I’m retired, what more can I do?
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It’s a well known fact that Australia has one of the highest life expectancies in the world. That means your retirement may last 20-30 years. That’s a lot of time without an income.
So what more can you do to maximise your retirement income? In this stage of your life, your focus should be on protecting your accumulated capital from inflation, longevity and investment risk where possible.
Here are some ways you can do this:
1. Consider a Transition to Retirement Pension (TTR) – This is a common strategy if you’d like to keep working, while you draw down some of your super benefits. A transition to retirement arrangement allows you to supplement your salary, maintain a comfortable lifestyle, save on tax and boost your super too.
2. Top up your super when moving into part-time retirement – If you’re still working part-time, speak to your employer about salary sacrificing. By ‘sacrificing’ a larger portion of your salary to go into your super, more of it will be taxed at the lower marginal tax rate of 15%. This strategy leaves you less ‘taxable income’, therefore can be a clever way to boost your super, without affecting your net pay.
3. Review your investment risk – As you’ve now reached the stage of life where accessing super is imminent, a staggered approach to how your funds are invested might be a wise idea. Funds you intend to access in the short-term (next five years), should be placed in a conservative investment. Funds that you do not intend to access for over 5-10 years, might be best in a more aggressive investment.
4. Use your super more tax-effectively – Consider using your super to start an account-based pension, rather than taking a cash lump sum. This can be a great way of reducing the tax you pay.
5. Invest the proceeds of your business sale into super – if you’re in the process of selling your business, you may wish to use the proceeds to make an after-tax super contribution, to top up your super and ensure it lasts longer.
These strategies will depend on your existing circumstances and your comfort level with risk. Seeking professional help from an experienced and qualified financial planner will help you secure your optimum retirement.
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