Trigger points in retirement: What to do between 50 and 60

There are changes to the rules and conditions of retirement income that will become relevant to you about every five years or so beyond age 50.

Many people assume that retirement planning starts when you get close to age pension age. But that is the opposite of the truth.

And most retirees, when asked what their biggest income planning mistake was, say that they should have started earlier.

Here’s why.

As we’ve said, rules and terms and conditions attached to your super and age pension eligibility vary according to your age.

Knowing these rules well in advance can help you take advantage of them and maximise your ultimate retirement income.

And it’s fair to say that the time you can do most to influence this income is when you are aged between 50 and 60.

That’s because most people are generally working and earning peak income at these ages.

It’s also because many of the decisions you make at age 50, 55 and pre-60 can have profound effects on your savings.

Below is a handy checklist for those who are in or approaching this decade. It’s designed to prompt you and ensure that you are on track to maximise your hard-earned savings.

Six actions you can take now to ensure your super will deliver a comfortable retirement. Photo: Getty

These are the six important actions you can take:

1. Know the essentials

Now is the time to identify and become familiar with the handful of essential rules that are relevant to your financial future.

Some are listed below, but checking with your Industry SuperFund adviser can help you create your own financial priority list.

2. Check your settings

As your super will still be in ‘accumulation’ or saving mode, it’s important to check your most recent statement to understand your balance, your financial year returns on these savings, and which investment setting you have selected.

3. Project how much you are likely to need for annual expenses

This handy Retirement Needs calculator shows your likely living expenses in retirement.

It also allows you to factor in ‘big ticket’ items like a new car or holiday.

This ensures you have an accurate estimate of how much you will need to have saved to reach this sweet spot.

4. Consider extra contributions

If, like most of us, your desired spending in retirement is much higher than your current savings, provided you start early enough, extra contributions can help fill the gap.

Such amounts are also tax effective in many cases. There are so many ways to make extra contributions:

• Salary sacrifice
• Spouse contributions
• Downsizer contributions
• Bring-forward arrangement
• Government co-contributions.

You can find out about all of these and more by speaking with a financial adviser at your Industry SuperFund.

5. Consider how you will manage debt

Again, research suggests that at least 54 per cent of 55 to 64-year-olds will be carrying debt into retirement.

There are many reasons for this and it should not be a cause for shame.

But the time to think about how you will eventually pay off any outstanding debt is well before you leave full-time work.

Again, some ways of paying down a mortgage are smarter than others when it comes to your eventual retirement income.

6. Anticipate opportunities and options

It’s important that you know what lies ahead.

For instance, the Transition to Retirement (TTR) strategy enables many 55+ Australians to ease back on work and access some of their super.

Understanding the detail of this option will help you understand if it’s a useful strategy for you.

Separately, knowing more about downsizing legislation is equally important.

With couples aged 55+ now able (pending conditions) to put up to $600,000 extra into super, this type of contribution can make a massive difference to your day-to-day life when your access your super in a retirement income stream.

And understanding the optimal time to switch from an accumulation account to one where you are drawing down an income is also critical.

These six trigger points are offered as a top level summary only. Every individual retiree will have a different set of circumstances and there are many other rules that can apply.

Taking time to become more familiar with your own super account and earnings and to discuss what this means and how you can manage it, with your Industry SuperFund adviser is the best gift you can give yourself at this age and stage.

Stick with your Industry SuperFund in retirement and your money could go further. Visit compareyourretirement.com today.

Read more of the Road to Retirement series
Part 1: It’s time to take control of your super
Part 2: What you need to know about using your super
Part 3: Tackling the FORO … why this won’t happen

This content is sponsored by Industry Super Australia.

This information provided in this article is of a general nature only and does not constitute financial or other advice. It is important to consider personal objectives, financial situations or particular needs when making financial decisions.