If you’re approaching retirement or already retired, market volatility can make it difficult to feel confident about your income and how long your savings will last.

Understanding your retirement income options can help you create more certainty.

Account-Based Pensions

  • An account-based pension allows you to keep your superannuation invested while receiving regular income payments.
  • You have flexibility over your investments and withdrawals, subject to minimum annual requirements.
  • However, because your money remains invested, your balance can rise and fall with investment markets.

Understanding Sequencing Risk

  • Market falls can have a greater impact during the early years of retirement.
  • If your investments fall while you’re also withdrawing money, your savings may not last as long.
  • This is known as sequencing risk.

Lifetime Income Streams

  • Annuities offer another way to create retirement income.
  • Generally, you invest a lump sum in return for regular payments for a fixed period or for the rest of your life.
  • Depending on the product, this can provide greater certainty regardless of short-term market movements.

Combining Income Options

  • You don’t necessarily need to choose one option.
  • For example, a lifetime income stream could cover essential expenses, while an account-based pension provides flexibility for travel and other spending.
  • Combining income sources can provide a balance between certainty and flexibility.

The Age Pension

  • If eligible, the Age Pension can also provide a government-backed source of retirement income.
  • How you structure your retirement income can affect your Centrelink entitlements, so professional advice can be valuable.

In summary, retirement income options can include:

  1. Account-based pensions.
  2. Lifetime income streams or annuities.
  3. A combination of income options.
  4. The Age Pension, if eligible.

There’s no single best retirement income option. The right approach depends on your spending needs, financial position, risk tolerance and desire for certainty.

Want to review your retirement income strategy?

We’re here to help. Talk to us about creating an income approach that suits your retirement goals and circumstances.

Important Notice:

The information contained in this article is general in nature only and does not take into account your personal objectives, financial situation or needs. You should consider whether the information is appropriate for your circumstances before acting on it and seek advice from a qualified professional.

Personal financial advice can only be provided after considering your individual circumstances and providing the appropriate disclosure documentation. VJC Wealth accepts no liability to any party for any loss arising from reliance on this information unless it has been provided as part of a formal advice engagement.