Author: Arden Shaw, Manager, Investment Advisory & Wealth
You have worked hard to build up your superannuation, and now it’s time to transition to a pension. Yet, beneath the surface lies a wealth of financial considerations crucial for shaping your future stability. It’s akin to an iceberg, with the pension representing merely the visible tip, while a myriad of vital considerations remain hidden below.
Here’s why it pays to get some advice:
Cashflow
It’s important that you understand your cashflow, including:
- How much pension will you receive each year (there are minimum and maximum levels set by law).
- Other benefits that you may be entitled to.
- How long your money will last.
Age Pension (Centrelink)
Accessing the benefits you are entitled to can help with achieving a financially secure retirement. The kind of government age pension and benefits you’re entitled to generally depends on your age, assets and income.
Tax Considerations
Whilst the income from your superannuation pension is generally free, if you are over the age of 60, there are still instances where this may not be the case. You may also have other income in your retirement that may be more effective if it is inside super.
Transfer Balance Cap
Your transfer balance cap is a lifetime limit on the amount you can transfer into one or more “retirement phase accounts” (in pension mode). The earnings within the super fund allocated to this account are tax free, which can be a significant advantage of starting the right sort of pension.
Death taxes
You should understand the implications of the rules around what gets taxed and what doesn’t get taxed from your estate, or when it goes down to your adult children.
BDBN
A binding death benefit nomination (BDBN) is a legal document that directs how your superannuation will be distributed upon your death. It can provide clarity and certainty in terms of the distribution of your super. However, not all nominations may be valid and binding, so getting advice and guidance on this is crucial.
Reversionary Status
A reversionary pension can ensure that your chosen beneficiary continues to receive your pension when you pass away. It can be a valuable estate planning tool to ensure that on your death your super savings go to the person you want with minimum fuss. But not everyone is eligible, so we can help ensure your wishes are kept in mind and documented appropriately, to ensure these mechanisms are used appropriately.
Will & Estate Plans
This is more than simply making a will. To be in control of your estate, you should know:
- The role of Wills and Trusts in passing on your financial legacy to your loved ones.
- How to keep your inheritance in the family if one of your children’s marriage breaks down.
- Discover how Superannuation moves to the next generation.
- How good estate planning can minimise Death Taxes.
What should you do now?
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Disclaimer: The information contained is general in nature. Professional advice should be sought before acting on any aspect on this page. Financial planning services provided by TAG Financial Advisors Pty Ltd (ABN 77 154 205 017 AFSL 415632), a wholly owned subsidiary of TAG Financial Services Pty Ltd (ABN 67 075 374 686). Copyright 2024. Please do not reproduce without the expressed written consent of the author.