At a glance…
- Budgeting, paying down debt and changing your thinking are key when it comes to strategies to get out of a pay-to-pay pattern.
- Editor of Money Matters, Effie Zahos, has provided a decade-by-decade guide to suit your super at every age.
By your 60s, the focus shifts from building wealth to using it. Most of the big decisions are behind you – now it’s about making sure your super, savings and assets are set up to support the lifestyle you want.
It’s less about strategy at this point and more about keeping things simple, flexible and easy to manage.
Start drawing income from your super
For most people, the 60s is when super starts to play a role in day-to-day income.
From age 60, if you’re still working but starting to reduce your hours, you might consider setting up a Transition to Retirement (TTR) strategy. This lets you access part of your super as income while you’re still working, helping to top up what you may lose from working fewer hours.
Once you turn 65, your super can generally move into a retirement phase account (often an account-based pension) – even if you’re still working. This also lets you start drawing a regular income from your super.
One of the key advantages of a pension account is that earnings within your super are typically tax-free, compared to being taxed at 15% while your super is still in the accumulation phase.
The key is making sure your money is set up in a way that’s easy to access and works for how you want to live now.
Think about housing and lifestyle changes
This is the time when you might start thinking about whether your home and location still suit the lifestyle you want in retirement, and what you might want to do next.
Downsizing to something easier to maintain or moving closer to family or services might be something you want to explore. Downsizing can also free up money, which you may also be able to use to make a downsizer contribution into super if you meet the eligibility rules.
This lets you contribute up to $300,000 per person (or $600,000 per couple) from the sale of your home into your super, without it counting towards your usual contribution caps.
You might also be thinking about a sea change or a move to a new area for a different lifestyle. If that’s something you’re considering, it can be a good idea to rent in the area first to make sure it feels right.
You may prefer to stay where you are. If you need extra funds, there are options that let you tap into the equity in your home, such as a reverse mortgage or the government’s Home Equity Access Scheme.
You might also want to think even further down the track and look into aged care options and how they’re funded, so you’re not having to think about it under pressure later on.
Make your money work for income
It can help to take a step back and look at how your super, investments and any investment property are set up, and whether they still suit where you’re at now.
You might want to start shifting the focus from long-term growth to generating income and not taking on more risk than you need.
It’s also worth thinking about how easy it is to actually access your money when you need it.
The aim is to make sure your set-up fits how you want to use your money now, not how it was set up years ago.
Simplify your finances
This is a good time to tidy things up. That might mean closing unused accounts, consolidating super funds or streamlining where your investments are held.
You should also take a look at what you’re paying in fees across everything you hold – including super, ETFs and property-related costs – as these can add up over time.
A simpler set-up can make it easier to stay on top of things, reduce admin and give you a clearer view of your overall position.
Make the most of entitlements
When you reach your 60s, you may find you’re eligible for certain discounts and concessions.
One worth looking into is your state-based Seniors Card, which can give you access to discounts on a range of goods and services across your state or territory. Eligibility varies, but it’s generally available from around age 60-65. There may also be limits on how many hours you can work.
Then there’s the Commonwealth Seniors Health Card, which may be an option if you reach Age Pension age (currently 67) but don’t qualify for the Age Pension, as long as you meet residency rules and an income test.
It can help reduce healthcare costs and may also provide access to a range of other concessions, including discounts on household bills depending on where you live.
Keep everything clear and easy to access
Take some time to make sure your key documents and account details are up to date and easy to access if needed.
That includes your will, any enduring power of attorney arrangements, and your super details – including your beneficiary nominations. It can also help to have a clear list of your accounts, investments, important contacts and passwords.
Try to keep things as simple as possible, so someone else could step in without having to figure everything out from scratch.
Get reassurance if you need it
As you get closer to retirement – or once you’ve started – it can help to have someone take a fresh look at how everything is set up.
A financial adviser can help confirm your income is on track to last, that you’re drawing a sustainable amount, and that your super, investments and any entitlements are working together in the way you expect.
You may also find it useful to speak with the Financial Information Service (FIS), a free Services Australia service that helps you better understand your financial situation in retirement.
3 simple money wins:
- Understand how your super will be accessed in retirement.
- Check what entitlements you may be eligible for.
- Get advice to make sure everything is on track for retirement.
This article originally appeared in Money Matters by The Australian Women’s Weekly. Purchase here.
Information is correct at the time of writing. Any advice provided is general in nature and does not take your personal circumstances into consideration. Readers should seek their own financial advice.
