A common retirement concern is how to produce an income for the rest of our lives as the main thing that we lose in retirement is the ability to earn wages or salaries.
Whether you’ve built up savings from superannuation, investment property, equity in your home, money in the bank, or an inheritance, you will need to turn this capital into an income stream which is convenient, secure and tax-effective.
You may also have other objectives in retirement such as gaining the most out of Centrelink and the Age Pension, or the Veterans’ Affairs Pension, in addition to estate planning issues.
Choosing a retirement income product
As you approach retirement, you need to decide how to use the super that you’ve saved to help support yourself in retirement. Super funds and life insurance companies offer many different types of financial products that let you draw down your superannuation savings in an orderly way to suit your lifestyle.
For an ever-increasing number of people the answer to retirement income lies in the form of income streams and, in particular, superannuation allocated pensions, term allocated pensions and other complying annuities.
Where do you go to get one?
Most life insurance companies and financial services organisations provide these different types of income stream products. You can approach these organisations directly, at which point they will usually direct you to one of their financial planning groups, or you can seek the advice of an independent financial planner. You should always seek professional advice. It is very dangerous to attempt to set yourself up with an income stream without professional consultation, particularly professional tax advice.
How do you set one up?
1. Decide on your retirement date or year.
2. Ensure that you have a clear and defined set of goals and objectives (e.g. required income per year, investment objectives, access to capital, Centrelink etc).
3. Do your research! Most providers’ websites have additional information on their income streams.
4. Arrange an interview with an independent financial advisor.
5. Work with your advisor to use your retirement savings to the best effect.
The ‘big picture' of retirement reveals there are about 4.35 million retirees in Australia.
When the best-laid plans fail to protect you against a nasty income shock.
New research shows more than 60 per cent of retirees will run out of money before they die.
Turn the spare room into a tax haven and keep the full Age Pension.
The simplest actions, whether done or avoided, can have the biggest impact on finances.
Review highlights need for a secure a sustainable retirement income system.
Can Peter receive a super co-contribution while on the Age Pension?
Securing an adequate and sustainable income is the savings goal of most Australians.
Marcus Padley looks at what the bank levy means for bank shares.
The myth that the Age Pension is unaffordable and unsustainable is simply not true.
Tony Shepherd predicts that Australia risks being ‘crippled by pension spending'.