What a difference a plan makes

A common question is; 'Why would I need to see a retirement planner?' There a number of ways that a retirement planner can help you, particularly if you are preparing for retirement. Let’s look at five of the most common areas in which a planner may be able help you.

Cashflow

Generally, when we are working, our income comes primarily from our salary. Income in retirement is likely to come from a combination of sources, such as income streams, social security and earnings from investments or a part time job.

A retirement planner can help you put together a plan to replace your salary once you stop work. For those of us who will receive a lump sum rather than a pension from our superannuation fund, regular income in retirement can be very important.

Tax

No one likes paying tax, however, in retirement without a regular salary it is particularly important to minimise the amount of tax that you have to pay on your income. Changes to the superannuation system, that allow tax-free income after age 60 from taxed superannuation funds, have altered the retirement planning landscape. Some traditional income sources such as fixed interest investments like term deposits are generally fully taxable and have become significantly less attractive in retirement.

Whether you are retiring before or after age 60 a retirement planner will be able to discuss a range of options for you to consider such as superannuation income streams that can provide a regular income and can help you minimise or eliminate tax.

Social Security

Understanding the complexity of the social security system is difficult. However, after assessing your situation, a retirement planner can help you to determine if you may be eligible for social security support. Importantly, as your circumstance change over time, social security entitlements may also change.

Security and Peace of Mind

A basic rule of sound investing is to spread your money over a range of different investments. This is called diversification. It is like the old saying: 'Don’t put all your eggs in the one basket'.

History shows that different types of investments, and investment managers, perform better than others at different times for different reasons. That’s why diversifying your investments can assist with:-

• Reducing the total amount of risk in an investment portfolio;
• Optimising the return you’re likely to get for the risk taken; and
• Smoothing out the volatility – the ups and downs of investment returns over time.

Having a diversified selection of investments also avoids the pitfalls of trying to time the market. Your planner will help you develop a plan that is right for your circumstances and suggest a range of investments that suit your retirement objectives.

Ongoing support

As you get older, you will probably find that your needs will change. At the same time, taxation, social security and superannuation legislation are also constantly evolving. An ongoing relationship with your planner means they are there to assist you over the long term. It is worthwhile remembering that many people considering retirement today will be retired for more than 25 years, and so ongoing support is a vital part of your long term planning.