Planning

Retirement will be a major financial turning point for most people. You no longer have a regular income from a full-time job so you have to plan to make the most of your superannuation, other money you have set aside and the Age Pension if you are eligible.

People moving into retirement want to be free of financial worries and want to enjoy a comfortable retirement.

To achieve this, you need to consider the following:

  1. How much money should you have for retirement?
  2. When is a good time to retire?
  3. How much income will you need to cover expenses?
  4. How do you use your superannuation when you retire?

How much you will need to save for in retirement depends on:

  • Your lifestyle, general health and financial commitments.
  • Whether any Centrelink entitlement can be received.
  • If you plan to use some of your super to pay off a mortgage, buy a new car, or take a holiday.
  • If you plan to save for future care in old age.

A budget planner is a useful tool to help you determine an annual amount.

You may also want to consider getting financial advice to assist you with your retirement plans. Read more about Water Corporation Superannuation Plan’s preferred financial planners - Western Financial.

ASFA Retirement Standard – how much you'll need

The ASFA Retirement Standard shows the annual budget needed to fund either a comfortable or modest standard of living in retirement.

The most recent national figures released for the ASFA Retirement Standard (September Quarter 2015) show the budgets for those aged around 65 are the following:

  Single Couple
Modest $23,695 a year $34,090 a year
Comfortable $42,962 a year $58,915 a year

Note: The figures in each case assume that the retiree(s) own their own home and relate to expenditure by the household. This can be greater than household income after income tax where there is a drawdown on capital over the period of retirement. Single calculations are based on female figures.

What is a Modest vs Comfortable retirement lifestyle?

Modest retirement lifestyle
Better than the Age Pension, but still only able to afford fairly basic activities.

Comfortable retirement lifestyle
Enabling an older, healthy retiree to be involved in a broad range of leisure and recreational activities and to have a good standard of living through the purchase of such things as; household goods, private health insurance, a reasonable car, good clothes, a range of electronic equipment, and domestic and occasionally international holiday travel.

Find out more about the Retirement Standard on the ASFA website.

When should you retire?

This will depend on your personal circumstances. By delaying your retirement for a few years you could:

  • Make additional contributions to boost your retirement savings.
  • Work part-time and transition to retirement. You won't have the demands of a full-time job and may be able to draw on some of your super to supplement part time income.

To assist in your decision, try the Moneysmart Retirement Calculator.

How do you use your superannuation?

There are a number of options for your current super account when you permanently retire after your preservation age:

  • Receive a cash benefit and take your money out of the super system altogether. (Examine the tax implications if you do this.)
  • Roll it over into a retirement income stream, i.e. Account-Based Pension or Transition to Retirement product.
  • Leave your super where it is until you're ready to access it.
  • Do any combination of the above.

Make sure the super you have saved during your working life works for you in retirement by:

  • Minimising tax.
  • Maximising income.

What is retirement income?

Retirement income products let you turn the super you've saved into regular income payments. But do choose the right sort of product, or you could end up losing valuable government benefits or paying unnecessary taxes. This can be complicated, so take your time, read more and consider getting professional advice.

Income Stream Products

The Water Corporation Superannuation Plan has two Income Stream products:

  • An Account-Based Pension
  • A Transition to Retirement Pension

A Pension is an account based income stream that allows you to change the level of income you receive each financial year (within the Commonwealth Government's limits), so it can adapt to your changing financial circumstances. You also retain access to your funds and can make lump sum withdrawals at any time. A Pension provides tax effective income for as long as there is money in your account.

Transition to Retirement (or Phased Retirement) allows you to access your superannuation benefits, once you have reached preservation age, in the form of a non-commutable income stream without having to retire or reduce your hours of work.

A non-commutable income stream cannot be converted into a lump sum payment.

  • You are able to access this benefit while you are still employed; and
  • You are unable to make lump sum withdrawals until a condition of release is met such as permanently retiring from the workforce or reaching age 65.

Once a condition of release is met (such as those described above), your Transition to Retirement account will automatically switch to a Pension arrangement.

Read more about the Products available with Water Corporation Superannuation Plan.