Retirement brings a new chapter of freedom, but that freedom will depend on financial security. Figuring out how much you’ll need is complex — estimate too low, and you could face a lifestyle cutback in your golden years; aim too high, and you might work longer than necessary.

Determining an accurate retirement savings goal gives you a realistic view of how much to save, how to invest, and when you might comfortably retire. 

The key is finding a balance.

According to the Association of Superannuation Funds of Australia (ASFA), a couple seeking a “comfortable” retirement will need approximately $73,337 annually. In comparison, a single person will need around $52,085.

These figures, however, are guidelines and don’t account for personal factors like health, family needs, or lifestyle choices, meaning your individual retirement goal will vary.

Here, we’ll break down how to calculate an accurate retirement goal, explore variables that impact your savings target, and help you confidently approach this crucial planning step.

Consider Your Desired Retirement Lifestyle

Retirement lifestyles vary widely. Start by asking, “What kind of retirement do I envision?” Your answer impacts the financial target you’ll need to aim for.

If a comfortable lifestyle is what you’re seeking — with a mix of travel, dining out, and regular leisure activities — ASFA’s benchmark annual cost estimates are approximately $73,337 for couples and $52,085 for singles. Bear in mind that these figures assume home ownership and relatively low healthcare costs.

On the other hand, a modest lifestyle prioritising the necessities and expecting fewer luxuries and some discretionary spending is estimated to cost around $47,731 per year for couples or $33,134 for singles.

From here, you can estimate annual expenses and multiply this by the years you’ll likely spend in retirement. Planning for at least 20 to 30 years is typically recommended — especially as life expectancy increases. Consider any health factors that may come into play, and always plan for a longer life than expected to avoid falling short in your later years.

Factor in Healthcare and Aged Care Costs

Healthcare and aged care are significant expenses that increase as we age. The average annual cost of aged care is currently $41,799 — and could be significantly higher depending on the resident’s needs.

It’s also worth considering the significant reforms to aged care announced this year, where new entrants to residential care would make larger means-tested contributions based on their income and assets.

Medicare covers some healthcare expenses, but costs like private health insurance, medications, and potential aged care fees are crucial to consider.

A good rule of thumb is to set aside a portion of your superannuation or investments specifically for health-related costs. Allocating a buffer for unexpected expenses provides peace of mind and ensures you don’t deplete savings prematurely.

Estimate Income from Superannuation and Other Investments

Your superannuation will likely be a primary retirement income source, so understanding how to optimise it is essential. ASFA suggests that individuals retiring at 67 with a balance of $595,000 (couples $690,000) could fund a comfortable retirement. 

Here are some tips to make your super work harder:

— Salary sacrifice and concessional contributions (such as personal deductible contributions) can be tax-effective ways to grow your super.

— Review asset allocation within your super to ensure it’s aligned with your risk tolerance and time horizon.

— Consider setting up an income stream like an account-based pension to allow regular withdrawals without depleting your capital too soon.

For those with additional investments (e.g., property, shares), it’s essential to calculate the expected returns and factor them into your retirement income. Diversification across assets can protect against market downturns and support a steady income.  

Calculate How Much You’ll Need to Withdraw Annually

To maintain your lifestyle, estimate how much you’ll need to withdraw from your savings annually. Many financial advisers suggest following the 4% rule, which means withdrawing 4% of your total retirement savings each year to ensure it lasts 25-30 years. Please note that if you have an account-based pension, there is a compulsory minimum drawdown rate based on your age.  

If you require around $50,000 annually in retirement, you may need a minimum nest egg of $1.25 million. However, this amount can vary significantly depending on your retirement age, lifestyle, and other personal circumstances. Working with a financial planner is key for a more accurate and personalised estimate. They can use advanced financial modelling based on your unique financial position and goals to help ensure your retirement plans are realistic and sustainable.

However, a higher amount may be necessary if you have high healthcare costs, wish to leave a legacy, or plan to pursue an active retirement lifestyle.

Remember to account for inflation when calculating your annual spending.

Inflation erodes purchasing power over time, so adjusting your retirement savings goal is crucial. A 2-3% annual inflation rate can double your expenses over 25 to 30 years. For instance, a $50,000 yearly budget today would increase to around $83,000 in 25 years to maintain the same lifestyle.

To hedge against inflation, allocate a portion of your portfolio to growth assets like stocks or property, which historically offer returns that outpace inflation.

Regularly Review and Adjust Your Goal

Your retirement plan should adapt as life changes. Review your savings and investments every few years to ensure they’re on track.

Engaging with a financial adviser can provide valuable insights and allow you to adjust based on new goals, market conditions, or changes in health.

To lower the mental burden, Collective Wealth Advisers’ WealthTrack Program can be an excellent resource. This strategy involves regular progress meetings to help you align your savings plan with your retirement goals. Ongoing support lets you stay accountable, adjust for changes, and gain peace of mind.

The Bottom Line

Building a retirement strategy can feel overwhelming, but it’s a powerful way to ensure you’re set up for a comfortable, worry-free future.

If you take anything from this article, it should be the following:

— There’s no one-size-fits-all number: Everyone’s retirement goal will differ based on lifestyle choices, health, and family circumstances.

