Retirement is a milestone marking the start of a new phase in your life. If you’re well-prepared, you can look forward to freedom from a set routine and the opportunity to enjoy many things you haven’t had time to do while working.

Your quality of life and financial security after work will depend on you having an adequate retirement income. The decisions you make now about how you will invest your superannuation and any other savings once you retire are of critical importance. Whether you intend to move into full retirement straight away, or scale down to part-time work first, there are many issues to consider before you make any changes.

Planning ahead

In the lead-up to your retirement, information and advice are crucial in helping you assess your situation, identify your retirement goals, and develop a practical, achievable plan. This is where we can help.

Superannuation is highly favourable for retirees, who may want to consider making the most of the tax concessions and flexible rules that are now available. For example, under the new transition to retirement legislation, between ages 55 and 65 – depending on your year of birth – you can now access some of your super money through a pre-retirement pension while you continue to work full time or scale down to part-time employment.

What you need to consider

When planning your retirement, areas to think about include:

• When you want to, or are likely to, retire
• Whether you want to retire completely or scale down to part-time work
• How much super you have
• How much income you will need
• How long your money will last based on your life expectancy
• What you want to do and achieve in retirement.

A regular income and big tax advantages

When you retire, it’s important to know that you have a reliable, regular income. The most popular and tax-effective way to arrange a regular income stream is through an allocated pension or annuity. This is because:

• If you’re 60 or over, lump sum or pension income payments are completely tax-free
• If you’re over 55 and under 60, you will receive a 15% tax offset on pension income payments received as part of a transition to retirement strategy
• Earnings in the fund are tax-free.

Control and flexibility

With an allocated pension or annuity, you can choose how much you want to receive as your regular income, provided you draw at least a set minimum (based on the value of your account balance). You can also withdraw lump sums at any time if you need to, but you can’t make additional contributions to your pension once it is set up.

If you choose to invest your money outside super, there is a wide range of investment options to choose from. A professional financial adviser can help you create a diversified portfolio designed to deliver the returns you need to achieve your goals. The income you receive is a combination of capital growth and earnings.

Centrelink benefits

For the majority of people, the Age Pension is considerably less money than they are used to living on. The amount of Age Pension you receive will depend on whether you are single or have a partner, whether you have dependent children, and your income and assets.

You can qualify for the Age Pension if you satisfy each of these criteria:

• Aged 63 and over for women or 65 and over for men
• Meet certain residence requirements
• Have income and assets below a certain amount.

The qualifying age for women is gradually being increased to match the qualifying age for men. By 2014, the qualifying age for both men and women will be 65.

We can help you calculate how much Age Pension you will be entitled to receive given your particular circumstances.

Putting your affairs in order

A comprehensive retirement plan should include a review of your will and the details of how you’d like your estate to be distributed after your death. The right advice from a solicitor can avoid many common pitfalls that occur in family or business situations. It’s also important to seek advice on the tax implications of how your estate will be distributed, to make sure your beneficiaries receive all that you would like them to. We can refer you to appropriate legal and taxation professionals.

Insurance is essential for your peace of mind. Whether you’re covering your life, your ability to work, your business, property or possessions, having insurance helps protect your lifestyle and the people who depend on you.

Insurance is never a luxury. You may go for years without making a claim, then one day the unexpected happens. No one can eliminate the devastating emotional impact of serious illness, disablement or death, but if you have to deal with money problems as well, the situation can be much worse. Having money available when you need it most is what makes insurance so valuable.

Using super to pay for your insurance

Some types of insurance allow you to pay the premiums automatically from your superannuation fund. This can be a tax-effective option because it enables you to pay your premiums with pre-tax money. Using money that is normally inaccessible until you retire also means you don’t have to dip into your daily living budget.

What should you insure?

When protecting your family financially, look at your areas of greatest vulnerability, such as your mortgage, other debts, regular household expenses and, if you’re self-employed, your business. You should also protect yourself against loss or damage to your property. These areas can be covered by:

1.      Life insurance 

2.      Income protection 

3.      Disability insurance 

4.      Trauma insurance

5.      Business insurance

6.      Home insurance

7.      Motor vehicle insurance

Do you have enough cover?

It’s all very well to have ‘some’ insurance, but many people are under-insured and find themselves out of pocket when they make a claim. It’s important to accurately assess how much insurance you need. This is an area where we can help you. We’ll help identify your greatest areas of risk and work out how much cover is appropriate for your needs.

ESTATE PLANNING

Most people think estate planning is the preserve of the very rich or those with complicated business and tax affairs. In reality, estate planning is something that can benefit a wide variety of people at various stages of life.

Estate planning involves considering what will happen to all your assets upon your death or that of your partner. An estate plan helps ensure that when you die your assets are managed in an orderly manner, consistent with your wishes.”

An effective estate plan ensures ownership and control of assets passes to the intended beneficiaries in the correct proportions and in a manner that results in the least amount of tax being imposed on the income and capital gains earned on those assets.

There are many issues to consider when creating an estate plan. For example, you may have concerns about what will happen once your assets are passed on. Perhaps a child or in-law may be tempted to use the funds or assets in a way that is not consistent with your wishes?

Most people have never considered the many ways their estate is open to being misused, whether intentionally or not. People are relieved to realise that professional advice and planning will overcome these challenges. It all comes down to getting the right combination of advice from a qualified legal practitioner and a qualified financial adviser.