{"id":7864,"date":"2023-02-20T12:01:41","date_gmt":"2023-02-20T01:31:41","guid":{"rendered":"https:\/\/adelaideprivatewealth.com.au\/transitioning-into-retirement-what-you-should-know\/"},"modified":"2023-02-20T12:01:41","modified_gmt":"2023-02-20T01:31:41","slug":"transitioning-into-retirement-what-you-should-know","status":"publish","type":"post","link":"https:\/\/adelaideprivatewealth.com.au\/transitioning-into-retirement-what-you-should-know\/","title":{"rendered":"Transitioning into retirement: What you should know"},"content":{"rendered":"
\n

Deciding on your retirement funding options in retirement comes down to what makes the most sense for you.<\/strong><\/p>\n

If you\u2019re close to retirement, chances are you\u2019ve already spent time thinking about how to tap into your superannuation when you retire.<\/p>\n

Broadly speaking, you have a few options when you retire, as long as you\u2019ve reached the minimum \u2018preservation age\u2019 when you\u2019re allowed to access your super.<\/p>\n

That\u2019s a little bit complicated, because there\u2019s currently a staggered range of preservation ages depending on when you were born. If you were born after 1 July 1964, your super access age is 60.<\/p>\n

You can check out your personal preservation age on the\u00a0Australian Tax Office website<\/a>.<\/p>\n

Deciding on your retirement funding options comes down to what makes the most sense for you.<\/p>\n

\"\"<\/p>\n

Leaving your super alone<\/h3>\n

There\u2019s actually no legislation that says you must start drawing out your super savings when you retire.<\/p>\n

In fact, if you don\u2019t need your super to fund your living expenses, you can simply leave it where it is.<\/p>\n

You can keep investing your super, and even add money into your account if you pick up some work income, and make concessional contributions up to $27,500 per year (which are taxed at 15 per cent), or personal non-concessional contributions up to $110,000 per year using after-tax money.<\/p>\n

You can contribute to your super at any time generally up until the age of 74 (excluding a home downsizer contribution), and by not starting a pension you\u2019re not forced by the government to start withdrawing regular payments.<\/p>\n

The government also allows people aged 60 and over to add up to $300,000 into their super account if they sell their principal place of residence, subject to a range of conditions. Legislation to lower the eligibility age to age 55 was passed in the Senate on 28 November.<\/p>\n

Keep in mind that if you do leave your money in a super accumulation account, all investment earnings will continue to be taxed at the 15 per cent rate.<\/p>\n

But that rate is still likely to be lower than what you would pay if you decided to withdraw your super and invest it into another asset, such as an investment property, where the rental income would be taxed at your full marginal tax rate.<\/p>\n

Leaving all your money in super after you\u2019ve retired means you can\u2019t withdraw money as a regular pension income stream. To do that you generally need to roll at least some of it over into an account-based pension.<\/p>\n

However most super funds will let you withdraw lumps sums whenever you like if you\u2019ve met all release conditions and have the money transferred into your bank account. A minimum amount of $6,000 generally must be left in your account.<\/p>\n

You should also be mindful that if you leave money in your super account or account-based pension and die that there may be tax consequences for non-dependant beneficiaries (see below).<\/p>\n

Starting a pension stream<\/h3>\n

On the other hand, if you want to use all of your super to have a regular income stream once you retire, you\u2019ll need to roll it over into a pension account.<\/p>\n

You\u2019ll need to contact your super fund manager to do this or, in the case of a self-managed super fund, ensure the trust deed allows for the payment of a pension income stream.<\/p>\n

Your basic options are to either roll your super over into a pension product offered by your current super fund or to transfer it over to another pension product provider.<\/p>\n

Most account-based pension products enable monthly, quarterly, half-yearly or annual payments, which will continue until your account balance runs out.<\/p>\n

Be aware that once you start up a pension you\u2019re required to withdraw a set percentage of your account balance every financial year, which increases as you age.<\/p>\n

The minimum pension account withdrawal amounts have been temporarily reduced by 50 per cent for the 2022-23 income year. You can see them on the\u00a0ATO\u2019s website<\/a>.<\/p>\n

There are a range of advantages from setting up a pension income stream versus keeping your super money in accumulation mode.<\/p>\n

Most importantly, if you\u2019re aged over 60 and retired, your pension payments are tax-free and so are any investment earnings generated inside your pension account.<\/p>\n

You can use your own pension income stream to supplement the government Age Pension if you\u2019re eligible to receive it. And you\u2019re also able to withdraw lump sums from your pension account at any time.<\/p>\n

Upon your death, non-dependants who receive money left in a pension account will need to pay tax on the taxable component. The amount of tax payable may be reduced by tax offsets.<\/p>\n

Doing both<\/h3>\n

If you\u2019re wanting total financial flexibility in retirement, you could consider leaving part of your money in super, rolling over some of it into an account-based pension, and also withdrawing lump sums whenever you need to.<\/p>\n

There are a range of benefits from adopting a combination of your options, although there may also be potential tax consequences for both you and your beneficiaries.<\/p>\n

Managing the combination of a super accumulation account, an account-based pension, an Age Pension entitlement (if eligible), potential investment earnings outside of super, and irregular lump sum payments, can be highly complex.<\/p>\n

Using the services of a licensed financial adviser is a worthwhile consideration as you weigh up all of your retirement options.<\/p>\n

Call us today if you\u2019d like more information about transitioning into retirement. Contact us on [phone].<\/p>\n

Source: Vanguard<\/a><\/span><\/p>\n

Reproduced with permission of Vanguard Investments Australia Ltd<\/p>\n

Vanguard Investments Australia Ltd (ABN 72 072 881 086 \/ AFS Licence 227263) is the product issuer. We have not taken yours and your clients\u2019 circumstances into account when preparing this material so it may not be applicable to the particular situation you are considering. You should consider your circumstances and our Product Disclosure Statement (PDS) or Prospectus before making any investment decision. You can access our\u00a0PDS\u00a0or\u00a0Prospectus\u00a0online or by calling us. This material was prepared in good faith and we accept no liability for any errors or omissions. Past performance is not an indication of future performance.<\/p>\n

\u00a9 2022 Vanguard Investments Australia Ltd. All rights reserved.<\/p>\n

Important:
Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business nor our Licensee takes any responsibility for any action or any service provided by the author. Any links have been provided with permission for information purposes only and will take you to external websites, which are not connected to our company in any way. Note: Our company does not endorse and is not responsible for the accuracy of the contents\/information contained within the linked site(s) accessible from this page.<\/p>\n

The post Transitioning into retirement: What you should know<\/a> appeared first on MLC Contemporary<\/a>.<\/p>\n<\/div>\n

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