Take retirement for a test run
Part time work can be a great way to ease into your retirement and there are a number of financial strategies you can use to stay on track to meet your retirement goals.
Plan to retire gradually
By moving to a part-time role before you retire you can test the waters and find out how you’ll cope emotionally and financially with the changes retirement brings.
A transition to retirement (TTR) strategy can help you get the right balance between working less, adding to your super and keeping your income at a comfortable level. With TTR you can work part-time and top-up your income with a TTR pension. Your super savings will still be growing with employer contributions (albeit at a lower level), plus any extra contributions you choose to make yourself.
There are limits on the income you can withdraw from your TTR pension each year. And if you are a member of a defined benefit scheme there may be considerations you need to take into account before putting a TTR strategy in place. A StatePlus planner can help you understand your options.
Using your long service leave
Using your accrued leave can be a good opportunity to stop working without having to access your retirement savings. And your employer will still contribute to your super during this time. You may not have to stop work completely. Talk to your employer about using your long service leave to reduce the number of days you work each week.
Retiring doesn’t always mean leaving work
Working in retirement can be beneficial in lots of ways. For some, it’s important financially. For others it’s a good way to keep active and engaged. The ABS reports 43% of people returning to work after retiring did so due to financial need . However 28% started working again for “something to do.”
Boost your income in retirement
If you’re concerned about losing much of your modest income through tax, remember once you’ve retired you can access a number of tax offsets (depending on your individual circumstances) which will reduce the amount of tax you pay. Tax can be complicated so it’s important to talk to an expert before you make any decisions about your money.
When do I have to stop work?
Legally, you can keep working for as long as you like. Most people are protected from compulsory retirement by the federal Age Discrimination Act 2004 and the Fair Work Act 2009. However, it can depend on the kind of work you do and whether it’s safe for you to continue in your role as you grow older.
If you’re planning to continue earning after retirement, it’s important to understand how it could affect your entitlements under a public sector superannuation scheme. In some cases working past your scheme retirement age may not be in your best interests. A StatePlus planner can help you understand your options.
Thinking about retirement?
If staying in the workforce is part of your retirement plan, chances are you’ll feel better about it if you’re motivated by your lifestyle goals rather than financial needs.
Speaking to a StatePlus planner is a great way to prepare yourself and your finances for a positive transition to retirement. To get started, download our free Retirement guide or call us on 1800 620 305.
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REFERENCES:
1 ABS Retirement and Retirement Intentions, Australia, July 2014 to June 2015, Summary of Findings
This information is of a general nature only and contains no advice. Before making any decisions based on this information you should consider its appropriateness to you. We strongly recommend that you consult a Financial Planner before taking action based on this information.
