Disclosure Statement: Durand Financial Services Pty Ltd and its advisers are authorised representatives of Fortnum Private Wealth Ltd ABN 54 139 889 535 AFSL 357306. General Advice Warning: The information contained within this website does not consider your personal circumstances and is of a general nature only. You should not act on it without first obtaining professional financial advice specific to your circumstances.
Most retirees get income from at least a couple of sources, like super and the Age Pension.
If you’re thinking about retirement, it’s important to consider where you’ll get the money you’ll need to live on, and set up a plan to make it last.
Your retirement income can come from many sources including:
- Income from super
- Investments outside super
- Age Pension
- Reverse mortgages and home reversion
- Selling the family home
- Working part-time.
These income sources can be combined so your money lasts longer, and you have a more comfortable retirement. However, it’s worth remembering that one income source can have an impact on another. For example, if you decide to sell the family home, your Age Pension may be reduced or cut off.
For information on how your different income sources will affect your Age Pension, speak to a Department of Human Services’ Financial Information Service (FIS) officer. FIS officers can also talk to you about taking control of your finances and help you plan for your retirement, and their services are free.
Assess your financial position
To prepare for retirement, the first thing to do is to work out how much money you have now, how much you might have in the future and where it will come from.
Bring this information together by finding out:
- what assets (houses, savings, investments) you have and how much they are worth
- how much super you have and when you can access it
- whether you are likely to be eligible for the Age Pension and when you can apply for it.
Find out when you can get your super and the Age Pension.
Make a long-term financial plan
The next step is to think about how your needs might change over time. For instance, in the first few years of retirement, you might want to travel or take up a new hobby. Later, you may want to replace your car or renovate your kitchen. Further down the track, you may want to move into a retirement village.
Think about how you can use your different income sources to fund the different stages of your life. Seek financial advice or speak to a FIS officer if you are unsure what to do.
The retirement planner will estimate your future income from your super and the Age Pension. You can also explore ways to improve your outcome.
See how your retirement’s looking.
Video: Effie Zahos on planning for retirement
In this video, Effie Zahos explains a few things you can do now to plan for your future retirement.
There are ways to stretch your retirement income to make your money last as long as possible.
Consider getting financial advice
Depending on your circumstances, you may want to seek financial advice to maximise your retirement income. For instance, if you have a substantial amount of super and want to invest some of it, a finance expert can help with investment options and tax advice.
Diversify your investments
With many retirees living beyond the age of 90, it’s a good idea to invest at least some of your money in assets that will grow over time, like shares and property. This will help ensure your capital will grow in value to keep pace with inflation and your income needs. Spread your investments to avoid financial heartache in the future.
Manage your spending
A simple way to make your money last longer is to watch your spending. Use the budget planner to see how you currently spend your money and see where you can cut back to save for special items.
Take advantage of your entitlements
Even if you don’t get the Age Pension, you may be eligible for other benefits, such as travel concessions, cheaper medicines and reduced council and water rates. The Seniors Card will also give you discounts on travel and some retail services. See our webpage on Over 55s – your money.
Also see the Department of Human Service’s Commonwealth Seniors Health Card webpage for more information.
Part-time work is a good option to ease into semi-retirement before fully retiring, or a way to keep extra income coming in. Here are some benefits of working part-time:
- Conserve your super balance – as you will be earning an income, you won’t need to draw as much from your super and can continue to contribute to the balance.
- Earn an income before the Age Pension – if you are not yet eligible for the Age Pension, working part-time allows you to semi-retire but still have some income.
- Tax incentives – if you are aged 55 or over you may be able to take advantage of a transition to retirement strategy, which allows you to supplement your pay by drawing down from your super after you have reached preservation age. You pay no tax on your super income from age 60 and your employer will continue to top up your super.
- Government incentives – earning extra income will potentially reduce your Age Pension; however, the Government has incentives to encourage people to work past the pension age. See Centrelink’s work bonus scheme for more information.
Here are some websites where you can get free and independent information about planning for retirement.
- Council of the Ageing (COTA) – Independent consumer organisation run by and for senior Australians. See cota.org.au.
- Department of Human Services (DHS) – Information on the Age Pension. See humanservices.gov.au.
- Department of Human Services’ Financial Information Service (FIS) – An independent, face-to-face service to help you make the right decisions about your financial affairs. See humanservices.gov.au or call 13 23 00 to make an appointment.
- Department of Veterans’ Affairs – Information and support for veterans and their dependants, including pensions, compensation, healthcare and counselling services. See dva.gov.au.
- Financial Planning Association of Australia (FPA) – Professional body representing Australia’s financial planners. Has information on choosing a financial planner. See fpa.com.au.
- National Seniors Australia – Not-for-profit organisation that provides a service to help people aged 50 years and over. See nationalseniors.com.au.
If you are thinking about retirement, learn as much as you can about your income options before you make any decisions. By developing a flexible financial plan that uses a combination of income sources, you can make sure your retirement is comfortable.