Working this out can be complex, as it depends on your income needs, when you want to retire, and what other goals you have in retirement. The situation gets more complex when you introduce downsizing provisions or the potential need for aged care. But don’t fret; we provide comprehensive modelling to determine how and when you can reach your retirement goals, as well as account for the contingencies that may arise along the way.

This can vary depending on your personal circumstances and needs as no two families will live the same kind of lifestyle. We always recommend that you consider your personal expenditure needs before you set of for retirement. You can use our expense analysis tool to assist with this process. According to The Association of Super Funds of Australia (ASFA) the average couple spend approximately $70k/pa to fund a comfortable retirement in 2023.

For most Australians, the age pension can provide supplemental income, which will help increase the longevity of your retirement savings. Because the age pension is paid based on your income and asset position, it will generally increase as your retirement savings diminish. If you need to boost your retirement savings, the pension bonus scheme allows older Australians to return to work and earn wages without reducing their age pension benefits. You may also be able to top up your super if you sell your home, or receive an inheritance. All of these factors need to be considered when preparing an effective retirement plan.

If you sell your home, you can contribute up to $300,000 of the proceeds to your super as a downsizer contribution, subject to meeting certain eligibility criteria. This is an effective way for retirees to boost their super savings in retirement. Downsizer contributions can only be made once per person, and are not subject to some of the restrictions that apply on other super contributions; for example, a downsizer contribution can still be made even if your total super balance is greater than $2.1m.

A transition to retirement income stream (TRIS) can be used to access your super benefits before retiring, if you have met the eligibility criteria. This can be used to supplement your income, allowing you to reduce your work hours. Alternatively, a TRIS can be used to assist with cashflow in order to maximise your super contributions and reduce tax. Both are common strategies for a TRIS, but each carries some inherent risks; if you’re interested in these strategies, we recommend you speak to an adviser.

Annuities are one of several products available to provide you with income in retirement. As with all such products, they carry certain pros and cons. Purchasing an annuity can provide you with a stable income stream, and can also increase your Age Pension benefits, as they are treated concessionally under the income and assets tests. However you may not be able to access the funds used to purchase the annuity in case of emergency, which could leave you in a vulnerable position. There is no one-size-fits-all solution to retirement income; you may benefit from using an annuity along with other investment vehicles, depending on your risk appetite and needs.

For most people after reaching the age of 60, you will not pay tax on money you draw from super, however certain retirement income streams such as the PSSdb pension may be assessable for income tax purposes. Your super funds also have taxable and tax-free components; although this may not affect the tax you pay, it will have implications for your estate, if these funds are left to non-dependent beneficiaries. There are strategies that can minimise the tax paid by you and your estate; if you’re interested in learning more, speak to one of our advisers.

Many clients we see are surprised to find that retiring can actually make their financial situation more complex; there can be multiple sources of income, tax strategies that were not available before, and multiple accounts to manage. Unfortunately many retirees who try to navigate this environment alone don’t realise that inefficient planning could be costing them thousands in unnecessary taxes or foregone benefits.

Too often people don’t see an adviser until they’re ready to retire, only to find they’ve missed out on benefits for many years. Small changes to your finances now can have a big impact in the future; with that in mind, it’s never too early to see an adviser. You can book a free consultation today using the form below.