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Preparing your finances for retirement

Posted by : Premraj | Posted on : Wednesday, August 26, 2015


Planning and preparing your finances, gives you the best chance of achieving the financial security and lifestyle you would like to enjoy throughout your retirement years. If you’re unable to work due to illness or disability, and therefore have retired earlier than anticipated, you may be entitled to benefits through superannuation claims, life insurance, or other insurance policies. In all circumstances, careful consultation with a financial advisor and industry expert can ensure that you enter your retirement with a viable financial plan.

Managing your retirement income

1. Employment considerations

When preparing your finances for retirement, it is important to review your outstanding financial rights as an employee. This will involve considerations of;

– Lump sum payments from your employee for unused annual or long service leave

– Bona fide redundancy payments if your retirement begins as a result of being made redundant. Payments under a bona fide redundancy are tax-free up to a limit based on the number of years you had worked for that employer.

– Participation in an approved early retirement scheme. If you are an approved participant, you may pay less tax on payments you receive under the scheme.

– If you’re selling your business, whether or not the any tax concession applies to your small business in retirement.

2. Revise your financial plans

A sound financial plan is one that involves the consideration of how you will fund your retirement lifestyle in the long term, not just in the immediate following years. It is important to consider how you wish to spend your retirement;  whether you plan to travel, move into a retirement village or take up an expensive new hobby.  With these considerations in mind, it is important to think about how you can use your different income sources to fund the different stages of your life.

Revising your financial plan involves a thorough review of;

– the amount of money you will need to live on based on your specific retirement plans

– retirement investment options

– tax issues

– the availability of any government assistance

– What assets  you have and how much they are worth

– How much super you have and when you can access it

– When you can apply for the age pension and whether you are likely to be eligible

– Budget planning

Preparing a thorough financial plan that is based on your specific view of your retirement years, can ensure that you are able to enjoy the years in the way that you had intended without any financial pressures.

3. Accessing your super

In Australia, you can receive your super as a super income stream, super lump sum or a combination of both. A super income stream involves regular part-payments from your super fund, whereas the super lump sum option involves the withdrawal of some or all of your super in a single payment. Your choice of super withdrawal may affect the amount of tax you pay, it is therefore wise to receive consultation from an experienced financial advisor to determine which withdrawal method is the most appropriate for your specific financial situation.

4. Taking advantage of your entitlements

Taking full advantage of the various Government led financial schemes for retirees is an important component of financially preparing yourself for retirement. Eligibility for age pension, travel concessions, cheaper medicine, reduced council rates and discounts through the Seniors Card, can reduce any financial pressures involved throughout your retirement.

It is worthwhile talking to an experienced financial advisor if you seek to establish a long term plan to fund your retirement or want to know how to withdraw your superannuation savings. A financial advisor can review your total financial status and offer informed advice about which financial options are the most viable considering your income, financial situation and retirement goals. Early and careful preparation of finances before retiring can ensure that your retirement years are spent in the way you have intended, supported by the savings you have worked hard to achieve.



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