Still working but looking at retirement? Then you need to read this
Are you now looking at the post-career stage of life and considering your options? You’ve most likely done most of the hard work by now – holding down a career and building your nest egg along the way.
Leading up to your retirement, it’s time to really start thinking about that next chapter. And then, once you know what you want your retirement lifestyle to look like, you need to know how you are going to fund it, and how to access your money so it goes the distance.
Rather than a brief sedentary retirement more people these days are enjoying a long, healthy, active lifestyle in their later years. Our general expectations of our retirement lifestyle have also changed. Many retirees now look to work and travel in retirement and maintain an active lifestyle. Whatever your retirement ends up looking like, no doubt it will be very different from your parents’ retirement and likely to be more expensive. But, a little planning and budgeting goes a long way. So start thinking about your retirement, today.
If you're under the age of 65 and wanting to access super benefits, then retirement generally involves ceasing full-time employment and making a retirement declaration, unless you intend to start a transition-to-retirement pension or you have unrestricted non-preserved super benefits. If you’re under 65 and you decide to retire, then you can still return to work if your circumstances change, or you genuinely change your mind. If you're under the age of 65, then you can make super contributions whether you’re fully retired, working part-time or working full-time. If you’re aged 65 or over, then you don't have to retire to access your super benefits in most cases.
Superannuation is one of the key ways to fund your lifestyle once you’ve stopped working, so it’s important to make sure you’ll have enough. A good way to boost your super savings while you’re still working is to consider tax-effective super strategies that can help you save more. And the sooner you start the better.
A good place to start is to look at your current super fund. You can review the investment and insurance options available, along with your current asset allocation and level of insurance, to determine if the fund is right for you and if you need to make any changes. And if you have more than one super account, consider bringing them together so you save on fees.
Once you’re satisfied with your super, salary sacrifice may be a tax-effective way of increasing your super balance. These additional contributions are taxed at a maximum of 15 per cent, which may be a lot lower than your marginal income tax rate of up to 46.5 per cent.
Another way to add to your super is with after-tax super contributions. You can simply deposit money direct into your super account and your contribution doesn’t get taxed again because you’ve already paid tax on this money.
Depending on your situation, there could be other tax-effective super strategies available to you including government co-contributions, low-income super contribution and self-employed super contributions.
Related links:
The changing landscape for Australia’s retirees
A guide to planning for your future