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Ready to retire?
Jane, 62, spent most of her working life at an Adelaide suburban newspaper group (owned by News Limited) starting thirty-three years ago taking ads for the classifieds and rising to Group Operations Production Manager. Husband Chris, 63, worked at the same company for twenty-nine years. No wonder it was a wrench to leave! “We’d decided to retire in early 2004, but over that Christmas one of our workmates died and on top of that our General Manager was replaced at short notice. It didn’t feel right to leave,” says Jane. Then, in early 2005, the newspaper format changed, causing huge workloads. Again it didn’t feel right leaving at such a difficult time. But when 2006 rolled around, and yet another major production change was scheduled, Jane says enough was enough. “We realised we could put off retiring for years. This time, we were going.” One unexpected advantage of staying at work was the boost it gave their super. “Our balances really grew in those years.” Nevertheless, as retirement day loomed, Jane’s primary emotion was anxiety. “I didn’t know whether we had enough super. It’s scary going from a regular pay packet to… what? Where’s the money coming from?” She and Chris made initial contact with their financial adviser, Ken Bailey, the week before they retired. “The first thing I asked was whether we had enough super. I was terrified he’d say we couldn’t afford to stop working. I didn’t know what we’d do if he said that, because we were determined to leave. Luckily we had enough.” Even though she says she didn’t pay her super enough attention over the years, Jane is thankful for it now. “I’ve realised how important super is. Once you start it off, it really grows. Thank God you can’t touch it!” Jane explains that a few times over the years she needed money and tried to access her super, but couldn’t. “I’m so glad it was locked away or I would certainly have spent it. And then where would we be? I’ve heard young ones say they don’t care about super, they’ve got a house. But it won’t be enough. To retire you want your house paid off, for sure, but you also want super.” On the subject of financial advice, Jane is equally emphatic. “You’re mad if you think you’ll do it by yourself. The retirement tax stuff is so complicated.Even your average accountant would struggle. Chris worked in accounts for years and never heard of all these obscure tax rules.” Jane has also overcome her aversion to claiming the pension. “I never wanted to be ‘a pensioner’, but Ken showed us that by using certain investments we would qualify for a part pension and this would supplement our investment income, making it last longer.” Being on a pension also means they qualify for valuable discounts on utility bills, council and water rates, and public transport.
They are both happy to have reached retirement without debt. They own their house and car. “We’re debating whether to buy a house down the coast. We can have two houses until Chris turns 65, but after that the second house will count as an asset and affect his pension, so we’d have to sell one.” One definite plan is to help their two adult sons financially. “I want to help the boys now, when they need it most, rather than after we’ve gone. Centrelink rules on gifts mean doing this as one lump sum isn’t an ideal financial option for us, and Ken advised us on a better solution, but sometimes family is more important than money alone. It doesn’t make a big difference to our finances, but it will make a huge difference to the boys.” One new retirement interest Jane and Chris will pursue is archery. “The people at work bought us beginner courses as a leaving gift. I was thrilled. I’ve been wanting to learn to ‘shoot arrows’ ever since my tomboy childhood!”
And one final tipJane and Chris decided to bite the bullet and retire after planning it for some time. But if you are about to retire, you might want to consider waiting until after 30 June (i.e. after the tax-free threshold and the Reasonable Benefit Limits increase in line with wage inflation). Waiting until after 30 June to retire and withdraw your super means you’ll save on lump sum tax and be able to withdraw more at concessional tax rates.
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Achieve is issued by Russell Investment Management Limited (RIM), ABN 53 068 338 974, AFSL 247185. In preparing this information we haven’t taken into account your own personal circumstances, including what you want and need for your financial future. It is important for you to consider these matters and also to obtain and read the relevant PDS before you decide whether to acquire or to continue to hold a product. Go to www.yoursupersolution.com.au to download a PDS. Interests in Russell SuperSolution are issued by Total Risk Management Pty Ltd.
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Jane and Chris tried to retire for two years, but various issues at the office conspired to keep them working. Finally they realised there’d never be a ‘good time’ to retire. They set a new date… and stuck to it.