Apr 30, 2022

Our insights 

The notion of retirement evokes a wide range of emotions among different people.

Excitement, trepidation, anxiety and relief are all perfectly normal ways to feel about a moment you’ve worked for your whole life. 

Retirement has evolved in recent times too.

It doesn’t have to be the end of your working life but maybe a gradual easing of your output, freeing up more time for leisure and family.

And if you’ve had the foresight to plan ahead and put some solid financial building blocks in place, the experience is likely to be a whole lot happier and more rewarding. 

When to retire?

As the eligibility to receive the Age Pension increases from 65 to 67, it’s only natural to assume some people may need to work longer.

People are also living longer. A healthy man aged 65 can expect to live for another 20 years, a woman another 22 years, so that too may affect how long people think they need to work. 

But let’s say you’ve built up a solid nest egg in super and have a retirement age in mind. What then?

Plan ahead

It’s worthwhile talking to friends who have already retired to pick up some ideas you may not have even considered. 

But there really is no substitute for consulting with an experienced financial planner to chart your course into retirement.

Decisions taken now can impact you immediately as well as years into the future. 

Does your financial situation stand up to a stress test? That is, how will you cope if the financial climate changes?

What if there is a stock market crash? Are you able to cope with rising inflation?

Do you need to supplement your income with other streams?

These are all questions that are best answered before a problem arises.

If you can tick off all those boxes in advance, you can enter retirement with peace of mind, knowing you have enough money regardless of the prevailing winds.

A super idea

It’s never too late to tip more money into your super. And if retirement is on your horizon, the time is nigh.

Ensure your super is working as hard for you as it should be and take advantage of the tax benefits on offer by tipping as much additional income into your super as is practical.

The more you have in super, the more options you’ll have when you are planning your retirement.

Preparing your retirement income

Ask us about what government entitlements you may be eligible for and start thinking about what pension product is right for you. 

If you have retired, you can generally begin accessing your super once you reach preservation age which will be between the ages of 55 and 60 depending on when you were born.

The table below indicates the age seniors affected by the sliding scale of the preservation age can access their super.

Date of birth | Preservation age

Before 1 July 1960: 55

1 July 1960-30 June 1961: 56

1 July 1961-30 June 1962: 57

1 July 1962-30 June 1963: 58

1 July 1963-30 June 1964: 59

From 1 July 1964: 60

Anyone aged 65 years can access their super even if they continue working full-time.

Transition to retirement

If you’re uncertain about whether you are ready for retirement, you may want to consider a soft landing.

Consider cutting back some of your hours and supplementing your income with a transition to retirement (TTR) pension with part of your super.

Most super funds offer TTR pensions but there are some rules that must be followed:

  • You must have reached preservation age
  • Money can only be withdrawn as an income stream, not a lump sum
  • There is a minimum annual withdrawal amount (4% of your TTR balance if you are aged 55-64 (currently 2% until June 2023)
  • There is a maximum annual withdrawal amount of 10% of your TTR balance
  • Income is tax free for those aged 60 or older while those aged 55-59 pay tax on the TTR income although you will receive a tax offset of 15%

The bonus is that by remaining in part-time work, you will continue to receive compulsory superannuation contributions from your employer which will help offset the withdrawals you are making.

Get advice today

Don’t gamble with your financial future.

If you are thinking about retirement or semi-retirement, let Calder Wealth Management help you put plans in place to ensure your transition is both happy and financially sustainable.

At CWM, we pride ourselves on ensuring our clients face the future with structure and financial stability.

Contact us today to discuss all of your financial needs and concerns.

This blog is written by Liz Wilson.

The information contained on this article is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from a financial adviser.

Taxation, legal and other matters referred to on this website are of a general nature only and are based on Calder Wealth Management’s interpretation of laws existing at the time and should not be relied upon in place of appropriate professional advice. Those laws may change from time to time.

Calder specialises in wealth management with a focus on advice, investment, sustainability, insurance and finance. 

Contact us now for a no obligations discussion about your needs.