When you are nearing the end of your final working days, it’s important to ensure that you have enough money that will last your entire retirement.
In Australia, preparing for retirement involves two main stages:
- The first is the accumulation stage, where you work to grow your super funds.
- Then, you reach the drawdown stage, where you spend the amount of money you were able to save and build during the decades of your working life.
Commonly, many retirees reach the drawdown stage and aren’t sure about the best way to make the most of their hard earned super savings.
While taking the time and effort to grow your super is essential, it’s also important to make smart decisions with your super all the way through retirement to help you get the most bag for your buck!
Here are 3 options that can guide you in the right direction of how to get the most out of your super during your retirement.
What Can You Do With Your Super?
Once you’ve reached your preservation age, you can gain access to your super. There are three options you can do with your superannuation.
1. Let Your Money Stay In Your Account
It is possible to leave your savings in your super when you reach retirement. This means your super balance will continue to be invested, with the aim of hopefully continuing to grow your savings in time.
The money you have will continue to be invested, but do note that the gains might fluctuate depending on the market situation.
This may or may not work for you, it really depends on your present financial situation. Some reasons you may decide to keep your super in the accumulation stage include:
- You don’t need the income from super;
- You have more than $1.6M in your super;
- You might still be working or planning on returning to work;
- You have personal life insurances within your super.
2. Move Your Super into an Account-Based Pension
You can also choose to use an account-based pension strategy. This option can offer you a regular, flexible and tax-effective form of income stream, rather than accessing the full lump sum of your super.
With this, you can enjoy the flexibility of choosing:
- How you want to invest money;
- How much money you’ll get per payment;
- How often you will be paid;
- How much of your super you want to move into your pension.
3. Move Your Super into an Annuity
In comparison to an account-based pension, an annuity is known as a lifetime or fixed-term pension, providing you with a more stable income strategy. It is also a form of income stream you can explore for your retirement. An annuity provides you with a guaranteed income for either number of years or potentially the rest of your life. Additionally, the amount you receive won’t be affected by current economic and market conditions.
This options allows you to choose:
- Whether you want a fixed-term annuity with a set time until you reach your average life expectancy;
- Or set your income up to last the rest of your life
However, while this option is more stable, it is less flexible compared to the account-based pension option.
Do you have a sound superannuation strategy?
Here at HH Wealth, we can work with you on your superannuation planning and help you reach financial freedom and a comfortable retirement. Drop by our office at Fortitude Valley or book a free consultation today!