Investments - Retirees

Are you confident your savings will last?

Nowadays you can look forward to a longer retirement than ever before, but this also means your savings will need to last longer.

Of course we can't predict how long we'll live but the fact is Australians are living longer. Current life expectancy for 65 year olds today is well into their 80's. So how can you make sure you have enough to live on, however long you live?

You'll need to control your income stream while making the most of your retirement investments.

When you retire you'll rely on your savings to fund your lifestyle and for most people this means drawing an income from their super.

You can access income from your super in a number of ways:

Lump Sum
When you retire you can take a lump sum payment from your super. You'll pay low (or no) tax o lump sums up to certain limits if you're aged 60 or over. However if you then invest the money you've taken as a lump sum in your own name, tax may be payable on any earnings at your marginal rate.

Account Based Pension
An account based pension invests your super and pays you a regular income. After the age of 60 you won't pay any tax on this income and your pension balance will increase with any earnings from your investments.

You'll also get a 15% offset for any payments you receive before you turn 60. If you've already turned 60, your payments will be tax free and you don't have to declare them in your annual income tax return. So choosing to have your super paid through an account based pension can help cut down on the amount of tax you pay on your other investments.

Taking your super as an income stream could help you qualify for (or increase your entitlement to) age pension payments

Age Pension
The government provides retirees with income through the age pension and other allowances. The amount you're eligible for will depend on how much income you receive from other sources and what your assets are worth.

What would you do if you had to put your retirement plans on hold?

Life is full of surprises and that doesn't stop when you retire. In fact, you may be considering delaying your retirement. For many retirees, poor market performance during the GFC severely reduced their super balance which has meant they've had to reassess their retirement plans

Retire later, save more

It makes sense that the longer you work, the more you can save and for many retirees you want to stay active, full or part-time work can be a good option. In fact the number of Australians expecting to work until age 70 has doubled since 2006

The right mix if investments

Many investors feel comfortable investing in growth assets when they're younger but since the GFC some investors have chosen to move to cash or defensive assets simply for peace of mind.

However moving to cash at this time of your life can be a poor decision. This is because in the years leading up to or just after retirement, your super balance will be at its highest level. This means that positive market returns can have a big impact on a super balance.

There are solutions that allow to get the certainty of income and to stay invested in the market by protecting your retirement savings from poor market performance and you can lock in your income needs and any market gains along the way

Contact us to help you with your retirement income strategy, we'd be happy to help

Is you financial plan up to date? Are your assets adequately diversified?

Retirement can be some of the best days of your life. Your children have grown up and you have the freedom to travel and spend money on your interests and hobbies. It's also a time in your life when you're no longer working.

For some people, their super savings may not be enough to sustain them in their retirement years. As many retirees use their investment portfolio to fund their retirement, it's key your asset allocation matches your needs at this stage of life.

Defensive investments such as cash and fixed income are important to provide you with regular, low risk income at this stage of your life, but it's also important to include some growth assets in your portfolio:

to help avoid the erosion of capital
so you can grow your savings longer, giving you a better chance that your savings will last and
if you want to leave an inheritance to your children

Is your estate plan up to date?

As we get older, estate planning becomes an even more important part of our financial plan. Effective estate planning can make things easier for your family and loved ones when you pass away.

But estate planning can be complex

A comprehensive estate plan will make sure all your estate assets are transferred according to your wishes, in the most tax effective and efficient manner

Your will
If you don't have a will, you lose control of how your estate is distributed. This can cause additional stress for your family and loved ones

Your super
Most people believe that their will covers all their assets - but this isn't the case. Your super is treated differently. You can nominate dependants to be beneficiaries of your super benefits in the event of your death

Your choices include your spouse, your children or someone that's financial dependant or inter-dependant on you, or your estate (where the money will be distributed as per your will)

It's worth remembering that your super is one of your biggest assts. It could be worth more than your family home so it makes sense to have the appropriate arrangements in place. If you don't nominate a beneficiary the Trustee of your super fund will decide who may be eligible to receive any benefits

Testamentary trusts
A testamentary trust is created upon your death, as outlined in your will. There are different types of testamentary trusts. A testamentary trust may help you distribute your estate in a more tax effective manner and it can help reduce the likelihood of a successful challenge to your will

Power of attorney
As you get older you may be unable to do everything you can now. By granting a power of attorney you can choose someone to make decisions, sign documents and act on your behalf on various matters

Enduring power of attorney
An enduring power of attorney will survive even if you suffer a loss of mental capacity.

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