In retirement, your regular income stops, so you need to draw on your savings to meet your lifestyle costs. You set up your savings so you receive regular payments, just like a salary. This is called a ‘retirement income stream’.
Allocated PensionDuring your working life you receive regular income in the form of a salary or business income. In retirement, this regular income stops, so you need to draw on your savings to meet your lifestyle costs. You set up your savings so you receive regular payments, just like a salary. This is called a ‘retirement income stream’.
The type of income stream you can start at retirement depends on whether the savings are inside or outside of super. The following are some options (but not all) that our retirement specialists will discuss with you to meet your retirement income needs.
Payment of your superannuation savings in regular periodic amounts is called an ‘account-based pension’ or ‘allocated pension’. An account-based pension starts when you transfer your superannuation savings into a new account, called a pension account, and start to draw down on the money in a series of regular payments.
You can elect how much income you want (above the specified age based minimum) and can continue to receive regular income until all of your super savings are exhausted, or you pass away. If you die, the balance of the savings is paid to your nominated beneficiary or to your estate.
How are your income and savings taxed?
If you are a member of a taxed super fund and age 60 and over, all of the income from your pension account is tax free if you are a member of a taxed super fund. If you are under the age of 60, a portion of your income may be tax free. Any amount that is taxable attracts 15 percent tax offset. Investment earnings and capital gains on your pension account are not taxed (tax free) once you start a pension.
Will you have enough?Each year, Australians are living longer due to improvements in medicine and changes to a healthier lifestyle. There is a one-in-two chance that one member of a couple age 60 today will live to age 90. So even if you plan your income strategy using today’s life expectancy, there is a good chance you will live beyond this age. At Bastion Wealth we will discuss strategies to stretch your savings longer.
Guaranteed income, for life!
A new generation of products has been developed to provide you with a secure income during your retirement, every year for the rest of your life. Some of the guarantees are designed so that they continue to pay you an income even if your savings run out, and – if you choose – it will continue to pay this income to your spouse even after you die. At Bastion Wealth we can help determine whether this type of product is right for your needs.
Retirement income streams outside of super
There are also a number of alternatives to create retirement income streams outside of your superannuation savings. These may include but not limited to the following:
At Bastion Wealth we will assist you in consolidating your assets and income to ensure you achieve the income you require to last throughout your retirement.