When should you really start planning for my retirement?

Whether it is planning for retirement, buying a new home, deciding what school to send the kids to, what job to take, or where to go for holidays, there are simply numerous variables that need to be taken into account.

For many of us, retirement will last for 20 to 30 years, so getting it right becomes very important indeed.

The short and simple answer to the question posed is ‘as early as possible’. Retirement planning is something we should start to think about as soon as we start working.

I am not saying for one moment that retirement should be at front of mind for a 25-year-old, however a couple of simple steps put into action very early in working life, that form part of a ‘set and forget’ strategy, may be the difference between a bleak or a comfortable retirement.

Superannuation is the Government’s preferred retirement savings structure, and it provides for some very attractive tax benefits.

Employers currently contribute 9.5% of their employee’s salary to super and many employees think that is enough, particularly as this will increase to 12% over the coming years. But will that be enough?

I have always held the view that, coupled with the good and robust investment of superannuation savings, in a low-cost super fund, extra money should be contributed to super. And what is the magic number?

If someone were to have somewhere between 15% and 18% of their salary contributed to super over their entire working life, their accumulated super at retirement would have a significant impact on the type of lifestyle they can afford in retirement.


Source:  Peter Kelly | Centrepoint Alliance

Age Pension – don’t set and forget!

Applying for an age pension is not an easy task.

There is a comprehensive application form and depending on your circumstances, numerous documents that need to be photocopied and lodged as well.

If an application is successful and the age pension is granted, many age pensioners never want to deal with Centrelink again.

It is extremely important for age pensioner to remember they have a legal obligation to notify Centrelink, within a 14 day period, of any change in their circumstances or assets.

The following is not a full list of changes in circumstances but provides examples of events when a pensioner is required to notify to Centrelink;

  • buy or sell shares or managed investments
  • open new bank accounts
  • have combined assets of more than the amount currently being assessed
  • receive a lump sum amount or one-off payment, e.g. inheritance
  • move into or out of a nursing home, hostel or retirement village
  • are charged with an offence and placed in prison or admitted to a psychiatric institution
  • gift more than $10,000 worth of assets in an income year
  • changes their employment
  • travel overseas for a period of more than 6 weeks
  • marry, separate, divorce, or become widowed
  • rent or sell their home, or purchases another

Centrelink review the value of share and managed funds automatically twice a year, in March and September. However, to ensure an age pension is being assessed correctly, it is extremely important for pensioners to notify Centrelink if they buy new investments or sell investments to pay expenses, or to travel.

It is also important to remember that if you fail to notify Centrelink of changes in your circumstances and Centrelink discovers they have overpaid the pension, they will raise the overpayment from the date the change was effective. On the other hand, if Centrelink becomes aware of a person’s pension being underpaid because of a change which was not notified or notified late, they will only adjust the pension from the date they became aware of the change and not from when the change actually took effect.

So, what is the best way of keeping Centrelink informed? Going into the local Centrelink office, or speaking to someone on the phone can seem either too daunting or requires the patience of a saint.

The best place to start is to establish an online ‘myGov’ account and link your Centrelink account.


Source:  Mark Teale | Centrepoint Alliance