Build a Retirement Income
If you are about to retire or already retired, we can help you arrange your finances to help you build a retirement income which is reliable and tax effective… and which should last for your lifetime or longer.
We can show you how to pay little or no tax on your lump sum; and if you own a business we can show you how to reduce or even eliminate tax on its sale.
In addition, we can help you arrange your finances so you maximise Centrelink benefits if that is appropriate for you.
Approaching retirement?
The ‘transition’ rules make it easier to top up your savings tax effectively.
The Government’s ‘Transition to Retirement’ rules could help you to move to part-time employment before fully retiring, save tax and make your retirement savings last longer. Here’s two ways this could work for you:
- Use super to top up salary when moving to part time employment
- Top up your super without forfeiting income
How long will your savings last in retirement?
To roughly work out the life expectancy of your retirement savings, just go to the column which matches the average annual earning rate your investments should achieve, then move down that column until you reach the average annual drawdown rate (see far left hand column) you will be making on your savings (your drawdown rate is: the amount of income & capital you will withdraw from your investments each year, divided by the amount you have invested, multiplied by 100).
The number you arrive at in the table estimates the number of years your money will last.
Here’s an example of how to calculate your drawdown rate: Let’s say someone has $600,000 in retirement savings and they require an income of $54,000 p.a.
Their drawdown rate is: $54,000 ÷ $600,000 x 100 = 9%
If their earning rate is say 4%, then their money will last around 15 years.
Of course, our ‘Money Life Calculator’ is just a guide. To accurately assess the life expectancy of your retirement savings you should talk with Damian Jenkins, your Fairway Capital financial adviser.
Strategies to help you stretch the life expectancy of your retirement savings
Will your savings last for your entire retirement? Or are you in danger of outliving your money (Longevity Risk)? If you are worried about your finances, there are a number of strategies you can use to stretch the life expectancy of your savings.
For example, you could ask Damian Jenkins, your Fairway Capital financial adviser to help you:
- Increase your contributions to super before you retire (including using the ‘Transition to Retirement’ rules to create additional tax advantages)
- Arrange your finances so you pay little or no tax in retirement
- Increase the return you generate on your investments
- Arrange your finances to qualify for higher Centrelink benefits
You could also consider these strategies:
- Retire later
- Work part-time in retirement
- Lower your income requirement in retirement
- Decide to leave less or nothing to your estate.
For the majority of retirees, the most appropriate solution usually involves many strategies. Damian Jenkins, your Fairway Capital financial adviser will be pleased to model different scenarios for you to ensure the right combination of strategies is employed for your situation and lifestyle needs.
Contact us today to discuss how we can work with you.
Damian Jenkins is an Authorised Representative of Personal Financial Services Limited (PFS) ABN 26 098 725 145, AFSL 234459. This information has been prepared by PFS. The taxation position described is a general statement and should only be used as a guide. It does not constitute tax advice and is based on current laws and their interpretation.
This information has been prepared without taking into account the investment objectives, financial situation or particular needs of any particular person. Because of this you should, before acting on it, consider its appropriateness, having regard to your objectives, financial situation and needs.
