Creating a retirement income

How will you manage in retirement without a regular income to keep you on track with the bills, help you budget and prevent over-spending? You don't have to give up a regular income just because you're retiring. There are good reasons to consider a retirement 'income stream'.
Go with the flow of an income stream
Kayak on river
Do you take the lump sum?

If you take your superannuation as a lump sum, you may have to pay some tax on super benefits if you are under age 60. Once you reach age 60, benefits from a Taxed fund incur no tax, regardless of whether you take a lump sum or an income stream. The benefit of rolling to an income stream, however, is that earnings are also tax-free.

Read more about lump sum payments

The income stream option

If you roll all or part of your super into an income stream, you'll be paid a regular income even though you've stopped working. Apart from helping you budget and manage your finances, you stay in the favourable superannuation environment, where your money continues to be tax-effective. There are different types of income stream products that suit different needs.

Find out more about the types of income streams available.

The Age Pension

Many retirees expect to rely on the Government's Age Pension. However our dependency on the Pension is changing. The maximum you can get from the Age Pension is around $12,900 pa (singles) or $10,800 pa (each person of a couple). Because the Age Pension is means-tested, not everyone can get it. People are increasingly turning to their superannuation and other options to fund their retirement, rather than relying on the Age Pension.

Read more about eligibility requirements for the Age Pension

Seek advice

The choices in retirement can seem overwhelming and they're certainly complex. The decisions you make could make thousands of dollars difference. It's a crucial time to seek advice. A financial planner can show you how you may achieve different results depending on your choices.

Why you need financial advice.
Hot topic: 2007 changes

In the 2006 Federal Budget the Government announced significant changes designed to simplify and streamline superannuation.  Some changes took effect in 2006-07, but most took effect from 1 July 2007.   Key changes in relation to retirement included:

  • No tax after age 60 from a taxed superannation fund, regardless of whether you take your benefit as a lump sum or convert it to an income stream
  • Reasonable Benefit Limits (RBLs) abolished so there’s no longer any penalties for accumulating large amounts is super
  • You can stay in super as long as you like, there’s no longer a requirement to cash out of super after 65 if you’re no longer working (this took effect 10 May 2006)
  • Tax component changes. If you are able to and choose to access your super prior to age 60, there may be a tax liability. But now there are only 2 tax components: a Tax free component and a Taxable component.
  • Pension minimums are calculated differently and there’s no longer a maximum. The minimum amount you need to take from your pension product is generally now calculated as a percentage of your account balanced based on age.  And for most pension products now, there’s no maximum annual payment limit. 
  • Death benefits as pensions can only be paid to tax dependants.  
  • Centrelink changes to pension assets test taper rate.  From 20 September 2007, the rate will halve, meaning people previously unable to access the Age Pension may in fact be able to.
Some changes also occurred to the superannuation system prior to retirement such as new contribution limits in super, visit our Superannuation Pages for more information on super in general.

So, talk to your financial planner - it may be worth topping up your super now.

Why you need financial advice.
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