The working years of most people’s lives include a mortgage, costs of raising a family, dependence on a single income for all or part of the time, and a chronic shortage of spare capital.

The commencement of the retirement years often coincides with the end of the mortgage and the end of the period of family raising. Often for the first time, retirement brings access to capital and time.

Planning for retirement is first and foremost about lifestyle planning - deciding what you wish to do and then constructing your financial strategy to meet your lifestyle objectives according to planning periods.

Those still in the workforce should look at their likely future need for income and capital and use their present situation and the rules that apply to ensure that they commence to structure and position effectively.

For most people in retirement a strategy which combines a core of regular income with a pool of capital provides the most flexible structure. Core income is intended to meet the normal costs of living from year to year, with cash and growth reserves available to service lifestyle needs over the short, medium and longer terms.

Age based factors which impinge on thinking about future planning periods include:

• Earlier years of retirement: People often wish to do the things they have waited all their lives to do. This may involve such things as travel, pursuit of special interests, home renovations or study. The early years of retirement or partial retirement can involve a lot of activity and an associated need for commensurate income and capital.


• Later retirement years: The need for income tends to drop away. People tend to become less mobile and less keen to travel and spend. Research shows that retirement income needs of those in their 70’s and 80’s tends to be lower than for those in their 50’s and 60’s.


• Age Pension: The application of an age pension friendly strategy can significantly buffer total income thus taking pressure off your capital to provide some core income, allowing some of it to be used for lifestyle in the earlier retirement years.


• Tax Rules: Most retirement incomes can be structured with little or no tax payable. Federal superannuation and retirement incomes policy is directed towards encouraging people to use the superannuation system to provide retirement income by providing tax concessions.

The retirement, superannuation, tax, social security and investment worlds and the way they integrate can be complex. Commence planning early.

Plan to satisfy your lifestyle objectives over the various planning periods of retirement.

Consider the present opportunities available to assist you by positioning now to enhance prospective future benefit levels. For example:

• the use of salary sacrifice to superannuation and the associated tax benefits


• starting a superannuation income (Transition Pension)while still working li>
  
• redistributing assets within a family to enhance income sharing in retirement


• using an efficient timetable for the sale of assets in terms of tax


• efficient consideration of Age Pension deprivation rules as they might affect you in retirement


• the inclusion of tax and Age Pension friendly assets


• family tax benefit rules and salary sacrifice


• accessing Government co-contribution


• salary sacrificing ESSSuper contributions


• structuring to take advantage of a difference in age between partners


• family tax benefit rules and salary sacrifice


• youth allowance rules

If you think you have not given sufficient focus to the planning issues that affect you then take the opportunity to make an appointment.