New approach to transition to retirement strategies needed
Clients entering retirement need help to reassess their ongoing approach to superannuation and changing income needs, rather than just focus on a transition to retirement strategy, according to Michael Hutton, wealth management partner at HLB Mann Judd Sydney.
He said many people did not understand what options were available in retirement - such as taking additional money out if it suits their circumstances, or varying their pension payments provided they meet their minimum payments, he said. Many people think their minimum pension payment is also the maximum they can withdraw, he added.
Many people also mistakenly think their superannuation should be part of their estate and that a large sum should be left to beneficiaries. "The government expectation has always been based on encouraging people to use super to fund their own retirement, not to create a tax-advantaged vehicle to help in estate planning," he said.
Concerns over capital gains tax (CGT) obligations and the tax of 16.5 percent levied when non-dependant beneficiaries receive payouts from superannuation - the so-called 'death duty' - also highlight this misunderstanding, Hutton said.
Those with more money than they'll need to fund a comfortable retirement also have options, such as withdrawing extra to pay a bond or deposit when moving into a retirement home, he said.
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