia, retirement used to mean when you turned 65. Now it is up to you when you stop work.

You are able to continue working past your retirement age, though you may still be eligible to receive your pension as well. Pensions in Australia are subject to income and asset tests, so it can be tricky to know exactly what you are entitled to, and when.

Your Financial Framework adviser will take all of the stress out of arranging your pension – whether you are already eligible for it, or simply planning ahead.

What Is The Age Pension?

The age pension is income support and a range of other concessions to Australians over the age of 65. Income and benefits are typically provided on a fortnightly basis. Eligibility for the pension is based on residency and income and assets tests. Pension age is likely to increase over time.

Speaker 1: If you've reached retirement age, you might be eligible to receive income support payments from the government in the form of the Age Pension. You may also be entitled to other benefits such as the pensioner concession card, pension supplement, or rent assistance. Once you've reached qualifying age, which is currently 65 but increasing to the age of 70 by 2035, Centrelink calculates how much Age Pension you are entitled to based on whether you are a single or a couple, your level of income and assets, and whether you won your own home. The government sets a maximum limit on the amount of assets that you can own, but generally your family home is not included in the assets test.
Centrelink also assesses the income you receive from your super annulation income streams, rent or par time employment. If you have financial investments such as bank accounts, term deposits, shares, and managed funds they use a set of rules referred to as deeming to calculate the rate of income you receive from them. If your income or assets are above the maximum limits, then you will not be eligible for a pension. But if they are under the limit they'll use both tests to work out your entitlement.
There are many rules when it comes to determining whether and how much Age Pension you're entitled to. It can be complicated. But your financial advisor may be able to assist.

Transition To Retirement Allocated Pension

Although superannuation cannot be accessed until retirement age (other than through hardship provisions) your super can be rolled into a Transition To Retirement Allocated Pension. This can be beneficial in several ways, as an Allocated Pension pays no tax and has capital gains tax advantages.

Your Financial Framework adviser will access your situation and outline your Allocated Pension options, aiming to improve your tax position, grow your finances, and allow you to live the retirement you deserve - The one you have earned.

Transfer an overseas pension to Australia

If you have a pension in another country, you may be eligible to transfer it to Australian funds. This is good for tax, but is a complicated process subject to means testing. Please visit our Overseas Pensions page for more information, then contact a Financial Framework adviser to discuss your situation and explore your options.

Top 9 Tips For Transitioning To Retirement Strategies

    1. Plan early, ensure well before your planned retirement date that you have a clear understanding of how much you will need to have invested to meet your retirement income target. The longer you have the better the ability to reach retirement targets on time.
    2. Once you have reached aged pension age, even if you are not entitled to any aged pension check to see if you are entitled to the Commonwealth Senior Health Care Plan or any other Centrelink benefits.
    3. Partner with a financial planning expert to ensure that you take advantage of all of your entitlements and confirm you are on track to retire in the manner that you would like to.
    4. Have your health assessed, making sure you move into retirement in tip top condition.
    5. Work on your retirement dreams, retirement is the time to celebrate what you achieved in your working life. If you have a partner make sure you are both on the same page regarding what retirement means to you.
    6. Make sure your estate planning is up to date, spend the time ensuring that your will is up to date and valid, consider enduring powers of attorney, involve your family and make sure they know where to find everything.
    7. Budget not only for the day to day expenses but make sure you have enough set aside for unexpected capital and health costs.
    8. Consider some volunteer work, there is now a line of thought that there is a stage between finishing work and full retirement, if helping and giving back is something you are interested in research the options.
    9. Live the dream. You deserve it.

Retirement Planning Strategy Video

Speaker 1:Transition to retirement: There isn't a one size fits all approach to successful retirement planning. In today's lifestyle, many people choose to ease into retirement and make adjustments to their work and lifestyle when they are ready. The key to a successful retirement is planning, the earlier the better, and taking full advantage of the superannuation and retirement income rules when they become available to you.

Speaker 1:While traditionally people that commence a transition to retirement strategy are trying to boost the value of their super prior to retiring, this is not the only way you can use this strategy. It can also be used to replace lost wages if, instead of retiring, you want to ease into retirement by gradually cutting back the hours you work.

Speaker 1:The first thing to know about the transition to retirement strategy is that only those people who have reached their superannuation preservation age, aged between 55-60 depending on the year that you were born, can start a transition to retirement strategy. This strategy allows you to access between 4-10% of your superannuation balance each year in the form of a non-commutable allocated pension, which is a fancy way of saying you draw a wage from your super fund.

Speaker 1: If you want to grow your super, this is how the strategy works: You salary-sacrifice or contribute some of your gross income to super, which is taxed at 15%. Then you move your superannuation into the tax free allocated pension environment, and finally you start to receive a regular income from your allocated pension account. The strategy works well as you normally pay less income tax due to the salary sacrifice, and you're contributing more to super than you're drawing out as a regular income. For those that want to move from full time work to part time work without experiencing a reduction in their income, the level of pension income received is set to replace the wages you have foregone by reducing the number of hours you work.

Speaker 1:There are limits to the amount that can be contributed to super each year and the amount that can be withdrawn as a pension while you're under 65 and working, so it pays to get advice to ensure you don't exceed these limits. Before commencing this type of strategy, contact us so that we can ensure that you're taking full advantage of these opportunities.

For more information and informational videos like this, please request access to our financial knowledge centre, a free resource for current and interested clients. Here you can find premium resources about retirement planning and transitioning to retirement planning strategies.