— Healthcare costs and inflation matter: Plan for medical expenses, long-term care, and inflation to avoid shortfalls later in life.

— Seek professional guidance: A tailored retirement strategy and regular check-ins with a financial planner can help ensure you’re financially secure when it matters most.

If you’d like assistance calculating your retirement needs, Collective Wealth Advisers is here to help. Our team is dedicated to providing clear, informed guidance every step of the way.

Contact us to book your Welcome Meeting and build a retirement plan tailored to your aspirations and security needs.

Planning for retirement can be overwhelming, but it’s one of the most important steps to ensure financial security in your later years. Without a solid plan, retirees may face unexpected challenges like struggling to cover rising living expenses or being unable to lead a lifestyle they’re accustomed to. We’ve seen firsthand how thoughtful planning can transform your retirement experience. In this blog, we’ll walk through five common mistakes to avoid as you approach retirement, giving you the confidence to secure a stable financial future.

Mistake #1: Jumping the Gun

Retiring too early without sufficient superannuation can put a strain on your finances. Many people underestimate how long their retirement savings need to last. With Australians living longer than ever — life expectancy is currently 85 for women and 81 for men — it’s essential to ensure your savings are enough to cover 20 to 30 years.   

Retiring without enough super or income sources can force you to make significant lifestyle adjustments or even return to work. It’s vital to assess whether you’ve built up enough superannuation or other income sources before you take that step into retirement.

Mistake #2: Forgoing a Retirement Plan

Retirement is not the time to “wing it.” Having a clear retirement plan ensures that you have a roadmap for managing your finances, lifestyle, and health. A retirement plan should account for your income streams (super, pensions, investments), your expenses, and your long-term goals.

According to research conducted by the Association of Superannuation Funds of Australia (ASFA), only half of adults in Australia have sought information on preparing for retirement. Without proper guidance, you may struggle to manage your expenses or miss out on tax-saving strategies. Establishing a retirement plan early on can help you navigate unexpected costs and ensure your superannuation lasts.

Mistake #3: Under-appreciating Inflation

Inflation can significantly erode the purchasing power of your savings over time. Many retirees make the mistake of not considering how rising costs will impact their retirement. Even a modest inflation rate of 2-3% can have a major effect on your expenses over a 20- to 30-year retirement. 

For instance, if your living expenses are currently $50,000 per year, they could rise to over $90,000 in 20 years with 3% annual inflation. Incorporating inflation protection into your financial plan is essential to maintaining your quality of life.

Mistake #4: Not Topping Up

We get it, life is unpredictable and it’s difficult to make additional contributions to your super. Whether it’s to cover medical bills, education costs, or other unexpected expenses, there are often reasons not to make an extra payment.

However, refraining from topping up your superannuation when you have the chance will reduce the potential for your retirement fund to grow. The power of compound interest means that extra contributions can dramatically increase your overall superannuation because funds compound as additional returns are earned.  

The non-concessional contributions cap is currently set at $120,000 — meaning you can contribute up to this amount each year without being subjected to extra tax. However, you can trigger the bring-forward rule to access non-concessional contributions caps from future years to contribute over $120,000 during a financial year without generating excessive contributions and paying additional tax. Keep this in mind if you’re looking to contribute a lump sum — an inheritance, for example. 

If you’re over 55 and are planning to sell your home, you could also benefit from Downsizer Super Contributions. In this instance, up to $300,000 from the sale of your home could be used to boost your superannuation fund without counting towards the contribution cap.

According to ASFA, a comfortable retirement lifestyle for singles requires a minimum of $49,462 annually. Even making small, consistent contributions will help to build long-term financial security and increase the likelihood that you have enough super for a comfortable retirement.

Mistake #5: Forgetting an Emergency Fund

An emergency fund is critical in retirement, especially with the increased likelihood of higher medical expenses. The risk of illness and injury rises with age, making it essential to have extra funds set aside for unexpected health-related costs. Without an emergency fund, you could be forced to dip into your superannuation, reducing the amount available for your daily living expenses. 

Aim for a fund that can cover at least six months of living expenses, and make sure it’s separate from your investment and super accounts for easy access.  

Strategies for a Strong Financial Future

Planning ahead is key to avoiding these common mistakes in retirement. There are many strategies and habits you can implement to ensure you’re setting yourself up for a comfortable retirement. Our WealthTrack Program has been carefully designed to help you navigate the complexities of retirement planning — keeping your financial strategy aligned with your evolving goals and changing circumstances. 

Some key actions we encourage our clients to follow include:

Managing Debts  

Entering retirement with high levels of debt can drain your retirement savings. Focus on paying down non-deductible debts like credit cards or personal loans. Keeping debt to a minimum will free up more of your superannuation and pension income for living expenses and leisure.

Budgeting Your Expenses  

Track your expenses and adjust your spending according to your retirement goals. Ensure your budget includes all necessary living costs, leisure activities, and unexpected health expenses.

Controlling Your Superannuation  

Once you’re eligible, consider converting your super into an account-based pension, which allows you to withdraw income while your earnings become tax-free. Keeping your super in an accumulation account means your investment earnings will be taxed at 15%. By converting to a pension, you eliminate that tax burden, maximising your savings.  

