Like going on a holiday or buying a new car, retiring requires planning.
Over the next decade, the number of retirees with a super account will more than double, with an estimated 2.5 million Australians set to retire.
Planning for retirement can be both exciting and daunting – luckily there are resources available to help.
According to the Association of Superannuation Funds of Australia’s (ASFA’s) latest research individuals will need $52,085 in retirement savings per year for a ‘comfortable retirement’ while couples will need about $73,337 per year. What you will need depends on your expectations and likely expenses including housing, medical and travel costs.
ASIC’s Moneysmart website has a great calculator to help you estimate how much you will need to retire.
A great first step in your planning is to complete the ATO’s super health check which includes looking for lost super.
The ATO reports there is almost $17.8 billion in lost super as of 30 June 2024. If you have changed your name, address, or employer some of it could be yours – finding it can boost your retirement savings.
To prevent your super becoming lost in the future, keep your contact details up to date (even during your retirement) with the ATO via ATO Online services through myGov and also by contacting your fund.
If you have multiple super accounts, you may wish to consolidate them however it’s important to choose the fund that’s right for you. You should regularly review your super fund’s fees, investment returns and consider if any insurance cover suits your needs which may change throughout your life.
You may also consider increasing your retirement savings by making extra contributions. This could include concessional contributions which are made from your after-tax salary or non-concessional contributions like super guarantee, salary sacrifice contributions paid through your employer.
Low to middle income earners may also be eligible for government co-contributions. There are also contribution options for people selling their primary residence or small business. Moneysmart has a super contributions optimiser tool which can help you determine which type of contribution will give your super the biggest boost.
Before making extra contributions consider your total super balance and contribution caps to avoid extra tax.
It’s important you know when you can withdraw your super. You can do this once:
- you reach your preservation age (between 55 and 60 depending on when you were born,
see here to find out yours) and meet a condition of release, such as retiring. - you have reached preservation age even if you continuing to work under the transition to
retirement rules. - you reach 65 even if you haven’t retired.
When withdrawing your super, you can choose to take an income stream, a lump sum, or a
combination of both. Your fund may have governing rules which determine the options available so you should contact them and know what is available to you.
For some, your retirement income might include a pension or allowance from the government. If you are 67 or older you may be eligible for these payments depending on your situation as government assistance is income and asset tested. For further information on the age pension visit Services Australia.
You can also learn more by watching their free Financial Information Service (FIS) webinars.
Given the complexities, it’s recommended you consult a qualified financial advisor to see what your options are to maximise your retirement savings.
By using the available resources, including the ATO’s planning for retirement content, you can make informed decisions and confidently plan for a secure and fulfilling retirement.
