Smart.Happy.Money 5: 3 steps you can take to improve your retirement

Even though retirement may seem like a long way off for many of you (closer for some!), have you ever asked yourself, “how am I going to retire”? It is a common question, especially for those who have passed the age of fifty. Fifty seems to be a turning point in the way people think about retirement. Although still 15 years or so away, it seems to be the time that people start to think about how it is going to work. We find more 50+ people want to start adding to their superannuation to boost their retirement savings, and this may also be the trigger to find and consolidate their superannuation funds.

So, how do people actually retire? It happens in one of a few ways.

1: Gone are the days that people leave work with no retirement savings. We have had compulsory superannuation since the 90’s and most people now have at least some super in an account somewhere.

The truth is the majority of people are retiring on a mix of their superannuation (which becomes an account based pension) and the age pension.

This does create problems if you want to retire before you’re eligible for the age pension to be paid.

The following shows when you can get the age pension (according to the current rules).

If your birthdate is; You’ll be old enough at;

1 July 1952 to 31 December 1953 65 years and 6 months

1 January 1954 to 30 June 1955 66 years

1 July 1955 to 31 December 1956 66 years and 6 months

From 1 January 1957 67 years

So, this might give you a good goal to set for your retirement age, especially if you are going to rely on the age pension to subsidise your income.

You can of course, and many do, access your super earlier than this if you retire. Some people choose to do this, access their super and eat into the balance while they wait for the age pension to kick-in. There is nothing wrong with this as long as you understand that your super won’t last as long.

You will find that over time as your account based pension is used up that the age pension you receive increases. This is because as your assets deplete you are eligible for a higher age pension payment. Your retirement income may begin with 90% coming from your superannuation paid as an account based pension and 10% coming from the age pension. Over time this will move to a 50/50 and will end up with the majority of your retirement funds being delivered from the age pension.

2: Other people retire with too many assets to receive an age pension at all. This is a great position to be in, you will find that you have a greater level of freedom in retirement.

Depending on the level of assets that you have you may also find that over time you fall below the age pension asset test and will start to receive a small age pension. Or possibly not. However, the management of those assets, to ensure that they are producing an appropriate income is very important and should be taken seriously. We need to weigh up risk and return, liquidity and ease of access to the funds needed.

3 steps you can take to improve your retirement outcomes

1: Consolidate your superannuation

Holding multiple super accounts is hard to manage and can be expensive. It takes more of your time to figure out what is going on and when you hit retirement, trust me, you will be happy to only have one account to deal with.

2: Contribute

Your employer is putting money into super for you, but are you also adding to this? You can contribute to your superannuation fund and receive a tax break on what you put in. Are you on a low income? You can take advantage of the government's co-contribution and low-income tax offsets, both of which add money to your super.

3: Pay attention

Where is your super and how is it invested? Receiving advice and looking after your super is very important. It is real and it is your money.

Superannuation focuses on growing an asset that you can use to retire comfortably. Once you hit retirement we change mindset from growth to cash flow. How do we get a good mix of income into your bank account every month to make sure that you get the retirement that you deserve? With strategic advice and careful planning, it is possible. Retirement may seem like a dream, we can help make it a reality.

Book a session with a financial advisor today at www.bgnfinancial.com.au

Have a great day and happy retirement planning!

Ben

Ben Graham-Nellor is an advisor, coach, blogger and speaker who has worked in the financial services industry for over 15 years.

BGN Financial Management Pty Ltd is a Corporate Authorised Representative 468796 of Professional Investment Services Pty Ltd AFSL 234951 ABN 11 074 608 558 www.centrepointalliance.com.au

The information in this communication has been prepared on a general advice basis only. The advice has been prepared without taking account of your specific objectives, financial situation or needs. Accordingly, you should, before acting on the advice, consider the appropriateness of the advice having regard to your objectives, financial situation and needs. In cases where the advice relates to the acquisition, or possible acquisition, of a particular financial product, you should obtain a Product Disclosure Statement (or other relevant information statement) and consider such document before you make any decision about whether or not to acquire the product. For these reasons, it is imperative that you seek advice from your financial adviser before making any investment decisions.

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BGN Financial Management PTY LTD is a corporate authorised representative (468796) of Professional Investment Services Pty Ltd (ABN 11 074 608 558)

which is the holder of Australian Financial Services License No.234951.

The information provided on this website has been provided as general advice only. We have not considered your financial circumstances, needs or objectives and you should seek the assistance of your Professional Investment Services Pty Ltd (PIS) Adviser before you make any decision regarding any products mentioned in this communication. Whilst all care has been taken in the preparation of this material, no warranty is given in respect of the information provided and accordingly neither PIS nor its related entities, employees or agents shall be liable on any ground whatsoever with respect to decisions or actions taken as a result of you acting upon such information. By entering your details to this website you are agreeing to be added to the BGN Financial Management contact list and will receive, from time to time, newsletters, updates and invites to events etc.  You can opt out at any time by emailing ben@bgnfinancial.com.au

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