Letters from retirement:
What would a retiree say to their pre-retired self? Sophie Imbert has more ideas.
By Sophie Imbert - 3 min read
A little about Sophie
As the Head of Customer Experience and Transformation at Russell Investments, Sophie leads the charge on championing the member experience. She is responsible for member research and insights and influencing the design of member experiences.
Last edition, I imagined what a retiree would say to their pre-retired self if they had the opportunity.
The Part 1 ‘letter’ was based on insights gathered from our member research. The gist of it was to stay calm, understand your options, and to ask for support from your super fund—you’re not alone!
But there’s more to add. Insights show that people don’t really have a solid understanding of the different options for retirement, and even among those who do know their options, there is a sense of being overwhelmed with too many choices. While a person’s level of wealth could lead them to make certain decisions, a key driver was a strong fear of losing what they already have. If you too are feeling this way, know that others share your feelings.
In this Part 2 ‘letter’, I’m keen to allay some of these fears and to provide some clarity on retirement options, so that you can make decisions about your retirement with greater confidence.
Date: Sometime in the not-too-distant future
Destination: A great life after work
Dear Pre-Retired Me,
I hope you’re staying happy, active and well on your journey to retirement.
If you’ve taken my previous suggestion and investigated the advice options offered by your super fund, that’s a great move! Uncertainty about the path to retirement and beyond can be a burden; finding trustworthy sources of information can help lighten the load.
If you haven’t contacted your super fund yet, that’s okay! You still have time to prepare—and if you’re reading this letter, I know these topics are on your radar, which is a step in the right direction.
Since my last letter, I’ve been reflecting from the comfort of my retired life on what else I could say to help you along.
My next best suggestion? Investigate your retirement income options and how these could fit in with your plans. Sure, you might not know exactly what those plans are yet, but understanding the types of income streams available will give you confidence you’ll be able to fund your lifestyle choices when you get around to making them.
I’ll explain with some examples.
Income from super while you work
If you’d like to access some of your super and keep working—maybe part-time or in a different type of role—a transition-to-retirement (TTR) income stream drawn from your super might help maintain your all-important lifestyle while you’re earning less from work.
To start a TTR income, you need to reach your preservation age (between 55 and 60), and transfer some of your super to a pension account while the rest stays in your super account.
Income from super after you retire
But if you need to replace your pay cheque after you leave the workforce, you might be better off taking an income stream from your superannuation—also called an account-based pension or an allocated pension.
That way, your super fund will keep looking after your investments and your money can stay in the superannuation environment (Fun fact: If you are 60 or older, your pension payments are tax free. But if you’re aged below 60, the amount of tax you pay will depend on your circumstances.)
Eligibility for the government Age Pension
You can also check whether you’re likely to be eligible for the government Age Pension and related supplements, which could provide you with up to just under $830 a fortnight as a member of a couple, or just under $1,100 a fortnight if you’re single1.
If you’re not eligible for the full pension, you may still be eligible for a part pension. The amount you receive progressively decreases depending on the value of your other assets and income, i.e. the more you have, the less government Age Pension you are entitled to.
Taking out a lump sum
You probably know you can take a lump sum out of super after you retire (after retirement age that is!). While this is the complete opposite of getting an income stream in retirement, it can be helpful if you’d like to repay your mortgage or make a large purchase (that motor home, perhaps?).
It’s worth noting that most people will choose to have a combination of the above, boosted with other sources of income. Take for example, a retirement income made up of an account-based pension payment + part government Age Pension payment + dividends from shares you own.
That probably seems like a lot, but it’s easy to get more information on all these topics. The Russell Investments team can give you plenty of information to get you started. After all, they’re a lot more than simply providing you with investment returns on your super!
By getting the right information and advice, you’ll feel more settled and confident so you can get on with enjoying the ride and looking forward to a great life in retirement—just like I’m leading now!
And remember… retirement means different things to different people, but it is a new beginning. It's a chance to redefine yourself, pursue passions, and contribute to the world in unique ways. The journey is ongoing, and I'm excited about the adventures to come. Trust in your preparation, ask the experts at your super fund for help, and savour every moment of your retirement journey.
Best wishes and good luck,
Your Retired Self
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