Make your superannuation go further with these potential investment strategies.
Creating a consistent income stream in retirement is a priority for many Australians, and understanding how your superannuation fund can help you achieve this is essential. Super funds offer several options for setting up income streams post-retirement, allowing you to enjoy your hard-earned savings and maintain your lifestyle. In this blog, I’ll explore how super funds can provide these ongoing income streams and what you should consider when setting up yours.
Transition to Retirement (TTR) Income Stream
For those approaching retirement but not quite there, a Transition to Retirement (TTR) income stream is a useful option. Once you reach your preservation age (between 55 and 60, depending on your birth year), you can access your super while still working. A TTR income stream allows you to gradually reduce your working hours without losing income. You can access a portion of your super through regular payments, helping you ease into retirement while supplementing your part-time salary.
You can find more information on how TTR income streams work at their website here.
Account-Based Pension
An Account-Based Pension is one of the most popular options for ongoing income after retirement. With this, you can convert your superannuation savings into a pension account. You can choose how much you wish to withdraw each year, as long as you meet the minimum annual withdrawal set by the government. The remaining balance stays invested in your super fund, which means your funds have the potential to grow over time, providing a longer-term income stream.
You can find more details about setting up an Account-Based Pension at the ATO website.
Annuities
An annuity is another way to create a predictable income stream. When you buy an annuity with a portion of your super, you receive regular payments for a specific period or the rest of your life, depending on the type of annuity you select. Annuities can offer peace of mind, as they are not dependent on market fluctuations. However, they may not offer the same flexibility or potential for growth as other income stream options.
For further reading on annuities and how they work, visit the SmartMoney website.
Combining Strategies for Maximum Flexibility
Combining an Account-Based Pension with an annuity can be a strategic way to enjoy both flexibility and certainty in your retirement income. You might choose to keep a portion of your super in an Account-Based Pension, allowing you to adjust withdrawals as your needs change, while also buying an annuity to cover basic living expenses. This mix can provide peace of mind, knowing you have stable income alongside the flexibility to draw more funds as required.
Finding the Right Strategy for You
When it comes to choosing the right retirement income stream, consider seeking advice from a financial adviser. Every super fund has different offerings and fee structures, so getting professional guidance can help you make informed decisions based on your unique financial situation. Many super funds offer advice services as part of their offerings, so check with your fund to see what support is available.