Leveraging Government Benefits  

Applying for the Age Pension as soon as you’re eligible is a great way to supplement your superannuation income. Depending on your assets and income, you could qualify for a full or partial pension. This can provide an essential income stream to support your retirement lifestyle.  

From staying consistent with your contributions to developing a retirement plan and accounting for inflation, mindful actions today can make all the difference tomorrow. A carefully considered financial strategy can help ensure your superannuation doesn’t fall short. By working with an expert adviser, you can optimise your retirement fund and enjoy the lifestyle you’ve worked hard to build.   

Should you decide to join our WealthTrack Program, we’ll regularly review your financial strategy through progress meetings and ensure that your retirement goals remain on track.

For more guidance on securing your financial future, contact Collective Wealth Advisers today. We’re here to help you navigate the complexities of retirement planning with confidence.

Retirement is a time to enjoy the fruits of your hard work and not worry about complicated tax obligations. However, changes to income streams can add a layer of confusion to tax time. As a retiree or someone nearing retirement, understanding your obligations is important to avoid unexpected penalties.

In this guide, we’ll break down what happens to your tax return once you retire and the best ways to approach tax post-retirement.

Do I Have to Pay Tax Once I’ve Retired?

For some retirees, a tax return may not be required. If your only source of income is the Age Pension or a similar government pension, you’re typically not required to lodge a tax return. However, you must still inform the ATO by submitting a non-lodgement advice form (read on for more details on completing this).

However, it’s not always that simple. You may still need to lodge a tax return in retirement if you’re receiving income on top of your pension payments — such as investments, part-time work, income from a business, or rental income.

The threshold for assessable income is currently set at $18,200, less any applicable tax offsets like the Seniors and Pensioners Tax Offset (SAPTO). Additional income streams that could push you over this threshold include:

• — Investment income
• — Part-time employment
• — Income from a business you own
• — Rental income from investment properties
• — Inheritance, insurance payouts, or compensation
• — Foreign income

If your total income surpasses the tax-free threshold, you’ll be required to lodge a tax return.  

Tax Offsets for Retirees

As a retiree, tax offsets can significantly reduce or eliminate your tax liability. Two key offsets to consider include the Seniors and Pensioners Tax Offset (SAPTO) and the Superannuation Income Stream Tax Offset.  

Seniors and Pensioners Tax Offset (SAPTO)

SAPTO is designed to reduce the amount of tax you need to pay. If you’re eligible, it could mean that even with additional income, you won’t have to lodge a tax return. To qualify, you must either:

• — Be eligible to receive the Age Pension or Department of Veterans Affairs (DVA) Pension, or
• — Pass a rebate income threshold test that determines your entitlement to a full or partial offset.

 

Superannuation Income Stream Tax Offset

While many retirees enjoy tax-free income from their account-based pension accounts, the Superannuation Income Stream Tax Offset applies in some cases. This tax offset typically applies to those receiving Defined Benefit schemes, such as the Commonwealth Superannuation Scheme (CSS) or Public Sector Superannuation (PSS) — lifetime, indexed pensions provided by the government.

Additionally, the offset may apply if you start drawing an income stream from your Superannuation before turning 60, such as through a disability pension.

In the above cases, you may be entitled to a tax offset. This can be 15% of the taxed element or 10% of the untaxed element.

The exact tax offset amount for the taxed element will be detailed on your PAYG payment summary. However, for the untaxed element, the offset is limited and will not appear on your payment summary. The current limits are:

• — $11,875 for the 2023–24 income year
• — $10,625 for the 2021–22 and 2022–23 income years
• — $10,000 for 2020–21 and earlier income years

 

Tax Returns for Trustees of an SMSF

If you’re the trustee of a Self-Managed Super Fund (SMSF), you are required to lodge a tax return, even in retirement. Managing an SMSF comes with additional responsibilities, including tax reporting and compliance. Ensuring that you meet all your obligations is crucial to avoid penalties from the ATO.  

Tax-Free Super Pension Recipients

If you’re receiving a tax-free super pension, and it’s your only source of retirement income, you generally won’t be required to lodge a tax return. This applies to many retirees who receive their income entirely from a tax-free superannuation pension, allowing them to enjoy their retirement without the burden of annual tax filings.

Claiming Franking Credits

If you’ve received franking credits during the financial year but aren’t required to lodge a tax return, you can still claim a refund for these credits. This is especially relevant for retirees who might not have other income that requires a tax return. Fortunately, the process is straightforward and can be done in several ways to suit your preference:

1. Online: Simply log into your myGov account linked to the Australian Taxation Office (ATO) and follow the instructions to apply for a refund.

2. Phone: You can contact the ATO directly and request a refund over the phone. They can guide you through the process and ensure everything is completed correctly.

3. Mail: Alternatively, you can complete and send the Application for Refund of Franking Credits for Individuals form by post. This form can be downloaded from the ATO website or requested by phone.

Remember, claiming these credits helps ensure you’re not missing out on benefits you’re entitled to.  

