When can I afford to retire?
This is one of the most common questions
asked. The right answer depends on issues like the lifestyle you expect
in retirement, how much you save and how long you work. If you want to
retire today, you’ll have less money for retirement than if you work
another five years. But you may already be in a position to do most
things you want in retirement. So how much is enough? Only you can
answer that question.
Should I save through super or other investments?
The answer depends on what you’re saving for, and your personal
situation. Super is a tax-effective way to save for later in life
because the investment earnings are taxed at a maximum rate of 15%,
compared with higher marginal tax rates outside super. Following recent
changes to superannuation, all benefits withdrawn after age 60 will be
tax free. However, when you put money into super you cannot generally
access it until you retire. If you have shorter-term goals, you’ll need
to invest outside the super system so you can access money when you
need it.
How can I save more super?
There are numerous ways to save more super, some of them certain,
others not. Some of the certain ways are:
- - make extra personal contributions to super above mandatory payments made by your employer
- - use a salary sacrifice arrangement to make pre-tax contributions
- - take advantage of the government co-contribution scheme if you are eligible
An
uncertain way to save more super is to take more investment risk. But
it’s important to discuss all approaches with a financial adviser so
you make the right choices.
Should I retire this year or next?
As well as your personal preference, financial considerations may sway
your decision whether to work longer or stop now. For example, by
continuing to work into a new financial year you may:
- - extend access to benefits like the government co-contribution scheme
- - save tax by deferring lump sum payments into a financial year when your taxable income will be lower
- - save tax by accessing higher thresholds for Superannuation withdrawals
- - wait until you turn 60 and access your super tax free.
In
some cases, it makes financial sense to retire straight away, while
other people choose to work part-time or stagger retirement over a
period of years. Everyone’s different and a financial adviser can help
you decide what’s right for you.
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