Part-time retirement
Retirement used to mean that you went from working full-time one day to not working at all the next. This was a big shift in lifestyle but nowdays more and more people are choosing to cut back on their working hours and stress levels rather than jump straight into a life of leisure.
Any form of retirement requires careful planning so your savings can meet your lifestyle. People working part-time or with irregular work hours require more readily available funds than those on secure full-time employment.
Work out a budget for what you need to live on but make sure you take into account money for unplanned expenses. Also consider the part-time lifestyle you can afford.
Your investments and in particular your superannuation can help enormously if they are structured right. Money from super can now be used to supplement a drop in regular income as the strict rules around access to superannuation benefits have been relaxed.
There is no limit on the amount of your super you can access but it must be received in the form of a ‘non-commutable income stream’ after your preservation age. Your preservation age is between 55 and 60 depending on when you were born. Non-commutable means that you are not able to access the capital used to purchase the income stream. Depending on the type of income stream you purchase you may have access to your capital when fully retired from the workforce.
A non-commutable income stream gives you income as a regular payment from your super. Many superannuation funds offer this functionality. Check with your financial adviser to ensure you have enough income to support you leading up to and over the course of your retirement.
There also seems to be more casual and part time positions now available as employers change to accommodate people wanting more flexibility than the traditional ‘nine to five’ job. Workplace arrangements can be tailored to suit not just the business but the individual as well.
Take John who is working full-time, aged 61, with $235,000 in super. He enjoys working but would like to reduce his time spent at work and increase his time spent with his wife and family so he has been considering reducing his working hours. John’s business partner is open to the idea so he visits his financial adviser to determine how his super can support a lower income without losing his lifestyle. His employment income will drop from $50,000 to $30,000. The adviser suggests that John use $150,000 from his super to purchase a non-commutable allocated pension and elects to draw income of about $8,800 a year. John and his wife decide to receive payments monthly, although quarterly, half-yearly and yearly payments are also available. This pension tops up their income and helps cover living expenses.
Those who have not been a part of the paid workforce but have money saved in superannuation may also benefit from the changes around accessing super. You can draw a retirement income stream from your super prior to age 65. Part-time retirement is now more achievable with improved access to super so you can tailor your working arrangements and funds to your lifestyle.
There are different income streams to suit different circumstances and your RetireInvest financial adviser can help you plan the best strategy to meet your part-time retirement needs.