When You Don’t Need to Lodge a Tax Return

For retirees or anyone not required to file a tax return, it’s important to notify the Australian Taxation Office (ATO) by submitting a non-lodgement advice form. This simple step lets the ATO know that you will not be filing a return for the financial year, preventing any unnecessary follow-ups or queries.  

You can notify the ATO in one of two ways:

1. Online Submission: You can easily complete and submit the non-lodgement advice form through your myGov account. This option is convenient and allows you to manage your tax affairs from the comfort of your home.

2. Through a Tax Agent: If you prefer, your tax agent can take care of this for you. They can complete and submit the form on your behalf, ensuring everything is handled correctly.

By submitting this form, you ensure that your tax records are up-to-date and reduce the likelihood of any unexpected correspondence from the ATO.  

If in doubt, seek expert advice…

Understanding whether or not you need to lodge a tax return in retirement can be complicated, especially with multiple income sources and tax offsets to consider. However, early planning and expert advice from a financial adviser can help you stay compliant and maximise your tax benefits. Seek guidance from a financial expert to ensure you meet all your tax requirements while making the most of available tax offsets.    

At Collective Wealth Advisers, we’re here to help you navigate the complexities of retirement tax planning, ensuring you remain compliant while making the most of your retirement income. Let us assist you in planning today, so you can focus on enjoying tomorrow.

Contact us today to learn how we can help you achieve your retirement goals.

Are you concerned about whether you’ll have enough money saved to enjoy a comfortable retirement?

Many pre-retirees share this concern, wondering how to best maximise their wealth before they stop working. The good news is there’s a simple strategy to help alleviate these concerns:

Investing early.

By starting your investment journey now, you can mitigate market risks, build a diversified investment portfolio, and set yourself up for a comfortable retirement well ahead of reaching your retirement age.

The Early Bird Gets The Worm

Let’s dive into why early investing is a good start for securing a comfortable retirement.

1. Harnessing the Power of Compound Growth

One of the most compelling reasons to start investing early is the power of compounding.

Compounding is the process where the returns on your investments begin to generate their own returns. This snowball effect means that even modest, regular investments can grow substantially over time.

For instance, if you start investing in your 30s, the earnings from your investments will compound over the decades, significantly boosting your wealth by the time you retire. The key is to let time work in your favour – the earlier you start, the more pronounced the compounding effect.

2. Mitigating Market Volatility – Investment Timeframe

Investing early allows you to ride out market fluctuations. Markets go through cycles of highs and lows, and early investing gives your portfolio time to recover from downturns. Over the long term, the market tends to rise, and early investments can benefit from these gains.

By spreading your investments over a longer period, you reduce the impact of short-term volatility. This strategy, known as dollar-cost averaging, involves regularly investing a fixed amount of money, which helps smooth out the effects of market highs and lows.

3. Building a Diversified Investment Portfolio

Starting early gives you the luxury of time to build a well-diversified investment portfolio. Diversification involves spreading your investments across various asset classes—such as stocks, bonds, and real estate—and within different market sectors. This approach reduces risk because it lessens the impact of a poor-performing investment on your overall portfolio.

By investing in a variety of assets, you can protect your investments from market-specific risks. For example, if one sector underperforms, gains in another can offset those losses. A diversified portfolio is a robust way to achieve long-term financial growth.

Overcoming Common Investment Concerns

While the idea of early investing is appealing, it’s natural to have reservations and concerns about entering the market. However, with the right knowledge and strategies, these concerns can be effectively managed.

1. Understanding Risk and Return

It’s natural to be concerned about the risks associated with investing. However, understanding the relationship between risk and return is very important. Generally, higher potential returns come with higher risks. The goal is to find a balance that aligns with your financial goals and risk tolerance.

By investing early, you have the advantage of time to adjust your strategy as needed. You can take on higher-risk investments with the potential for higher returns when you’re younger and gradually shift to more conservative investments as you approach retirement.

2. The Importance of Financial Education on a High Level

Investing can seem daunting, but it’s essential to educate yourself about different investment options and strategies. Financial advisers, like our team at Collective Wealth Advisers, can help you navigate the complexities of investing and develop a plan tailored to your needs with expert financial advice.

By understanding the basics of investing and staying informed about market trends, you can make more confident and informed decisions. This knowledge will empower you to take control of your financial future and achieve your investment goals.

Start Investing Today for Long-Term Prosperity

Investing early is one of the most effective ways to build wealth and secure a comfortable retirement.

As the saying goes – “A good plan executed today is better than a perfect plan executed tomorrow.”

By taking advantage of compound growth, mitigating market volatility, and building a diversified investment portfolio, you set yourself up for long-term financial success.

At Collective Wealth Advisers, we’re here to guide you every step of the way through your retirement journey. Our experienced financial planners can help you create a personalised investment strategy that aligns with your goals and risk tolerance.

Don’t wait – start investing early and take the first step towards a comfortable and secure retirement.

As retirement approaches, many Australians face the question of whether their super balance will be sufficient to support a comfortable retirement for the next 20 years.

Recent research from the Super Members Council of Australia has revealed some alarming statistics:

When they reach their life expectancy age, 80% of men and 90% of women have no super left. This highlights the need for retirees to seek strategic financial planning to ensure a stable retirement.

