Retirement is a time of life for you to relax and do the things you have always wanted to do. Therefore, careful planning can help ensure you are financially comfortable.
Prior to retirement, there are some important questions you need to ask yourself, including:
- What do I want to do in retirement?
- How much money will I need to do it?
- Do I need a regular income?
- Where will this income come from?
- When can I retire?
- How and when will I be able to access my super?
- What Government support will I be eligible to receive?
Planning ahead can assist you in making the most of what you have and help you achieve financial security, reduce uncertainty and enjoy your retirement.
There are many different options available to help fund your retirement. These include taking your super as a cash lump sum, purchasing an income stream product to give you a regular income or a combination of both.
A regular income in retirement
Allocated pensions
An allocated pension is purchased with super monies and provides a flexible, tax-effective, regular retirement income stream. It is not guaranteed, however the payments are flexible and can be adjusted within maximum and minimum limits set by the Government. Any capital remaining upon death is distributed to your estate or dependants.
Annuities
An immediate annuity on the other hand is an investment of a lump sum, usually with a life insurance company, that provides a regular guaranteed income for a specified period. The income will depend on the initial investment, frequency of payments and the prevailing interest rate. The income you receive is generally set at the time of investment and will not change.
A complying pension or annuity is one that meets certain conditions and may provide partial or full exemption from the Social Security Assets Test (although not the income test) and receives favourable treatment under the Reasonable Benefit Limits (RBLs) system. This allows you tax-effective access to your super savings.
Each type of income stream has different features. The 2006/2007 Federal Budget also proposed many changes that may affect income stream products and your retirement. A Bridges financial planner can help you with these changes and your retirement planning by identifying income options that best suit your circumstances and goals.
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Questions?
If you have any questions, please contact us 
