How can I fund my retirement? - Retirement Income

How you choose to fund your retirement depends on a number of circumstances, and we suggest you seek advice from a financial planner.

If you are retiring, you can take action so you will qualify for the age pension, and use your super in a number of different ways so you can enjoy the lifestyle you want.

Let’s take a look at these options.

The age pension

In most cases, the age pension is not enough to fund a comfortable retirement on its own. However, it can still play an important role by qualifying you for the pensioner concession care, which saves money on prescriptions, utility bills, council rates and other expenses.

Centrelink, which oversees the age pension on behalf of the Government, applies strict rules around who can get it and how much the benefit will be. 

Centrelink eligibility rules

You must meet the following 3 criteria to qualify for the age pension:

1. Australian residency – you must be an Australian resident and have lived in Australia long enough to satisfy qualifying residence periods.
2. Your age – males must be 65 to be eligible. The female eligibility changes depending on your date of birth. 
3. Means test – this test consists of an Income Test and an Assets Test. These tests consider areas such as the level of assets you have, where you invest those assets and the income these assets are deemed to earn.

Take action so you qualify

Take these steps to make sure you are on track to qualify for the age pension:

1. Understand the eligibility criteria.
2. Determine if you currently qualify. If not, find out why (eg you do not pass the means test). 
3. Put plans into place to ensure you pass all 3 eligibility criteria.

A financial planner can help you work through these issues. They will assess your personal needs and circumstances, and help you to maximise your Centrelink entitlements. 
 
Maximising your Centrelink entitlements
The ’Means Test’ determines how much of the age pension benefit you’re entitled to. By reducing your total assessable assets, you may be able to maximise the benefit. A financial planner can help develop strategies to assist with this.

Enjoying your super

You basically have 3 options for using your super to fund retirement. These are:

1. Income stream – you may use your superannuation money to purchase an income stream for retirement. There are 2 main types of retirement income streams: pensions and annuities. 
2. Lump sum – you could take your money out of your superannuation fund as a lump sum payment, then live off the lump sum.  
3. Lump sum and income stream – you may also take some money out of your superannuation as a lump sum and use the remaining balance to purchase an income stream. This gives you access to a lump sum amount now, as well as an ongoing income. 

The way you choose to enjoy your super can affect the amount of tax you have to pay and also your Centrelink entitlements. Before making a decision, talk to a financial planner, who can assess your individual situation and help you make the most of your retirement benefit.