Already retired? Here are the next steps for your wealth management
Managing your super doesn't stop once you retire. We've got some tips to help you get organised!
Sponsored by Aware Super. Grab your handy financial action plan for your age and get the know-how to manage your money in retirement.
So with this in mind, we're looking at what you can do to effectively manage your funds post-retirement.
1. Budget to suit your lifestyle
Budgeting is fundamental to managing your finances at any age. But it becomes especially important during retirement.
You'll need to think carefully about how to best use your super to fund your retirement lifestyle.
The basic principles remain the same at any age – checking your income against your expenses and looking at the best ways to balance them.
Making use of a budgeting calculator can help you put together an effective plan for your finances.
2. Review your income sources
Part of determining how you'll fund your retirement long-term is looking at what sort of income sources you have available.
These can include:
- Your super
- Your investments outside of super, like shares, private equity, and property
- Equity in your home
- Assets, like art collections, gold, and your cash savings
- The Age Pension
- Other forms of passive income, like royalties or from a side hustle
It's also important to consider the liquidity of each of these resources. An art collection might have a high net worth on paper, but how easy is it to convert to funds in a pinch?
On the other hand, a Retirement Income Stream Account draws on your super and can provide ongoing funds on a regular basis.
Having a clear picture of what your income sources are and how liquid they are can help you make more informed decisions about your next steps.
3. Choose your super payouts
When you choose your super payout, you have three main choices for how you receive it:
- A lump sum
- An income stream
- A combination of both
A lump sum can be an appealing, but slightly daunting option. The obvious temptations are to make several big-ticket purchases, pay off the mortgage or cover outstanding debts, but doing so could leave you short-handed on cash in the long term.
Taking a lump sum can give you flexibility. But it might also require a lot of careful planning so your money lasts. Plus, you'll need to understand how a lump sum will impact your tax and Age Pension.
For many people, they might decide to get an income stream from their super.
These accounts use your super to pay you an ongoing income, and investment earnings on your super balance in retirement are generally tax-free.
Some retirees might decide to take out a lump sum and set up an income stream. This can help provide regular income over time, but allow access to larger amounts.
4. Leverage resources from your super fund
Your super fund isn't just for storing your retirement cash and letting it grow.
They can often also help you prepare for retirement!
For example, Aware Super provides a range of resources for upcoming retirees, including calculators, guides and so much more.
To get an idea, you can download an action plan for your age from Aware Super to check how ready you are for retirement.
5. Making a Will and nominating beneficiaries
Now, if you've already made it to retirement age, chances are you might have a Will.
But if you don't (and even if you do!), retirement is a great time to sit down, assess the situation and get it sorted.
Marriages, divorces, deaths in the family, children, grandchildren, evolving financial circumstances and more can all be reasons for creating or updating a Will.
It's also worth checking your super beneficiary nomination. Your super isn't automatically part of your estate. And if you don't have a valid nomination, your super fund might decide who receives your super when you pass away under their rules and the law. Nominating a beneficiary can help make your wishes clearer and reduce stress for loved ones at a difficult time.
Want to learn more about super and retirement? Make sure to check out these articles from Aware Super.
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Aware Super is a low-fee super fund with 12 different ways to invest including a MySuper option and an ethical investment option.
General advice only. Consider your objectives, financial situation, or needs, which have not been accounted for in this information and read the relevant PDS and TMD at aware.com.au/pds before acting. Issued by Aware Super Pty Ltd (ABN 11 118 202 672, AFSL 293340), trustee of Aware Super (ABN 53 226 460 365).
Issued by Aware Super Pty Ltd (ABN 11 118 202 672, AFSL 293340), trustee of Aware Super (ABN 53 226 460 365).
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