Take charge of your retirement income through robust retirement planning 

• Retirement planning strategies can ensure you have enough money saved to successfully transition to retirement with certainty.
• A financial adviser can help older Australians create a retirement income stream to match their needs throughout retirement.
• Superannuation is a crucial financial asset that can be grown with smart strategies.

Many people overlook retirement planning until later in life – and this delay can be costly.

The earlier that individuals or couples start putting in place a financial strategy for their transition to retirement, the better prepared they will be to enjoy their golden years without monetary hardship or stress.

Such plans typically include an assessment of your current financial standing, along with likely future expenses and income streams as part of a detailed retirement budget. That budget should reflect how much money you will need to pay for living expenses each year, and how long your retirement income stream will reasonably be expected to last before you die. 

Retirement planning is not, however, just about wealth creation; it also involves managing financial risks. This could include a range of factors such as calculating the impact of inflation on your finances, factoring in market volatility of property and shares, and weighing up longevity risk (that is, the prospect of outliving your savings).

An experienced financial adviser can assist with helping you to understand the income you wish to have in retirement and how you wish to derive that income.

If you have or are eligible for a superannuation plan, it is likely to be a core element of your retirement planning strategy.

Currently, through the Super Guarantee, your employer must pay contributions of at least 11.5% on top of your salary into your chosen super fund, with the rate scheduled to progressively increase to 12% on July 1, 2025.

This pool of money can grow over many years thanks to ongoing contributions and compound earnings.

One of the real strengths of superannuation for many people is the concessional tax treatment. There are two types of super contributions – concessional and non-concessional.

• Concessional contributions come out of pre-tax pay and are usually taxed at just 15%, which is much lower than most employees’ marginal rate (up to $30,000 a year, this limit includes your employer contributions[1])
• Non-concessional contributions are made from your after-tax pay, with no further taxes being applied ($120,000 per year or $360,000 over three years).

Your super fund then invests this money in assets such as shares and property to grow your balance over time.

Remember, however, that you can only withdraw your super in certain circumstances – for instance, when you turn 65, when you reach age 60 and retire, or under transition-to-retirement rules while you continue to work after age 60.

Navigating this superannuation journey is much easier with the assistance of a financial adviser.

As you approach retirement you may look to receive your super money as an income stream through either an account-based pension or an annuity – rather than taking your super as a lump sum.

A financial adviser can help you decide if a super income stream, a lump sum, or a combination of both, is right for your objectives and financial situation, along with a range of other strategies.

Superannuation aside, retirees might consider a range of different income sources, such as investing in property, shares, accessing the age pension and exploring other savings or investment vehicles.

Your financial adviser can also help you with options such as downsizing your property or even returning to work part-time.

Working on a part-time or casual basis can have major benefits, including retaining regular income, continuing to grow your super balance and help ensure you stay active and mentally healthy.

Your adviser can let you know how returning to work could impact your retirement plans and any age pension entitlements.

If you are 55 or older, you may look to downsize your home. The government has made a provision to contribute up to $300,000 from the sale of your home as a non-concessional contribution to boost your retirement savings. This is called a ‘downsizer contribution’. Whilst these are classed as a non-concessional contribution, it does count towards your transfer balance cap (which applies when you move your super savings into retirement phase). A Financial Adviser would be able to review your current financial situation and find out if this is a strategy that would work for you.

Effective retirement planning through sound investment strategies can help you build a substantial retirement nest egg that provides financial security and peace of mind in your later years.

With the help of a financial adviser, start making informed decisions now about your retirement income and super savings so you can optimise your income streams, minimise tax liabilities and smooth out your transition to retirement.

Providing superannuation advice and retirement planning strategies requires specialist skills. For an initial consultation with a Mercer Financial Adviser, please complete the form below and we will be in touch.

^{[1] As at 9 October 2024. Applicable to tax year 2024-2025.}

^{[2] As at 9/10/2024}

^{[3] Different rules apply for sole traders and partnerships. See ATO website for more information}