Income Planning for Retirement

Today's seniors have a great diversity of financial needs upon retirement. While individual circumstances for seniors mean each person has different goals and needs, most share the following concerns including:

• Making the best use of their current income, assets, and other resources
• Regular cash flow
• Being able to have a reasonable quality of life in retirement
• Being able to leave a legacy to others after their death.

To assist in meeting the financial needs of seniors, there are a range of services and advice offered by financial institutions. These include:

• Financial planning. This involves estimating and planning for financial needs through all three of the phases identified in retirement – active, passive and final.
• Risk-management strategies. These include life insurance, health insurance and tax planning.
• Investment strategies and vehicles. These may include investment growth, income and asset allocation as well as stocks, bonds and mutual funds.
• Sources of retirement income from a variety of retirement plans.   

Types of income streams for seniors

Some common types of funds usually embraced by older Australians when forward planning for their retirement years are outlined below.

• Tax-free allocated pension. Money to live on is drawn down from a lump sum in regular installments until the capital is exhausted or the person dies. (There are usually restrictions on how much can be drawn down at a time or per year). There are products that integrate a pension payment with a cash management account, allowing seniors direct access to the capital of a pension fund through a bank branch, ATM or online banking. Any remaining benefit can be “left” to a surviving spouse or nominated beneficiary. The tax-free aspect is obviously a winner.
• Retirement Income Streams. Your savings from superannuation, investment property, and equity in your home, money in the bank or inheritance is turned into capital from which a regular “income” is drawn down. It can be a convenient, secure and tax effective way to provide for your retirement. This type of investment is a catch-all term that includes superannuation allocated pensions, term allocated pensions and other complying annuities.
• Fixed Interest Investments. Banks, building societies, credit unions, super funds, life insurance companies and financial services organizations provide a variety of income stream products or structures.

Sound advice should be sought from an independent financial planner before any financial decision is made. The Federal Government has some terrific resources on its websites as well so there is plenty of reliable information available as you research your various needs and the products currently on offer.