Adding to this challenge, more than 40% of workers are now retiring with mortgage debt, a significant increase of 16% over the past two decades. This means that many retirees are not only relying on their superannuation but also facing the burden of ongoing debt, making it even more critical to have a robust financial plan in place.

Insufficient Super Balances

A study by Innova Asset Management using APRA data highlights the problem even more. It found that around 60% of MySuper accounts owned by pre-retirees (aged 60 to 64) have less than $100,000 saved. This amount is not nearly enough to support a comfortable retirement for two decades, meaning many retirees will have to rely heavily on the Age Pension.

Given these statistics, it is evident that a significant number of Australians need to seek financial advice well before retiring. This advice is crucial for boosting retirement savings and exploring alternative ways to enhance retirement income.

Investing Through Retirement

Staying invested in a well-balanced mix of assets can provide the best chance of achieving retirement goals. Your super needs to grow to keep up with inflation and the rising costs of living.

With retirements potentially lasting over 30 years, having a long-term investment strategy is essential.

But as we age, our tolerance for investment risk typically decreases. Younger individuals can afford to take more risks as they have time to recover from potential losses.

However, as retirement approaches, the focus shifts to preserving wealth and ensuring a steady income stream. Despite this, it’s important to maintain some exposure to growth assets to keep up with inflation, given the increased life expectancies.

Optimal Investments for Retirement Income

Retirees should consider investments that offer stability and income generation, such as:

– High Dividend Paying Australian Shares: These include bank shares and mining companies, known for their reliable dividends.

– Credit, Mortgage & Bonds Funds: These funds offer attractive yields, especially as interest rates rise.

– Term Deposits and High-Interest Savings Accounts: With recent increases in interest rates, these options have become more appealing due to their low risk and steady returns.

Credit and Mortgage Funds

Mortgage funds pool investors’ capital to lend to corporates and property developers, offering yields from 6% to 12% p.a. However, higher yields come with higher risks, particularly in property development.

Australian Shares

Australian shares are renowned for their high dividend yields, typically around 4.2%, plus additional income from franking credits. Despite stock prices’ inherent volatility, the potential for long-term capital gains makes them a valuable part of a retirement portfolio.

Retirees Should Seek Advice

The statistics we’ve discussed show the importance of seeking the right advice from a suitable financial planner to boost your superannuation savings well before retirement. This might also mean considering more aggressive investments to ensure a comfortable retirement. Unfortunately, this goal is still out of reach for many Australians.

At Collective Wealth Advisers, we’re here to guide you through every step of your retirement planning journey. We know that change is a constant, and we want to help keep your financial goals on track and make the best decisions possible for your retirement and investments.

Contact us today to learn how we can help you maximise your investments and achieve your retirement goals.

Understanding the different pensions available as you approach retirement can help you make more informed decisions about your financial future.

At Collective Wealth Advisers, we want to simplify this process by explaining the key differences between two types of pensions commonly used by Australian retirees:

An Account-Based Pension and a Transition to Retirement (TTR) Pension.

This article will compare these two pension strategies, helping you have more comprehensive discussions with your financial adviser and navigate your retirement planning effectively.

Comparison of Account-Based Pension and Transition to Retirement Pension

Below is a quick comparison of an Account-Based Pension and a Transition to Retirement Pension.

Account-Based Pension Explained

An Account-Based Pension allows retirees to convert their superannuation savings into a regular income stream. You can start an Account-Based Pension once you’ve reached your preservation age and have fully retired.

Please refer to the Australian Taxation Office’s (ATO) guidelines for your specific preservation age. Please note that the preservation age will increase to 60 for everyone from 1 July 2024.

Date of birth	Preservation age
Before 1 July 1960	55
1 July 1960 – 30 June 1961	56
1 July 1961 – 30 June 1962	57
1 July 1962 – 30 June 1963	58
1 July 1963 – 30 June 1964	59
From 1 July 1964	60

 

Benefits of Account-Based Pensions

One key advantage is their flexibility. You can withdraw any amount above the minimum annual pension income factor, allowing you to manage your retirement income according to your needs.

Another significant benefit is the tax-free earnings once you reach the age of 60. At this point, any income you receive from your Account-Based Pension is entirely tax-free. Additionally, the earnings on your investments within the pension are generally tax-free, which can enhance your retirement savings and provide more financial security.

You can also make additional lump sum withdrawals, which can help with unexpected expenses.

Disadvantages of Account-Based Pensions

There are a few disadvantages to Account-Based Pensions that should be considered.

One such disadvantage is the Transfer Balance Cap, which restricts you from transferring up to $1.9 million into an Account-Based Pension. Any superannuation funds above this cap must either remain in the accumulation phase, where earnings are taxed at the concessional rate of 15% or be withdrawn from super entirely.

The income from an Account-Based Pension depends on market performance. If the market does well, your income might increase, but if it does poorly, your income could decrease. This means your retirement income is only guaranteed to be consistent or lifelong if the market performs well.

Transition to Retirement (TTR) Pension Explained

A Transition to Retirement (TTR) Pension allows you to access a portion of your superannuation while still working, provided you have reached your preservation age. This strategy is particularly beneficial for those who wish to reduce their working hours or salary sacrifice more into their super.

