fbpx Skip to content

3 Wise Options in Maximising Your Retirement Funds

It can seem like a lot of money once you’ve built up a retirement nest egg. You might be tempted to take a lump sum from your superannuation and do something nice. But keep in mind that, with life expectancies and cost-of-living rising, your money will likely have to endure for a long period – perhaps even 20+ years.

You’ll want your money to endure at least as long as you do to enjoy your retirement. A government pension, investment returns such as interest, dividends, rent, and retirement income stream assets specifically targeted for retirees are all possible sources of retirement income.

You’ll need to think about how you want to access your superannuation and the benefits of keeping it in the system and getting a regular income. This article examines many ways to maximise your retirement income.

Some tactics may result in tax savings or preferential treatment from Centrelink. Some allow you to access your money in various ways, but there is no assurance that it will last. Others guarantee a steady income for a specified period.

As expert retirement advisers, here are three things you could do with your retirement funds.

Option 1: Take A Lump Sum Payment

Having a considerable sum of money in your hands may be beneficial. You could take a vacation, buy a new car, or pay off any outstanding mortgages. But, before you succumb to this desire, keep in mind that you’ll need money for a long time. Furthermore, receiving money as a lump payment may prevent you from benefiting from the tax advantages of leaving it in the superannuation system. If you decide to take your superannuation in one lump sum, it’s good to re-invest it wisely, following the four principles of wise investing.

Option 2: Keep It in Superannuation and Take Regular Pension Payments 

If you choose to keep your money in superannuation, the investment earnings on that money will endure being taxed at up to 15%. If you decide to start a pension using your superannuation assets, you will get a regular income that is tax-deferred.

When you retire, the earnings and capital gains on the assets that provide your pension are tax-free. The superannuation you can utilise to establish a retirement financial planning phase is usually limited.

Option 3: Receive A Partial Lump Sum Payment and A Pension

This could provide you with the best of both worlds: money now and afterwards. Consider whether you have adequate investments that offer simple access to funds while establishing your retirement income strategy.

If not, a partial lump-sum payment could offer you a financial reserve in the future. Superannuation laws limit the amount that can be transferred into retirement phase pensions.

For more information on how the rules may apply to your situation, seek professional advice from a specialist retirement financial planner in Newcastle.

However, even if you utilise all of your superannuation assets to start a pension, you may be able to draw added funds from the pension as needed. Many programs allow you to withdraw additional funds as required, giving you more flexibility with your money.

Taxes On Retirement Income

Superannuation lump sum or income stream payments are tax-free if you are 60 or older (if paid from a taxed source, which is the most common source). If you are under the age of 60, the amount of tax you pay is determined by whether you take the money as a lump sum or as an income stream and the basis on which contributions were made. Tax breaks are available between the ages of preservation and 59.

Lowering The Tax Paid on Non-Superannuation Assets

Current legislation allows a couple over the age of pension to receive up to $61,186 (combined) in retirement income in 2020-21 without paying any tax, except Medicare. The amount is $33,898 for a single person. Your situation and investments determine the tax-free income you can expect in retirement.

Pension Considerations As You Become Older

The deeming rules apply to account-based pensions that started after January 1, 2015. Some people who started an account-based pension before January 1, 2015, maybe given a higher score on the income test. Other retirement income assets (such as annuities) may be evaluated favourably under the income test. You may be eligible for a more significant age pension or other social security benefits.

Get Access to the Best Retirement Fund 

You’re never too late to initiate maximising your retirement savings! Hopefully, these fundamental ideas will assist you in planning for the future. Of course, if you hire an experienced financial planner in Newcastle, you can have a more detailed and efficient plan.

Do you require assistance with retirement planning in Newcastle? Newcastle Financial Planning Group can help you plan your retirement fund, so you get to start doing whatever you want, whenever you want in your retirement years. To discuss the options available to you, book your first meeting today.

DISCLAIMER: The views expressed in this publication are solely those of the author; they are not reflective or indicative of RI Advice Group’s position and are not to be attributed to RI Advice Group. They cannot be reproduced in any form without the express written consent of the author. This information (including taxation) is general in nature and does not consider your individual circumstances or needs. Do not act until you seek professional advice. Newcastle Financial Planning Group, Central Coast Financial Planning Group, Sydney Wealth Advisers, Coastal Advice Port Macquarie and Coastal Advice Ballina Byron are subsidiaries of Coastal Advice Group Pty Ltd which is a Corporate Authorised Representative of RI Advice Group Pty Ltd, ABN 23 001 774 125 AFSL 238429.
Back To Top