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Planning for Retirement

There comes a point when everyone realizes they cannot work their entire lives and must plan for their retirement years.  Supporting yourself during these years can cause a great deal of anxiety if you are not prepared.  Your retirement years should not be stressful; after a lifetime of hard work, you should be able to enjoy life and pursue other goals.  The earlier you start planning for your future, the more comfortable you will be. Check out these tips provided by pensionerloansassistance.com.au.

Goals in Retirement

While money and taxation are an important aspect to consider, you cannot properly plan your income streams if you don’t know what your life goals are after you leave work.  Take some time to assess how you want to spend these years to help you anticipate how much income you will need.  If you haven’t given much thought to your retirement years, here are a few steps to help you successfully plan for your future:

  • Outline your financial issues and goals
  • Determine your current position
  • Adapt your goals into a feasible plan
  • Convert your plan into clearly defined and attainable steps

Income Streams

Once you have a clear plan of what you want to do in retirement, you must now decide how you will support yourself financially.  Since you are no longer earning a regular salary, you must rely on other forms of capital such as pensions, savings, investments, and equity that you have built up throughout your lifetime.  Whatever form of capital you plan to use, you will have to convert it into a convenient and tax effective income stream.

In addition to estate planning, you should also understand how to maximize the benefits offered through the Veterans’ Affairs Pension or the Age Pension.  Many people find that superannuation pensions, allocated pensions, and annuities are the most effective source of income during retirement.

Pensions and Annuities

Superannuation allows both employers and employees to contribute to an individual retirement fund.  These funds are held within a trust and invested until it is withdrawn.  If you select an allocated pension, you will receive regular payments from the super fund.  Pensioners have the option to receive it as a lump sum or in allocated payments.  Minimum payment amounts are based on a percentage of the total account balance and the type of account.  Since you choose the investment strategy and the amount is dependent on market returns, there is no guarantee how long payments will last.  Any remaining funds can become part of your estate after death.

If you decide to purchase annuities through a life insurance company, you will receive guaranteed payments for an agreed amount of time.  Annuities are not as flexible as allocated pensions; you cannot receive lump sums and you do not control how your money is invested since the fund manager assumes all the risk.  These tend to earn less since they usually apply a conservative investment strategy.  There are a wide variety of annuities available which have differing conditions, so be sure to speak with your financial advisor about which options are best for your financial future.

When it comes to planning for your retirement, the sooner you start the better.  Once you have decided when you want to retire and how you will support yourself, research various providers to see what income stream will best support your retirement plan.

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