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Choosing an age to retire

As waves of baby-boomers now reaching what was once a popular retirement age, as well as the rapid ageing of the population, the topic of retirement intentions is getting a lot of attention.

The Government has further focused attention on this issue with its plan to progressively increase the age for pension eligibility from 65 to 67 over the next few years.

The age that an individual chooses to retire can have a significant influence on their retirement savings, and in turn, their standard of living throughout their retirement.

Undoubtedly, a shorter retirement is more affordable than a long one. Those who elect to remain in the workforce have the opportunity to save for longer, for what will be a shorter retirement.

Some people are not in the position to choose their own retirement age given such considerations such as their health and the availability of employment opportunities.

The Australian Bureau of Statistics (ABS) released a report stating that the average age of retirement of individuals who retired over the past five years was 61.5 years. However, the report also showed that of the 4.7 million in the labour forced aged over 45 almost a half intend to retire between 65 and 69

It is always a good idea to discuss retirement with a professional to discuss the impact of the intended retirement age on the ability to finance the desired standard of living in retirement.

Posted on 20 February '14 by , under Super.

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Transition to retirement

The transition to retirement (TTR) strategy allows you to access some of your super while you continue to work.

You are able to use the TTR strategy if you are aged 55 to 60. You can use it to supplement your income if you reduce your work hours or boost your super and save on tax while you keep working full time.

  • Starting a TTR pension: To start your TTR pension, transfer some of your super to an account-based pension. You have to keep some money in your super account so that you can continue to receive your employer's compulsory contributions as well as any voluntary contributions you may be making.
  • Government benefits and TTR: The benefits you or your partner receive might be impacted if you choose to opt for this strategy. How and what exactly will change might become clearer upon discussing this with a Financial Information Service (FIS) officer.
  • Life insurance and TTR: In some cases, the life insurance cover you have with your super may stop or reduce if you start a TTR pension – check this before making any decisions or changes.

TTR can help ease your mind as you transition into retirement but it can be a bit complex. Before you choose whether you want to use TTR to reduce work hours or save on tax, or even if you want to use TTR altogether, you should figure out how this will impact all aspects of your finances.

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