Read more about the TTR Pension in our previous article here.

Benefits of TTR Pensions:

One of the primary benefits of TTR Pensions is their work flexibility. If you reduce your working hours, a TTR Pension can supplement your income, ensuring a steady flow of funds and a smoother transition into retirement. This is particularly useful for those who have yet to retire fully but wish to scale back their workload.

Another significant advantage is the tax benefits. Before age 60, your TTR Pension income is taxed at your marginal tax rate with a 15% offset. After turning 60, this income becomes entirely tax-free, leading to substantial tax savings and increased disposable income. You can’t access a TTR before 60, starting from 1st July 2024.

TTR Pensions also provide flexible investment options. You can choose from various strategies, tailoring your investments to match your risk tolerance and financial goals. This flexibility can enhance the growth of your retirement savings despite market fluctuations.

Disadvantages of TTR Pensions:

One downside of TTR Pensions is the withdrawal limits. You can only access between 4% and 10% of your super balance each year. This can limit your financial flexibility if you need more significant sums.

Another drawback is the restriction on lump sum withdrawals. Unlike Account-Based Pensions, TTR Pensions don’t allow lump sum withdrawals unless you fully retire or meet specific conditions. This can be a problem if you need a large sum for unexpected expenses.

Another disadvantage to consider is the investment returns within a TTR Pension. Returns are taxed at up to 15%, which is higher than the tax-free status of Account-Based Pensions. This could reduce the growth of your super savings.

Making the Right Choice for Your Retirement

Choosing between an Account-Based Pension and a Transition to a Retirement Pension depends on your circumstances and retirement goals. At Collective Wealth Advisers, we recommend considering the following:

Retirement Status:

If you have met the retirement definition/or met a condition of release and wish to retire fully, an Account-Based Pension might be more suitable due to its flexibility and tax advantages.

Current Employment:

If you are still working but want to reduce your hours or enhance your super contributions, a TTR Pension can provide additional income while transitioning to full retirement.

Income Needs:

Evaluate your current and future income requirements to determine which pension strategy aligns best with your financial goals.

Collective Wealth Advisers is committed to helping you navigate these options and create a retirement plan that ensures financial security and peace of mind.

If you need further assistance or personalised advice, please contact Collective Wealth Advisers. Our team of experts are here to guide you through every step of your retirement planning journey.

Choosing the right financial planner for your retirement is an important decision Australians make in their lives. Yet, many are reluctant to reach out and seek advice from a financial adviser.

A report from the Australian Securities and Investments Commission revealed that just 27% of Australians actively seek support from a financial planner. This isn’t due to undervaluing an adviser’s expertise; rather, everyday expenses and the misconception that financial advice is a luxury reserved for the wealthy are holding people back.

Investing in retirement planning advice from a financial adviser may add pressure in a cost-of-living crisis. Still, with the proper guidance, the benefits can far outweigh the costs.

Advisers Have the Expertise to Guide the Way

A financial adviser is essential for navigating the intricacies of retirement planning. They provide expert guidance on managing investments, optimising tax strategies, and organising your estate plan. Selecting the right adviser is crucial for reaching your retirement objectives.

Here’s a helpful guide to assist you in choosing the ideal financial planner for your retirement journey.

Key Considerations When Choosing a Financial Adviser

Check Their Experience and Credentials

Start by looking into the experience of potential advisers. If you’re looking for someone to help with your retirement planning, ensure they have plenty of experience in this area. This way, they’ll be better equipped to meet your specific needs.

Do They Have a Good Reputation and References?

Be sure to research a financial adviser’s reputation by reviewing the reviews and testimonials from current and past clients. Consider asking for references and speaking with these clients about their experiences with the adviser. A strong reputation for reliability and effectiveness is a good indicator of quality service.

Aligning Your Communication Styles

Good communication is the key to a great relationship with your financial adviser. Make sure their communication style matches your preferences.

Does the adviser keep you updated regularly?

Are their explanations clear and easy to understand?

Clear and proactive communication from your adviser will make the retirement planning process smoother and reassuring.

Evaluate the Adviser’s Approach

For example, do they consider your entire financial picture? A great adviser will look at all aspects of your life and finances, such as investments, taxes, estate planning, and overall financial health. They should create a customised plan that aligns with your unique goals and requirements.

Assess The Fee Structure

Advisers can charge fees in various ways, such as hourly rates, flat fees, or a percentage of assets under management. It’s important to understand their fee structure and what services are included clearly. This way, you can choose an adviser whose fees fit your budget and avoid any unexpected costs later.

Consider the Adviser’s Fiduciary Duty

A fiduciary is required by law to prioritise your interests, offering additional security and trust for clients. An adviser’s fiduciary duty means they are bound to put your needs ahead of their own when giving financial advice.

Make Your Final Decision

After considering these factors, narrow down your options and meet with potential advisers.

Prepare a list of questions to ask during these meetings, such as their approach to retirement planning, how they handle market fluctuations, and their strategies for tax optimisation. Meeting face-to-face (or virtually) will give you a better sense of their personality and whether they fit you well.

