This is the second article in a two-part series about superannuation through generations, covering how to tackle superannuation in your 50s, 60s and 70s.
You’ve raced through your 20s, thrived through your 30s and consolidated through your 40s – so what do the next few decades have in store?
By the time you get to your 50s, you’ll want to start making retirement plans in earnest, ensuring you get the most out of your superannuation before you begin to transition out of working life.
Being this close to potential retirement should be an exciting time, and at First Financial, it is our pleasure helping you navigate it.
It is our philosophy that it’s never too early to start planning for your retirement.
But if you’ve already made it to your 50s before you’ve made firm plans, don’t despair, we’re here to help you to do everything you need to broaden your opportunities for your golden years.
In this article, we also discuss what you should be thinking about when it comes to superannuation in your 60s and 70s.
Superannuation in your 50s
Welcome to your 50s – the first decade you can officially see retirement coming at you from around the bend.
It probably felt like you’d never get here, and as if you got here too fast, all at once.
This is the decade where you will most likely start to think seriously about your retirement gap and how to close it.
And it’s also an important decade to ensure you’ve supercharged your superannuation as much as possible as you approach preservation age.
At First Financial, we have a knack for ensuring our clients get the most out of their superannuation as their working life progresses.
If you’ve hit this crucial decade, here’s a checklist of superannuation tips for your 50s:
- Review your superannuation with a fine-toothed comb.
It’s likely been a long time since you first set up your superannuation account, chose insurance options, made investment choices and listed your beneficiaries. Your 50s are a great time to review all of these details and make informed decisions about whether your initial choices are still relevant to your current life path.
Check-in with your financial adviser for the best practice options, depending on your personal circumstances.
At First Financial, we understand that everyone is different and comes to us with a unique launching pad for retirement. So it’s no surprise everyone’s retirement needs and expectations will vary too.
How much money you need to retire is very dependent on what you want to achieve in your golden years. That’s where a financial advisor can step in and work with you to create an income plan that is based on your unique set of circumstances.
After all, retirement goals, just like on a footy field, should be there to deliver a win.
To find out more about a retirement plan that works for you, talk to one of our advisors.
- Make voluntary contributions to your superannuation.
One of the simplest ways to make your hard-earned super work for you is to give it a boost wherever and whenever you can.
Making voluntary contributions to your super can have a huge impact on your comfort levels in retirement and completely change your retirement outlook when compared to solely relying on the contributions your employer has made.
- Salary sacrifice
This is where your employer deducts an amount of money from your salary before you pay tax and pays it into your superannuation on your behalf.
If you haven’t been doing much of this before now, now is the time.
- Review your investment strategy.
While your earlier decades are a great time to be taking bigger investment risks, from your 50s onwards, you should be entering more of a holding pattern approach to your superannuation.
Ask your financial adviser whether or not your superannuation investment choices are suitable for your stage of life.
- Ensure you have a non-super savings account set aside.
If you’ve always been a ‘spender,’ now is a good time to reign it in and ensure you have a savings account put aside separate from your superannuation savings and everyday savings that is specifically for your retirement.
Superannuation in your 60s
Once the clock ticks over to the decade with a six in front, you will have reached the magical milestone many have waited for all of their working lives – the age of preservation.
Remember in our first article in this series we detailed when you can access your superannuation?
At 60 and above, it is likely you can access your superannuation, but many of us are still working, and plan to do so for some time yet.
While you’re working, your employer must still pay superannuation guarantee contributions to those aged over 60. These sit at the rate of 10.5% and legislation will see them rise incrementally to 12% by July 2025.
Your 60s is the decade where a transition to retirement strategy is most likely to come into play, which allows you to access your superannuation and continue to work in a manner that suits you – usually by way of an income stream.
An income stream is an increasingly popular method whereby retirees can access their nest egg through regular income payments rather than getting a lump sum.
What are the different types of superannuation income streams?
Account-based income streams
With an account-based income stream, you receive a regular payment from your superannuation – and you get to decide on the amount of this payment and the frequency of it.
Most superannuation funds have two income stream products available – one for people gradually moving into retirement by way of a transition to retirement strategy, and one for people who are retired permanently.
These income streams continue as long as there is money in your super account.
The pro of this approach is the flexibility to decide on the payment amount within the minimum and maximum withdrawal limits that apply to your superannuation fund.
You can also choose how you invest the remainder of your super balance and withdraw lump sums at any time, so long as you meet the criteria to do so.
Non-account-based income streams
A non-account based income stream is more like an annuity that guarantees an income for a set period of time and is independent of investment performance.
With a non-account-based income stream you receive a regular income stream (usually monthly, quarterly, half-yearly or yearly), guaranteed for your life expectancy or for a fixed term.
The pro of this approach is you receive a guaranteed income that is not linked to market performance and, according to the ATO, annuities purchased with super money are tax free from the age of 60.
Super when you’re still working in your 60s
But even as birthdays tick over, many people still wish to maintain their working life throughout their 60s, and in that case, you may still be adding to your superannuation nest egg at this time.
So, what are the rules on making contributions when you’re in your 60s?
You can still make concessional contributions and non-concessional contributions during this decade.
Concessional contributions include:
- Compulsory pre-tax contributions from your employer under the super guarantee
- Voluntary salary sacrifice contributions you make additionally from your before-tax income
- Voluntary tax-deductible contributions you make from your take home pay and then claim a tax deduction for – they are normally taxed at 15% if your total income is under $250,000.
Non-concessional contributions include:
- Voluntary personal contributions to superannuation, which you can make by transferring funds from your bank account into super that you are not able to claim a tax deduction for.
If you’re making contributions to your super, there are limits on the amount of concessional and non-concessional contributions you can make each year.
Want to know more about super in your 60s?
At First Financial, our advisers are best placed to assist you navigate your superannuation specifics, from helping choose your investments, to ongoing management and maintenance and everything in-between.
Contact our friendly team today to find out more.
Superannuation in your 70s
Once most Australians hit their 70s, full retirement is usually the main goal, but that means your retirement finances need proper attention.
At First Financial, we work hard to ensure our clients can add certainty to their retirement years by properly managing their superannuation.
The Australian superannuation landscape is very complex and requires a deep understanding to maximise its potential.
And with super legislation changing every other month, you need an advisory team that is on top of all legislative changes, on your side.
To best manage your superannuation in your 70s, is it best to partner with a financial adviser that can help you to make smart decisions with your money so you can build wealth, reach your financial goals and retire your way.
Ask our experts about making last-minute contributions to your super, downsizer contributions or super contributions bring-forward-rules.
First Financial Superannuation tips series
At First Financial, we are committed to making your retirement dreams come true, and if your retirement is just around the corner, we’d love to help you switch gears and put that plan into action.
We know that your dream retirement is as unique as you are.
At First Financial we have years of experience in helping our clients to retire life ready.
Make the most of your next stage of life with a financial plan that will deliver choices – so you can stroll into the retirement you want with confidence and certainty.
Contact a First Financial adviser today.
