Retirement Planning

Retirement income: what you need to know

One of the most effective ways to provide some or all of your required level of income in retirement may be via a regular retirement income stream such as an account-based pension or an annuity. Some retirees may also be eligible for an Age Pension or other benefits from the Australian Government. It’s important to understand how all these options work, to determine the solution that is right for you.

Will I have enough to retire?

With improved life expectancy and advances in medical science, Australians can look forward to a much longer and more active retirement than past generations. A male retiring at age 65 is likely to spend around 19 years in retirement and a female 22 years. Enjoying a long and happy retirement, however, may cost more than you think. According to the Association of Superannuation Funds of Australia (ASFA), the following lump sums are required to provide a comfortable level of retirement income for 25 years of retirement.

Your financial adviser can help you see how you are tracking by determining your future income potential, projecting your final savings at retirement, and taking you through your options.

Transition to retirement – flexibility and choice

Before you retire you have the option to ‘transition to retirement’ (TTR). This means you can reduce your work hours and supplement your income with potentially tax- effective withdrawals from your super through a transition to retirement income stream. Your financial adviser can help outline your choices and the impact that starting a transition to retirement income stream may have for your super balance at retirement.

Earnings on assets supporting a transition to retirement income stream are generally taxed at up to 15%. Prior to 1 July 2017, they were tax free.

How do I access an income in retirement?

As well as any Age Pension you’re entitled to, or non- super investments such as properties that you will retain and receive income from (e.g. rent), the most common way to provide for your required level of retirement income is with one or more regular retirement income streams. These include:

  • Account-based (allocated) pensions – these must be purchased with your super savings
  • Lifetime or term annuities – these can be purchased with either your super or non-super savings.

In some cases, the best way to provide for your retirement income could be to combine an account- based pension and an annuity.

What are account-based pensions and annuities?

An account-based (or allocated) pension lets you draw regular flexible pension payments from your super balance. Your pension account balance is adjusted in line with market movements, investment returns, pension payments, lump sum withdrawals and fees.

An annuity generally involves swapping some of your retirement savings for a guaranteed income stream payable over a specified period. The two main types of annuities are:

  • Fixed term annuities which pay a guaranteed income for a defined period of time e.g. 20 years
  • Lifetime annuities which pay a guaranteed income for the remainder of your life.

By guaranteeing your future income payments regardless of the underlying performance, the annuity provider effectively carries all the investment risk. They also offer flexible ownership options and indexing to protect against inflation. The trade off for an investor is you generally have no choice of investments, limited ability to make withdrawals and can’t change your income once the annuity has commenced.

Combining retirement income streams

The right mix of retirement income streams will depend on your individual needs and circumstances, which might include:

  • Your fixed and variable income needs in retirement
  • Whether you will need to access some of your retirement savings as a lump sum in the future
  • How important qualifying for social security benefits such as the Age Pension is to you
  • Your estate planning needs, including whether you want to leave an inheritance to your dependants in the future
  • Your tolerance for risk when investing.

For example, you could consider using a lifetime annuity to provide enough guaranteed income (along with any Age Pension you’re entitled to) to allow you to meet your fixed income needs in retirement, while using flexible payments from an account-based pension to meet your additional non-essential spending needs – as shown in the following graph.

We can help you decide the mix of income streams that best suits your circumstances.

Download our complete Retirement Income fact sheet

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Dimos Fessopoulos

Dimos Fessopoulos

Dimos is a Financial Adviser with 9 years’ experience. He takes great satisfaction in helping our clients gain peace of mind by knowing that their financial plans are on track to provide for their current lifestyle and ongoing retirement, along with optimally protecting their assets, and the interests of their families and friends. His friendly, caring nature, developed from his 20 years as a Physiotherapist, puts his clients quickly at ease allowing them to comfortably focus on their future goals and needs.

Dimos is married with 3 sons aged 20,15 and 14. His weekends are therefore spent at various sporting fields as a very keen spectator. He also continues his passion for soccer by coaching representative teams and as a committee member for the local soccer club. Dimos is also a very keen golfer and plays tennis socially.

