Retirement Planning

Before retirement age

Retirement planning is something that is never too early to start. It is commonly know that if we don’t plan part of our life, we might not get to where we want to be. Read about current baby boomers dark retirement situation.

We are here to assist you turn your retirement goals into reality. There are many options when it comes to retirement planning and we offer expert advice in the following areas:

Transition to retirement pensions

Transition to Retirement Pensions (TRIP) allows over 55’s to keep working part time, while drawing down some of their super benefits and supplementing their salary in the form of a pension or income stream. Other advantages are that there is less tax, super funds can be boosted through salary sacrifice and retirement can be eased into.

Allocated pensions

An account-based pension (also known as an allocated pension) is a regular income that you receive in your retirement or when you reach preservation age. It is drawn from your super benefits and provides the security of regular payments.

So why are allocated pensions so popular? Why don’t retirees just withdraw their funds out of super and dump the lot into a term deposit or savings account, or even use their super to buy other investments such as an investment property or shares?

The major reason here is tax. Allocated pensions save you tax compared to most other strategies in retirement. That’s because any investment earnings in an allocated pension – interest, dividends, capital gains – are tax free (age 60 and above). In comparison, interest made on a term deposit or rent received on an investment property held outside the super environment are subject to tax at the retiree’s marginal tax rate.

Salary sacrifice & salary sacrificing for super

Salary sacrifice is an agreement with an employer, where an employee agrees to forego or “sacrifice” part of their future salary or wages in return for their employer providing benefits of a similar value. Subject to the agreement, an employee can sacrifice their salary or wages into a variety of benefits, including superannuation.

Having super contributions setup under an effective salary sacrifice arrangement, can mean many benefits such as:

  • Super contributions to complying super funds are not a fringe benefit
  • Super contributions are deductible if you are under 75 years old
  • Salary sacrifice reduces your assessable income
  • Super contributions are concessional taxed in the fund
  • Contributions are taxed at 15%, which is less than if you were to take the money as salary
salary-sacrifice-benefits
Long term benefits of salary sacrifice

Lifetime annuities

HOW ANNUITIES WORK

You can purchase an annuity (also known as lifetime or fixed-term pensions) from a superannuation fund or life insurance company using your super or other savings.

HOW MUCH INCOME WILL I RECEIVE?

The income you will receive is fixed when you purchase the annuity. Your income can be indexed to increase each year, either by a fixed percentage or in line with inflation.

HOW OFTEN ARE INCOME PAYMENTS MADE?

Income payments can be made monthly, quarterly, every 6 months or annually.

HOW LONG DO INCOME PAYMENTS LAST?

It is your choice as to the term of the payments when you purchase the annuity. They can be either the rest of your lifetime or for a fixed number of years.

Questions you should ask before buying

All advisors at Peacheys Investment Services Pty Ltd hold a wide range of professional qualifications. See our about us page for full disclosure of our qualifications.

Peacheys Investment Services Pty Ltd holds an Australian Financial Services License (AFL) 238154 and an Australian Credit License (ACL) 238154.

You will always be speaking to the person who has helped you with your finance advice.

We are paid in the form of fees and/or commissions that are clearly disclosed and agreed upon by both parties.

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After Working “A New Beginning”

Once you hit retirement, there is undoubtedly more time for leisure, holidays, volunteer work in the community, i.e. Meals on wheels. Therefore, maximising government entitlements through receiving an income stream from your superannuation can contribute to greater freedom and peace of mind.

Centrelink maximisation and monitoring

Using all government entitlements to help you maximise your financial position is imperative at any stage of life, however, we find that it often makes a much more significant difference in retirement.

Aged pension

Clients are pleasantly surprised when they discover that they can have considerable assets, yet still receive the Aged Pension. At Peacheys Investment Services, we look at strategies on how to maximise the aged pension through gifting, funeral bonds and the transfer of assets.
We can also provide advice on accessing the various benefits associated with aged pension / senior cards, Carer and Allowances and Disability Pensions.

Work bonus scheme

If you are past pension age but still working, there is the possibility that you can benefit from the Work Bonus Scheme.

If you are eligible, the first $250 of employment income is excluded from assessment under the income test for the age pension.

we-help-you-with-work-bonus-schemes

Estate planning

Estate planning is the process of pre-empting and arranging for, the disposal of an estate during a person’s life. The process is setup to eliminate uncertainties over the administration of a probate and maximise the value of the estate by reducing taxes and other expenses.
Planning for the future in this regards ensures you that loved ones and family members aren’t left with the burden of sorting out messy finances after your death.

Who should you appoint as attorney?

An attorney can have an enormous power over your affairs and therefore, should be someone whom you trust and who will manage your finances in a responsible manner. If your financial affairs are complex, an attorney should be appointed who is capable of managing complex affairs and is available to do so. You may wish to appoint a family member or a close friend as your attorney. You can also appoint a trustee company, such as Peacheys Investment Services.

Testamentary trust

Testamentary trusts are created by a Will to provide a greater level of control over the distribution of assets to beneficiaries. There are some great tax advantages available through testamentary trusts, making them an effective estate planning tool.

There are 2 types of testamentary trusts:

DISCRETIONARY TESTAMENTARY TRUSTS

Executor gives the beneficiary the option to take all or part of their inheritance via testamentary trust. The primary beneficiary has the power to remove and reappoint the trustee and they can appoint themselves to manage their inheritance inside the trust.

PROTECTIVE TESTAMENTARY TRUSTS

Protective testamentary trusts are where the beneficiary must take their inheritance via the trust and does not have the option to appoint or remove trustees. This setup is useful when the beneficiary is not in a position to responsibly manage their inheritance due to age, disability or spendthrift tendencies.

Allocated pensions/lifetime annuities

An account-based pension (also known as an allocated pension) is a regular income that you receive in your retirement or when you reach preservation age. It is drawn from your superannuation benefits and provides the security and peace of mind of regular payments.

So why are allocated pensions so popular? Why don’t retirees just withdraw their funds out of super and dump the lot into a term deposit or savings account, or even use their super to buy other investments such as an investment property or shares?

The major reason here is tax. Allocated pensions save you tax compared to most other strategies in retirement. That’s because any investment earnings in an allocated pension – interest, dividends, capital gains – are tax free (age 60 and above). In comparison, interest made on a term deposit or rent received on an investment property held outside the super environment are subject to tax at the retiree’s marginal tax rate.