Retirement Planning & Experiences

[Jacques Vert]

"If I am not mistaken a financial planner would cost $2500-$5000 or more and that's something I cannot justify trying to get out of this mess."

You should be able to find advisers who will provide initial consultations without a fee. Have you asked your current superfund if they have such a service?

 

[Jacques Vert]

Until then, if you leave your employment or "retire", since you are over 60 you can access part of or your entire balance and pay off any debt as a lump sum. (It does not matter if you find gainful employment somewhere.

To add to that, last time I checked , you didn't have to retire from your main job , just cease an employment contract . Many get around this by working on election day. You sign a contract , do the day's work and your contract has finished . Box ticked.

But make sure you check this with an adviser and/or your accountant. The above is not financial advice .

 

[QF WP]

Note at 65 years old the TTR transitions back to allocated pension and tax on earnings will be back the same as accumulation phase.

Have appointment with financial planner next Monday.

@JohnK, once an account moves from either super to account based (allocated pension) or from TtR AP to retirement AP, then tax on earnings are zero.

From moneysmart.com.au:

• Transition to Retirement (TTR) Pension (Age 60+): Regular payments are tax-free, but investment earnings in the fund are taxed at up to 15%. You cannot take lump sum withdrawals, and payments are capped at 10% of the balance annually.
• Allocated Pension / Account-Based Pension (Age 60+): Income payments are tax-free, and investment earnings within the fund are also tax-free.
• Under Age 60: TTR and pension payments are taxed at your marginal rate less a 15% tax offset.
• TTR to Account-Based Pension: Once you turn 65 or declare full retirement, a TTR account converts to an account-based pension, making investment earnings tax-free

 

[JohnK]

If you have any debts still costing you interest at the age of 65 it makes good sense to eliminate the debts completely. It is unlikely returns on an income stream would be greater than the cost any interest.

Good advice. Debt will be close to wiped out soon.

You should be able to find advisers who will provide initial consultations without a fee. Have you asked your current superfund if they have such a service?

I have set up free meeting with Insignia Financial next Monday.

I know I want TTR. I'm curious if anyone thinks it's a bad idea or has other advice.

 

[OATEK]

Good advice. Debt will be close to wiped out soon.



I have set up free meeting with Insignia Financial next Monday.

I know I want TTR. I'm curious if anyone thinks it's a bad idea or has other advice.

I used TTR for 3 years to cut back work hours from 5dpw to 3 dpw. I found the time that gave me was valuable both for preparing for retirement, and for time with family (esp grandchildren).

 

[Quickstatus]

I'm curious if anyone thinks it's a bad idea or has other advice.

Whether it's a bad idea depends on personal circumstances. It's your money. The downside is you are accessing super earlier and reducing the compound interest potential. The upside is you can be less financially stressed

 

[Hollywood100]

Apologies, I am not asking for free advice just thoughts. If I am not mistaken I can set up free meeting with ANZ super.

I am now 62 years old and want to transfer around $250,000 into a TTR. I believe the fund earnings are taxed at 15% but if I withdraw 10% a year as regular income stream there is no tax even though I am working?

Plans are to keep working until at least 70 years old but the TTR can help me reduce some of my debt which is hurting. At the same time I can increase my regular super savings to ~$30,000 saving some income tax as well?

Thoughts?

Hi John,
Yes, you are correct, your TTR pension will still be taxed like a super fund at 15% but the pension you receive is tax exempt and not included in your taxable income. I assume you need this income to assist with your living costs otherwise I wouldn't be drawing down until retirement, oh and you can consider the cessation of any gainful employment since turning 60 strategy in order to unlock all of your super at that time of the declaration to then be able to start a ABP(account based pension) which is all tax exempt on earnings and tax exempt pension, speak to your adviser. Also do a health check on your super fund regarding fees etc as there are more cost-effective options available nowadays eg Vanguard Super referring to the barefoot Investor (Scott Pape) and his wonderful articles.

