7 considerations for the last decade before retirement

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7 considerations for the last decade before retirement

Brought to you by Rest

By Simon Webster

To a 50-something retirement can seem a long way off. But if you don’t engage actively in your super in the last decade or so before retirement (or semi-retirement), you may be missing a trick.

Depending on your circumstances, the decisions you make now can have a considerable impact on your living standards in years to come.

Savvy super is your best chance of a happy retirement.

Savvy super is your best chance of a happy retirement.Credit:iStock

“The decade before retirement can be a good time to reflect, reassess and plan how your super will help you reach your financial goals,” says Deb Potts, group executive at Rest superannuation.

“This is a great opportunity to start looking ahead and plan your transition out of the workforce.”

Here are seven things to consider.

1. Plan for the amount you’ll need

The Association of Superannuation Funds of Australia (ASFA) Retirement Standard says a single person who owns their own home will need $545,000 in savings for a comfortable retirement, while couples will need $640,000.

But ASFA’s definition of “comfortable” may not suit your lifestyle. You really should try to work out how much, you, personally, might need.

“As you start planning out your retirement budget, it’s important to assess the type of retirement you want, including your lifestyle, existing debt, and any other expenses that need considering,” Potts says.

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Once you’ve got a target figure, Rest’s retirement calculator can give you an idea as to whether your super is on track.

2. Make extra contributions to boost your balance

Putting extra money into super in your pre-retirement years can not only boost your balance, but offer tax benefits too.

Depending on your circumstances, you might make contributions before tax, such as salary sacrificing (known as concessional contributions, which for most people are taxed at 15 per cent); or contributions after tax (known as non-concessional contributions), which you can claim as a deduction at tax time.

3. Find out when you can access your super

It’s all well and good putting all this money into super, but when do you actually get to spend some of it?

The age at which you can access some, or all of your super, is known as your preservation age. It can be between 55 and 60, depending on when you were born.

Find out when you can access your super.

Find out when you can access your super.Credit:iStock

4. Consider a transition to retirement strategy

Retirement doesn’t have to be about suddenly going from full-time work to no work at all. If you are thinking of scaling back work, you might want to look at a transition to retirement (TTR) strategy. It allows you to work and access some of your super at the same time, through a TTR pension if you have reached your preservation age.

This might enable you to reduce your work hours while still enjoying the same take-home pay to which you’re accustomed.

Or you could consider if using a TTR strategy is available and appropriate for you to continue working full-time and pay less in tax. Generally, the strategy involves increasing your salary sacrifice into super (which is taxed at only 15 per cent – less than most people are normally taxed), while receiving your TTR pension payments which are generally tax-free if you are 60 or older.

5. Think about living arrangements and aged care

“If you’re a pre-retiree, you should start to consider what your living arrangements will be during retirement, and how this can impact your retirement balance,” Potts says.

If you plan on downsizing your home, you may be able to put up to $300,000 from the proceeds of your sale into super.

You might also want to think about future aged care requirements. “This is a cost that should be factored into your retirement planning,” Potts says.

6. Establish tax-effective income streams for your retirement

“There are three main sources of income at retirement: your superannuation, non-superannuation assets, such as returns from investments, and, if you’re eligible, the Age Pension,” Potts says.

Managing these in the most tax-effective way can make a big difference to your retirement.

7. Seek financial advice

If mapping out financial goals, transitioning to retirement and navigating all the tax implications seems a bit complicated, well, that’s because it is. A bit of advice usually doesn’t hurt.

“The earlier you seek advice about how to prepare for your retirement, the more likely you will achieve your retirement goals,” Potts says.

You could see a financial adviser or talk to your super fund.

Retirement is one of the most important stages of your life. To find out more about retirement planning, Transition to Retirement accounts, and Pension accounts, visit rest.com.au/retirement

Issued by Retail Employees Superannuation Pty Limited ABN 39 001 987 739 (Rest), trustee of Retail Employees Superannuation Trust ABN 62 653 671 394 (Fund). Any advice is general only and does not take account of your objectives, financial situation or needs. Before acting on any advice or deciding whether to acquire or hold a product, consider its appropriateness and the relevant PDS and TMD available at rest.com.au/pds

Rest Advice is provided by Link Advice Pty Ltd ABN 36 105 811 836, AFSL 258145 (Link Advice). Rest Advisers are staff members of Rest and provide advice as authorised representatives of Link Advice. Rest Digital Advice is provided by Link Advice. Rest Advice may be accessed by members without incurring additional fees for simple advice. An advice fee may be payable for complex advice. You should read the Rest Advice Financial Services Guide, which you can obtain by calling us on 1300 300 778, before accessing these services.

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