3 Easy Ways to Save Money in Retirement
Retirement should be considered the beginning of a new phase of your life: a time to create new dreams, achieve bigger ambitions, and experience life-changing events!
Financial freedom can easily make this a reality, but can often be hard to maintain without proper financial planning in place.
As you begin to notice that you have more available time to spend on your hobbies and maybe activities you’ve always wanted to try, it’s crucial to remember that your retirement savings play a huge role in providing you with your ideal lifestyle.
Financing a Happy and Fulfilling Retirement
It can seem quite overwhelming for some when having to navigate your finances for life during your retirement. Without a regular source of income, it can be quite difficult to figure out how to fund your needs and ensure you’ll be able to live a fulfilling life for the rest of your later years.
It’s important to remember that sufficient retirement planning can positively impact your retirement lifestyle.
Commonly, most Australians start by determining how they are going to spend their retirement savings. It’s important to understand where your money will go towards and often receive expert financial advice, to have a greater chance of achieving your retirement goals.
It’s essential to acknowledge that no matter your age or what stage you are in life, financial planning is crucial.
You may have been familiar with the ins and outs of investments, savings, and taxes that applied to you during your working days, however, you may start to notice that these terms may start to apply differently to you, as a retiree.
Reducing Your Taxes in Retirement is a Great Way To Increase Your Retirement Savings
Just as minimising your taxes during your working days was beneficial, you may also find you are able to reduce your taxes as a retiree to save money
Understanding how you can minimise your taxes lawfully may be especially important for you as it will add value to the retirement life you’ve always dreamt of. Essentially, the more money you are able to keep for yourself, the better!
If you’re unsure about how you might be able to fit tax reduction strategies into your retirement planning, here are three tips that may help you:
1. Explore an Account-Based Pension Plan:
This method can significantly help you reduce your taxes and save money in retirement. By commencing a pension from your super fund, the fund earnings won’t be applied to the 15% tax anymore.
To put it simply, your fund earnings become tax-free! However, those aged 55 to 59 years old may have to pay a small amount of tax until they turn 60.
2. Utilising A Self-Managed Super Fund (SMSF) Might be Suited to Your Needs:
If you are someone who would like greater scope and flexibility for your superannuation and tax planning, it might be beneficial to optimise the SMSF option.
With an SMSF, you are often provided with the opportunity to explore more avenues to manage your taxes leading up to and during retirement.
Carefully considered tax strategies can help you to grow your super balance and reduce tax payments as you transition to retirement.
If you have an SMSF, then you also have the flexibility to decide if you want to sell your assets and assets and transfer the proceeds to super.
3. Use a Transition to Retirement (TTR) Strategy
A transition to retirement strategy lets you access some of your super balance while still working.
You can use this strategy if you have reached your preservation age (between 55 and 60 spending on your date of birth). This TTR strategy can:
- Provide additional income if you have reduced your work hours;
- Allow you to boost your super and save on tax. If you are 60 or older, your TTR pension payments are completely tax-free!
Retirement planning is easier said than done, but there are countless tips and tricks to make things manageable for you.
As long as you work with an experienced financial advisor, you can have a financially stable and fulfilled life during your retirement!
Are you unsure how to manage your retirement planning?
Then, let our team of financial planners at Blue Financial Ballarat help you! Once we understand your goals, we can create a plan to help you reach your unique goals in retirement!
General Advice Warning: This article contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information.