As superannuation is design to fund our retirements are we giving it enough attention?
Funding your relaxing retirement
Looking forward to a more relaxed life after work…never having to get up for work again…having the time to see the grandkids, travel, golf, read, seeing more of your family – retirement is a time when you should be able to relax and enjoy yourself and not have to worry about your finances. It should be the rewartd for your hard work.
If you're thinking about your retirement, whether completely or partially, one of the most important things to consider is how you are going to fund your lifestyle.
If you are close to retirement, it's worth taking stock of your situation and ask yourself the following questions. These are some of the issues you should discuss with your financial planner.
• Will you be able to comfortably fund your retirement lifestyle?
• Do you have sufficient funds in superannuation to last your lifetime?
• How do the recent changes in super affect you?
• Are you aware of and in control of your current living expenses?
• Do you know when you can retire?
• Are you aware that differing investment strategies within superannuation that can affect your bottom line?
• Do you know which retirement income stream is more appropriate for you?
• Some Centrelink benefits are available to most retirees.Can you access any of these benefits?
Super and Tax
Strategies to consider
As retirement draws closer, maximising your savings and superannuation becomes a priority. Some of the important strategies to consider before you retire are:
Eliminating non tax deductible debt
The interest you pay on debts such as your home mortgage and credit cards can significantly reduce your capacity to create wealth. Reducing debt is a very important aspect of building a strong financial future.
Maximising opportunities outside super
Strategies that you could use apart from superannuation include: lump sum investing, regular investing (savings plan) and gearing. Investments could include shares, property and cash reserves.
Maximising your superannuation
Depending on your circumstances and requirements, your financial planner may suggest a financial strategy that uses superannuation as a tax efficient investment vehicle to enter the investment markets.
Some of the important considerations for such a strategy are:
Your objective should be to fund retirement in a tax effective manner
Contributions to your superannuation cannot exceed your age-based maximum deductible limit (set by government regulation each financial year) and a recent maximum undeducted limit.
Super funds generally don't allow access to capital, until you meet age requirements and retire from workforce.
Income streams in retirement
Income streams, which you can use to fund your retirement, can be broadly categorised into:
• Traditional income streams (superannuation based)
• Non-superannuation investments:
• Interest on deposits
• Dividends from shares
• Rental income from property