Dimos holds a Diploma of Financial Services (Financial Planning) and a Graduate Diploma of Applied Finance (majoring in Financial Planning) from FINSIA. Dimos also holds a Bachelor of Applied Science (Physiotherapy) from the University of Sydney.

Dimos Fessopoulos (Director of Financial Planning) is an Authorised Representative of Count Financial Limited. Dimos' ASIC Adviser ID No is 335420.

John Mihail

John Mihail

Professionally, John has 12+ years' experience in financial planning and is a CFP® professional member of the Financial Planning Association of Australia, which is the highest designation in financial planning and recognised internationally. In addition to his CFP® studies, he also completed an Advanced Diploma in Financial Services (Financial Planning) in 2007; and non-financial tertiary studies with a Masters of Health Science (Exercise & Sports Science) in 2002, and a Bachelor of Applied Science (Occupational Therapy) in 2000, both from the University of Sydney.

Outside of work, John is married with 2 young daughters. In his spare time, he enjoys the company of family and friends, follows the success (or suffering) of the EPL's Manchester United, our Socceroos, and the NRL's Bulldogs, while fruitlessly fighting the ageing process through (short) bursts of jogging, swimming, tennis and so on. He also loves a good cup of coffee.

John holds specialist technical accreditations with Count and is authorised to provide advice on Self-Managed Superannuation Funds, Aged Care, Direct Securities, Business Insurance, and Defined Benefit Schemes.

John Mihail (CERTIFIED FINANCIAL PLANNER® professional) is an Authorised Representative of Count Financial Limited. John's ASIC Adviser ID No is 289605.

Yolla Nohra

Yolla Nohra

Yolla Nohra is our Lending & Leasing Manager and she has over 34 years' experience in a variety of roles within Chartered Accountancy practices.

Yolla holds a Diploma of Financial Services (Finance/Mortgage Broking Management), a Diploma of Financial Services (Financial Planning), is an Accredited Mortgage Consultant (AMC) from the Mortgage and Finance Association of Australia (MFAA)and she is also a member of the Credit and Investments Ombudsman (CIO), membership number: 411084.

Yolla holds a Certificate IV in Financial Services (Finance/Mortgage Broking) and is also a SEQUAL accredited Reverse Mortgage Consultant (RMC). Yolla is also a Justice of the Peace (JP). Yolla is a Credit Representative of finconnect™ (australia) pty ltd ACL 385888.

Yolla is very happily married and has 4 children, a daughter, 3 sons and a grandson. In her spare time, she enjoys spending time with her family, cooking, reading and listening to music.

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Winnie Su

Winnie Su

Winnie is a Paraplanner and Practice Manager at CBC and has been at the firm since June 2009. Winnie has over 10 years' experience in the financial services industry and over 2 years' experience in Client Services (Margin Lending).

Winnie holds a Bachelor Degree of Arts (Media and Communications) from the University of New South Wales, an Advanced Diploma of Financial Planning from Kaplan and a Diploma of Teaching from the University of Technology. Winnie is also a Justice of the Peace (JP).

Winnie was born in Hong Kong and emigrated to Sydney at the age of 5, currently living in the south-west of Sydney with her husband and their children. Winnie loves travelling, languages, computers and new technology. She has traveled to Japan several times, working there for a year in total.

Larry Chi

Larry Chi

Larry is our Financial Planning Client Services Co-ordinator and joined the firm in September 2016 shortly after completing a Bachelor of Economics (Finance and Economics) from the University of Sydney. During his time with CBC, Larry has completed a Diploma of Financial Planning in 2017 from KAPLAN.

Larry continues to work as a basketball referee over the weekend and loves spending his time on outdoor adventures with his girlfriend, shooting hoops at the basketball courts and training at the gym. He also enjoys caring for his pet fish and Subaru.

Larry hopes to explore countries around the world and aspires to become a professional in the finance industry.

Lisa Nguyen

Lisa Nguyen

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