Retired
Whatever your hopes are for retirement you'll have more chance of meeting them if you have a financial plan in place. A financial adviser can do the numbers for you and help you put an investment strategy in place to meet your goals.
There can be a lot to look forward to about retirement but it’s also a good idea to consider some of the harder decisions from a financial perspective.
Where to hang your hat
For many people, retirement may mean changing homes. You may need to down-size, free up money to live on, move to a nursing home or enter a retirement village. Take care to investigate your options and make sure the move is the right one - as it's expensive and stressful to change your mind later.
What if you need care in the future?
If you or your partner need some assistance with daily care, you may be able to stay in your home with the assistance of community services provided by State and local Governments. If you or your partner need a high level of care, you may need to move into a nursing home or hostel. These offer varying levels of care depending on your needs.
How can I fund my retirement
Once the employment income stops, you will be reliant on your super, other investments and savings, and if eligible, the Government Age Pension.
Accessing your super
You can generally access your super when you permanently retire on or after you reach preservation age or when you turn 65. When you access your super, you will have the option of drawing a lump sum, converting to a pension (see below) or a combination of both.
You can, however, leave your money in your super fund as long as you wish regardless of your age or employment status. You only need to draw on your super when you are ready to.
Account-based pensions
On retirement you can choose to convert your super to an account-based pension which will provide you with a regular income in your retirement An account-based pension offers unlimited access to your capital, flexible income payments (subject to a minimum payment limit) and tax concessions including 0% tax on investment earnings and tax free payments once you reach age 60.
The value of the account depends on investment earnings and the amount of payments made and the pension will continue until your account balance is used up or is withdrawn in full.
Age Pension
The Government Age Pension provides a safety net for older Australians. If you are eligible to receive the age pension, the amount you receive is based on your individual circumstances such as whether you are single or part of a couple and the level of your income and assets. For many people, the Age Pension is considerably less money than they are used to living on.
To qualify for the Age Pension you need to have reached the qualifying age (65 for men and currently 63.5 for women increasing to age 65), have income and assets below a certain amount and satisfy certain other criteria such as residency requirements.
For full details on current pension rates and eligibility criteria refer to Centrelink at www.centrelink.gov.au.
Did you know?
When you start work, there are five things you should look at straight away.
Many financial advisers believe an extra two years work can fund a full six years of retirement.
Important changes to your pension
Your minimum pension payment levels will change from 1st July 2011.
