advantages / disadvantages to not changing from accumulation to pension when you retire

A question?

Husband retired in August. 61. He hasn’t started an account pension. Just living off his end cheque and my wage.
We have a small CG this year. And we did want to add another 25k to his super to offset this.

Are there any advantages/disadvantages to not changing from accumulation to pension when you retire?

 

Whilst your super is in accumulation, all earnings (i.e Capital Gain & dividend income) within the super fund is taxed at 15%.

If you convert your husbands super into an Account Based Pension, the earnings tax rate falls to 0%. So this is a big positive, tax free earnings. A negative is that he will need with take regular payments from the pension each year.

You can operate both an accumulation account and a pension. So even if you start an account based pension, you can still make contributions (assuming you have not exceeded the $1.6mill cap).

There are other considerations, so please see a financial adviser if you are uncertain.

 

Poached from Noel News 20/11/18.



If they're meant to be a guide for how much you'll need in super to live comfortably, there are a few holes in the numbers (without going into too much analysis):

Housing - $100-120/wk - that may cover rates, insurance, water but what about if someone rents?

 

All of those retirement calculators and the ASFA Retirement Standard, which is where I think that link came from, all assume you have your home paid off.
See page 15 of this https://www.superannuation.asn.au/A...ment-Standard-Budgets-Review.pdf.aspx?Embed=Y

So if you're rentvesting in your twilight years, just add on whatever you anticipate your rent will be/is.

 

Note that Centrelink Age Pension alone does not cover even a Modest lifestyle.

 

Your definition of modest must be different to mine. I know a pensioner who just got back from an overseas trip. only source of income is the govt pension.

 

I'm using the ASFA Retirement Standard figures quoted earlier. I know plenty of aussies get by on Centrelink alone.

Managing to squeeze an overseas trip into the budget is impressive though.