Life Stages

Starting your working Life

When you start work, you need to start managing your money. Five things you should look at straight away are your bank account, tax file number, super, savings and insurance.

Your Bank Account

Your employer will need the details of your bank account so they can pay you. If you don't already have a bank account it's worth comparing fees and charges before you decide which account to open.

Your Tax File Number

If you don't provide your employer with a Tax File Number (TFN), you will be taxed at the highest personal rate. If you don't have a TFN you need to get in touch with the Australian Tax Office (ATO).

Your Super

Generally, your employer must pay 9% of your salary or your wages into a super fund. This is call the Super Guarantee (or SG) and its designed to help you save for your retirement - that means you generally can't access you money until you retire. Your super fund invests your money on your behalf - it may offer you some choice as to how your money is invested. If you learn about your super when you start work it can be of real benefit later.

Your Savings

When you start work have a look at your budget to see if you can start to put some money aside. You may want to save for a holiday or a new car. Your employer may be able to split your pay into two accounts, one for saving and the other for day to day living. Even saving a small amount each week can help you grow your savings into something much bigger over a year or two.

Insurance

Insurance is an important part of any good financial plan. It can provide protection for your family, assets and lifestyle. When you start work, think about the things you value most and how you would replace them if they were lost or damaged. You may not be able to cover the costs if this happens and insurance can help. If you have people who depend on you, think about how you would be able to provide for them if for some reason you couldn't work.

In working Life

Your income and financial needs are likely to change through your working life. There are however some sound financial habits which once learned will always be beneficial.

Budget

Keeping track of where your money goes is the key to getting control of your finances. A budget doesn't need to be more complicated than a list of all the money going in to your bank account and a list of where that money goes. Once you have control over this, you can start to make decisions. It can also help to plan in a certain amount for unexpected expenses.

Save

You can't start saving early enough and whether it's a small or large amount, regularly putting something aside will help. Even if you don't need anything specific, that may change over time and having some savings could be very important.

Invest

When you have saved some money, you can make it work harder for you by investing rather than leaving it in your bank account with low interest rates. There are many types of investments and your choices will depend on how much risk you are prepared to take with your money.

Approaching Retirement

Some people can't wait to get out of the rat-race - others want to ease out gradually to keep the benefits of working a little longer.

Ease out of work and into retirement

Some of us can't wait to retire while others may be reluctant to lose the stimulation and friendships of their working life - not to mention the income. If you define yourself by your work, you may lose direction if you stop work overnight. This is why instead of retiring completely; many people opt to ease out gradually by working part time, working as a consultant or volunteering. Easing yourself gradually out of the workforce, rather than overnight, may help you adjust better to the changes. It comes down to what we want in retirement - and what we can afford. This decision is important because often an extra two years work can fund a full six years of retirement.

Save more

You will spend a long time retired. Today's long life expectancies mean many of us will have 30 or more years in retirement. Working longer means you may have more savings to fund your retirement.

More opportunities for work

As the baby boomer generation moves into their senior years, Australia faces an ageing population and a decrease in the number of the younger workers available. This may mean more employment opportunities are available to you to help you transition into your retirement.

Consider your super cut off

Super Guarantee contributions are only required to be made by your employer until you turn 70. Once your turn 65 you have to meet a "work test" to be able to add more to your super but once you turn 75, contributions generally cannot be made by you or made on your behalf.

Accessing your super

You can generally access your super once you permanently retire after reaching your preservation age or when you turn 65. When you access your super, you will have the option of drawing a lump sum, converting to a pension or combination of both. You can, however, leave your money in your super fund as long as you wish regardless of your age or employment status. This may be particularly useful if you are living off other savings or investments and don't need to draw an income just yet. You only need to draw on your super when you are ready to.

Retirement

Whatever your hopes are for retirement you'll have more chance of meeting them if you have a financial plan in place. Our financial advisers can do the numbers for you and help you put an investment strategy in place to meet your goals. There can be a lot to look forward to about retirement but it's also a good idea to consider some of the harder decisions from a financial perspective.

Where to hang your hat

For many people, retirement may mean changing homes. You may need to down-size, free up money to live on, move to a nursing home or enter a retirement village. Take care to investigate your options and make sure the move is the right one - as it's expensive and stressful to change your mind later.

How can I fund my retirement?

Once the employment income stops, you will be reliant on your super, other investments and savings, and if eligible, the Government Age Pension.

Accessing your super

You can generally access your super when you permanently retire on or after you reach preservation age or when you turn 65. When you access your super, you will have the option of drawing a lump sum, converting to a pension (see below) or a combination of both. You can, however, leave your money in your super fund as long as you wish regardless of your age or employment status. You only need to draw on your super when you are ready to.

Account-based pensions

On retirement you can choose to convert your super to an account-based pension which will provide you with a regular income in your retirement An account-based pension offers unlimited access to your capital, flexible income payments (subject to a minimum payment limit) and tax concessions including 0% tax on investment earnings and tax free payments once you reach age 60. The value of the account depends on investment earnings and the amount of payments made. The pension will continue until your account balance is used up or is withdrawn in full.

Age Pension

The Government Age Pension provides a safety net for older Australians. If you are eligible to receive the age pension, the amount you receive is based on your individual circumstances such as whether you are single or part of a couple and the level of your income and assets. For many people, the Age Pension is considerably less money than they are used to living on. To qualify for the Age Pension you need to have reached the qualifying age (65 for men and currently 63.5 for women increasing to age 65), have income and assets below a certain amount and satisfy certain other criteria such as residency requirements. For full details on current pension rates and eligibility criteria refer to Centrelink at www.centrelink.gov.au.

What if you need care in the future?

If you or your partner need some assistance with daily care, you may be able to stay in your home with the assistance of community services provided by State and local Governments. If you or your partner need a high level of care, you may need to move into a nursing home or hostel. These offer varying levels of care depending on your needs.