 

[CaptJCool]

Time is the only resource you cannot get back.

I quit work at 53 360 days
Had a tide over year while still having a mortgage
Then onto a fairly fully taxed Comm govt pension until 59. From there tax concessions happened at 59 & 60

It’s a joy to live life fully free from work. Especially from stupid people, those who hardly work, and bosses

What I learnt from thee first 6 MONTHS OF
“MAKING MONEY WHILE I SLEEP”
(Hay while the sun shines)


Plans still need to be agreed upon

Effort then Rewards

Sub-100 is a beautiful thing

Get Out in the Sunshine

Exercise, exercise, exercise

There’s always the next day

Rules aren’t made to be broken

Challenge will happen At least every other day


Play

Jazz

Walk One Street back

Activists need to put their money where their mouths is

 

[Quickstatus]

you can consider the cessation of any gainful employment since turning 60 strategy in order to unlock all of your super at that time of the declaration to then be able to start a ABP(account based pension)

The problem with that is that would lock in some or all of the transfer balance cap. This means the locked in TBC cannot increase in the future due to CPI increases

 

[JohnK]

Whether it's a bad idea depends on personal circumstances. It's your money. The downside is you are accessing super earlier and reducing the compound interest potential. The upside is you can be less financially stressed

It's a tough one.

Wife and I made a decision recently that we'll keep working another 8-9 years so our daughter can finish year 12 at school. That will put me at 70-71 years old but to be honest if my current motivation continues why stop working?

That then brings an interesting dilemma. I'm saving super for a time in my life where I'm not going to need that much money. We don't eat out, don't go to movie etc. Our main expense is holidays in Thailand.

So that then brings up the next burning issue. Old aged care. Let's assume that we need aged care. Forget Australia. In Thailand we can get a private Health Insurance policy for around 250,000 baht/year. We already have a house in Chiang Mai and if we were to get care 12 hours a day that would cost around 220,000 baht/year or less. We can easily live on 30,000 baht/month or 360,000 baht/year. So 830,000 baht/year (AUD40,000) for care and comfortable life. Current pension projection is $75,000/year + investment properties earning.

I think I can safely use super to pay off some debt and reduce the burden.

 

[Quickstatus]

Current pension projection is $75,000/year + investment properties earning.

Sounds like you have done some sums/budgeting and have some buffer.. Though is that realistic?. I'm not saying it is not, but I always caution that budgets should be realistic and not bare bones..

Also consider that at some stage OAP will kick in. I don't know how that works for expats living OS.

 

[Hollywood100]

It's a tough one.

Wife and I made a decision recently that we'll keep working another 8-9 years so our daughter can finish year 12 at school. That will put me at 70-71 years old but to be honest if my current motivation continues why stop working?

That then brings an interesting dilemma. I'm saving super for a time in my life where I'm not going to need that much money. We don't eat out, don't go to movie etc. Our main expense is holidays in Thailand.

So that then brings up the next burning issue. Old aged care. Let's assume that we need aged care. Forget Australia. In Thailand we can get a private Health Insurance policy for around 250,000 baht/year. We already have a house in Chiang Mai and if we were to get care 12 hours a day that would cost around 220,000 baht/year or less. We can easily live on 30,000 baht/month or 360,000 baht/year. So 830,000 baht/year (AUD40,000) for care and comfortable life. Current pension projection is $75,000/year + investment properties earning.

I think I can safely use super to pay off some debt and reduce the burden.

As we all know we either "fail to plan" or "Plan to fail" go see a good Financial Planner and make a plan

 

[VPS]

The other issue that I've found is people who plan to work until they are 70+ and base their whole financial planning on that and then for many reasons are unable to keep working and then have no fall back plan

 

[serfty]

Also consider that at some stage OAP will kick in. I don't know how that works for expats living OS.