Enjoy a Smooth Retirement Journey

Finding the right financial adviser for your retirement is key to feeling secure and at ease about your future.

Think about their experience, reputation, communication, approach to planning, fees, and whether they have a fiduciary duty. Doing this lets you find an adviser who understands your needs and goals, making your retirement journey much smoother and more enjoyable.

At Collective Wealth Advisers, we’re here to guide you through every step of your retirement planning journey. We know that change is a constant, and we want to help keep your financial goals on track.

Our WealthTrack Program is our commitment to an ongoing partnership with our clients. It is designed to educate, adapt, and implement timely strategy shifts that keep your plan on track.

Contact us today to learn how we can help you make the most of your investments and achieve your retirement goals with our WealthTrack Program.

Our research partners, Innova Asset Management, have released their Quarter 2 – 2024 Market Commentary report.

Here’s a quick look into the dynamics that shaped the financial terrain:

– In January, expectations for rate cuts in the US were highly optimistic and unrealistic. Many expected the first rate cut to happen as early as March, with 6-7 cuts of 0.25% each predicted for 2024.

– This optimism helped boost equities, but as the quarter progressed, the expected date for the first rate cut was delayed, and the number of expected cuts significantly reduced.

– Since October/November 2023, consumer sentiment has improved, reflecting a more positive economic outlook. Positive economic data, especially from the US, has led to increased optimism, higher bond yields, and a new “reflation” narrative for 2024.

– While GDP growth revisions have been positive, there are concerns about sustainability. Consumers have shifted from spending excess savings to using credit cards, which isn’t sustainable long-term. However, increased household wealth has made this more manageable, creating a “wealth effect” that benefits consumers.

– Among 55 managers in the HUB24 Balanced SMA universe, three of Innova’s portfolios ranked in the top five for performance in March. Over a three-year period, three of our portfolios remain in the top ten performers.

Watch the full video breakdown below, or read the attached commentary here on the current key issues, a comprehensive review of Quarter 2, and how we are positioning our Innova Active portfolios for clients.

What has happened in markets | Q2 2024

Market outlook & positioning | Q2 2024

Are you often wondering how you’ll manage financially once you step away from the workforce?

With increasing lifespans and fluctuating global financial markets, ensuring your retirement savings lasts is more crucial than ever. Many retirees find themselves trying to figure out how to spend their savings effectively, risking not fully benefiting from their years of hard-earned superannuation.

Thankfully, with the right strategies and modern financial solutions, you can find a balance between enjoying your retirement now and securing your finances for the future.

Maintaining a steady income once you retire is essential, and thankfully, it doesn’t mean giving up the financial stability you’ve grown accustomed to during your working years. Adjusting our financial mindset and planning appropriately can make transitioning from a regular paycheck to retirement income seamless and stress-free.

Continuous Income in Retirement

Many people are used to the comfort of a steady income stream during their working years. Entering retirement shouldn’t mean giving up this stability. Shifting from earning a salary to relying on various sources of retirement income can be smooth with the proper planning and adjustments to our usual financial perceptions.

Superannuation forms a crucial component of your retirement strategy, but it’s not the sole source. Most retirees will also draw income from other investments such as shares, property, or even the Age Pension (more on the Age Pension below).

Diversified Retirement Portfolio

Like any investment strategy, a diversified approach to sourcing retirement income helps balance risks and returns.

A fulfilling retirement is a goal shared by all, and it comes with a common requirement… income.

Retirement products designed to provide lifetime income offer guaranteed payments, ensuring a reliable income stream regardless of lifespan. With a robust investment portfolio, you can spend confidently and enjoy your retirement without financial worries.

Understanding Key Retirement Income Sources

Let’s explore three primary sources of income for retirees, clarifying some common misconceptions along the way.

Income from Your Super: Account-based Pensions

One popular option is converting your superannuation into an account-based pension, which provides regular income during retirement. You have the flexibility to decide the frequency and amount of your withdrawals as long as they meet the minimum withdrawal requirements. While this allows for adjusting withdrawals to match inflation, there’s a risk of depleting your funds depending on how much you take out and the returns on your investments.

A common and critical misunderstanding about account-based pensions is the assumption of endless payouts. In reality, once your super balance is exhausted, so too are the payments.

Lifetime Income Streams (Lifetime Annuities)

Lifetime income streams, such as lifetime annuities, offer a fixed, regular income in exchange for a lump sum investment from your super or savings. Our annuities can be tailored with options for fixed payments or those adjusting with inflation, interest rates, or market changes. Annuities ensure income for life, covering you and potentially your spouse, thus safeguarding against longevity risk.

Combining an annuity with an account-based pension is not only possible but advisable. This strategy allows you to secure a portion of your income for life, enhancing confidence in your financial stability throughout retirement.

Income from Age Pension (Centrelink Age pension)

Upon reaching the eligible age, the Age Pension may serve as a supplementary income source, subject to Centrelink’s assets and income tests. While the Age Pension provides a safety net, it often falls short of covering all living expenses, making it clear that relying solely on this government benefit is insufficient for a comfortable retirement.

Crafting a Resilient Retirement Portfolio

Intelligently blending your income sources ensures you have adequate funds for today and the future.

