65 and over – Retirement & Pension Strategies

Retirement should be a new stage of life.
A time to do more of the things you are passionate about or are curious about.

The questions you would ask yourself are:

  • “How can I afford …?”
  • “How can I maximise our after tax income …?”
  • “What would the Centrelink benefit be if I also had ….?”

Juggling the necessary assets to maximise your income is part of the recommendations we make all the time.

BUT – you need to know what to do while you are still working – the juggling process occurs before retirement – not after.

Case Example:

Message: Plan before hand. Get it Right the first time.

Deborah and Maurice are about to be retired, they are 65 and 67.

Deborah has about $190,000 in superannuation and Maurice has $70,000 in Super and $110,000 in term Deposits. He has traditionally doubted the benefits of super over the years and loves his Term Deposits. As home owners the asset threshold is $265,000
(@ July 2011). Maurice wants to pull his money out of super and put it into Term Deposits.

  • When evaluating their overall position I point out that Centrelink effectively penalises those in Term Deposits compared to Allocated Pensions.The Age pension is correspondingly less for the same income generated. There are ways and means to deliver a low risk good income return for Maurice and Deborah while also maximising the Centrelink benefits.
  • Thus effectively Centrelink will subsidise the use of an Allocated Pension as a preferred investor vehicle.

BUT – Maurice has to rearrange his affairs before terminating work.

 

Case Example ll:

Message:  Check your assets before retirement and disassociate yourself from the attached emotions for the best result.

Linda & James are both 64 and about to retire.

Due to James successful work as an engineer they have a large set of investments. Their own home, superannuation an investment property and also they inherited Linda’s parents house up the coast.

The preferred plan is to rent out the 2 properties and perhaps occasionally stay in Linda’s parents’ house when it’s not rented out as a holiday letting.

However, the combined investment income and the small Centrelink benefit fall short of their desired household income for a comfortable lifestyle.

Some hard rationalisation needs to be made, and ideally at least one of the properties sold with the proceeds channelled to more tax effective and Centrelink friendly investments.  The resultant income from the investments and Centrelink lifts them both into a comfortable situation.

  • I also then raise with them a 15 year plan –Here they will seriously consider aged care needs for themselves between the ages of 75 and 80, with an expectation that they may need to act at some stage after 75 or 80 years of age.What should they think about? What should they accept as a big picture set of options? These are also discussed with their children so that the thought process is established beforehand.