If you are aged 67 year and older and have lived in Australia for at least 35 years from the age of 16 and would otherwise qualify for a pension (e.g. means test) then you are entitled to receive it no matter where you are.

You cannot apply from overseas* and you must have lived in Australia for at least two years before applying. You would not be eligible for some addons such as Energy Supplements.

The maximum a single pensioner currently gets is AUD28,839.29 per year; the maximum for a pensioner couple is $43,586.40.

https://www.servicesaustralia.gov.au/payment-schedule-and-rates-for-people-outside-australia?context=22526

*There are exceptions as pointed out by @mrsterryn below.

 

[mrsterryn]

If you are aged 67 year and older and have lived in Australia for at least 35 years from the age of 16 and would otherwise qualify for a pension (e.g. means test) then you are entitled to receive it no matter where you are.

You cannot apply from overseas and you must have lived in Australia for at least two years before applying. You would not be eligible for some addons such as Energy Supplements.

The maximum a single pensioner currently gets is AUD28,839.29 per year; the maximum for a pensioner couple is $43,586.40.

https://www.servicesaustralia.gov.au/payment-schedule-and-rates-for-people-outside-australia?context=22526

You maybe able to apply from overseas if you live in an agreement country for example Japan . There are numerous countries with agreements

 

[SydneySwan]

It's a tough one.

Wife and I made a decision recently that we'll keep working another 8-9 years so our daughter can finish year 12 at school. That will put me at 70-71 years old but to be honest if my current motivation continues why stop working?

That then brings an interesting dilemma. I'm saving super for a time in my life where I'm not going to need that much money. We don't eat out, don't go to movie etc. Our main expense is holidays in Thailand.

So that then brings up the next burning issue. Old aged care. Let's assume that we need aged care. Forget Australia. In Thailand we can get a private Health Insurance policy for around 250,000 baht/year. We already have a house in Chiang Mai and if we were to get care 12 hours a day that would cost around 220,000 baht/year or less. We can easily live on 30,000 baht/month or 360,000 baht/year. So 830,000 baht/year (AUD40,000) for care and comfortable life. Current pension projection is $75,000/year + investment properties earning.

I think I can safely use super to pay off some debt and reduce the burden.

Sounds like you may be planning to retire in Thailand and therefore becoming tax resident there. You need to ascertain as to how Thai authorities will view your Australian private pension. Although it is tax-exempt if paid to you as a tax resident in Australia, in Thailand it may be viewed as taxable.

Disclaimer; This is not tax advice.

 

[Quickstatus]

Also there is the issue of Medicare if no longer resident in Australia (even though citizenship is retained)

I think if overseas for 5 years continuous Medicare coverage is lost. However so long as Medicare card is valid, then there is coverage.

 

[Jacques Vert]

I think you'll find the correct term is "tax-exempt". "Tax-free" refers to a portion of your balance.

 

[SydneySwan]

I think you'll find the correct term is "tax-exempt". "Tax-free" refers to a portion of your balance.

I have updated my post.

 

[mrsterryn]

There is no agreement with Thailand

If a person departs permanently overseas prior to age pension age they must recommence residency in Australia for the two years mentioned by @serfty
The below information is from the Social Security Guide 7.1.6 Portability for former Australian residents


"A person must satisfy the SSAct definition of Australian resident (1.1.A.330) in order to lodge a proper claim for a pension. Generally, this means they must be residing in Australia when they lodge their claim.

A person who was previously an Australian resident as per the SSAct definition but ceases to satisfy that definition, for example, because they move overseas to live, is referred to as a former Australian resident.

A former Australian resident who returns to Australia can lodge a claim for a payment if they have genuinely resumed residing in Australia, based on an assessment of their circumstances and the evidence available against the factors listed in SSAct subsection 7(3), and all other claim requirements are met. There should be a clear intention to remain permanently in Australia. A person who intends to return to Australia for a defined period only (for example, 2 years) would generally not be considered to have resumed residing in Australia."