A comprehensive retirement income plan should ensure that all your bases are covered by establishing a safety net income that covers basic living expenses. This can be achieved by supplementing the Age Pension with annuities, securing a steady flow of funds for your essential day-to-day needs.

For more flexible financial needs such as dining out or travel, allocate income from less certain sources like account-based pensions. This approach allows you to enjoy discretionary spending without impacting the stability of your core financial needs in retirement.

A strategic approach to retirement income planning ensures that your transition from earning a salary to utilising your retirement savings doesn’t keep you up at night. By understanding and utilising various income sources effectively, you can achieve both the peace of mind and the financial stability needed to fully enjoy your retirement years.

Collective Wealth Advisers provides a financial roadmap centred around making the most of your money. Through proven wealth planning, tax minimisation and cash management strategies, we facilitate clarity and security when you need it most throughout your retirement journey.

Our team of experienced advisors is available to assist you throughout the entire process and provide answers to your questions. Get in touch with us now to begin your retirement planning journey.

Are you facing an unexpected early retirement? The uncertainty can be overwhelming, but fear not – you might be better prepared than you think.

Many Australians find themselves retiring earlier than they had in mind. While the average planned retirement age hovers around 65, the reality is closer to 56. Unexpected circumstances like job loss, health issues, or caregiving responsibilities can force us into retirement prematurely.

The ideal retirement varies from person to person, whether globe-trotting, volunteering, or quality time with family. Regardless of the circumstances, careful planning and goal setting can help you achieve your plans or, at the very least, prepare you well if you are unexpectedly forced into retirement.

If early retirement catches you off guard, don’t fret. This post will explore four crucial steps to make the most of an unexpected retirement.

1. Assess Your Current Financial Situation

If retirement knocks on your door earlier than expected, evaluating your financial standing is vital. Begin by checking your superannuation balance to determine the resources available if you retire unexpectedly.

When assessing your situation, consider your assets, debts, and any income you might get from sources like government support. For example:

– How much do you have in your superannuation?

– Do you have any savings you’ve accumulated?

– Do you still need to pay debts like credit cards or mortgages?

– Can you get income from personal investments, such as stocks or property?

Additionally, it’s worth exploring whether you meet the criteria for the Government Age Pension.

Date of birth	Preservation age
Before 1 July 1960	55
1 July 1960 – 30 June 1961	56
1 July 1961 – 30 June 1962	57
1 July 1962 – 30 June 1963	58
1 July 1963 – 30 June 1964	59
From 1 July 1964	60

2. Calculate Your Living Expenses

Once you’ve grasped your financial assets and income streams, it’s time to calculate your day-to-day expenses. This will give you a clear picture of the annual budget you’ll need during retirement.

These expenses encompass various aspects of retirement life, such as housing costs, utility bills, groceries, entertainment, vacations, insurance, home and vehicle maintenance, and healthcare expenses.

Understanding your financial needs will help gauge whether your superannuation or savings can sustain your desired lifestyle.

3. Know When You Can Access Your Superannuation

Accessing your superannuation typically depends on your preservation age, which is determined by the government and ranges from 55 to 60 based on your birthdate. To access your superannuation, you must fulfil certain criteria:

– You must permanently retire.
– Opt for a transition to retirement while you are still employed.
– Cease employment with an employer after turning 60.
– Reach the age of 65, even if you continue working.

In some exceptional circumstances, you may be eligible for early superannuation access due to financial hardship, compassionate reasons, or permanent disability.

4. Explore Income Options With An Account-Based Pension

If you face early retirement unexpectedly and meet the requirements, exploring your income options is important. One of those options is to receive your superannuation as a lump sum payment, which means you’ll get all your retirement savings at once.

Another option is to transfer your superannuation into a dedicated retirement account, an account-based pension. An account-based pension is a financial product designed specifically for retirees. Here’s how it works:

Regular income payments

When you choose an account-based pension, your retirement savings remain invested, and you receive regular income payments from the invested balance. These payments are typically made on a regular schedule, such as monthly, quarterly, or annually. The amount you receive is calculated based on the balance of your account and factors like your age and the performance of your investments. Think of it as receiving a regular income similar to a salary or wages during your working years.

Flexible access

Unlike taking a lump sum payment, which provides you with all your retirement savings at once, an account-based pension allows you to access additional funds from your superannuation whenever you need them. This flexibility can be valuable, especially if unexpected expenses arise during your retirement.

Investment opportunities

With an account-based pension, your remaining balance is typically invested in various assets, such as stocks, bonds, and other investments. This means that your retirement savings have the potential to continue growing through investment returns. While this growth is not guaranteed and comes with some risk, it allows you to benefit from potential increases in your retirement wealth while still receiving regular income payments.

By considering these income options and understanding how an account-based pension works, you can make informed decisions to navigate unexpected retirement more confidently while maintaining financial stability.

Get Professional Financial Advice

Planning for an early retirement frequently depends on your pension for an extended duration. While this might seem daunting, seeking advice from a financial adviser can offer valuable insights and bolster your financial confidence. The earlier you embark on your retirement planning journey, the greater control you can exert over your financial future.