How can I... retire with confidence?

Meet Heather1:

  • 69 years old
  • Working full time
  • Salary of $130,000 p.a.
  • Defined Benefit member
  • Makes after-tax contributions to her super
  • Has super with a retail super fund
  • Will receive a 3% pay increase on 1 January 2018

Heather is planning to retire in two years. She isn’t sure what she needs to organise before then, and is feeling overwhelmed.

She visits her UniSuper On-campus Consultant, who explains that she is already eligible to access her super. Heather is surprised by this, and wonders what else she doesn’t know about her super. The On-Campus Adviser suggests she consults a UniSuper financial adviser who can help her make sure she has her finances in order before she retires. 

Heather’s first meeting with the adviser is held on campus. She answers some questions about her financial situation and they discuss her objectives, including her plan to retire in two years’ time and her desire to leave an inheritance for her children. After the meeting, the adviser prepares a Statement of Advice. They then meet again to review the document and discuss how to move forward.

The adviser makes a range of suggestions to help Heather reduce her tax, maximise any Age Pension eligibility and reduce the tax her children will pay on any inheritance. The major recommendation is that Heather start accessing her DBD benefits now. The adviser also shows Heather some retirement income projections, which indicate that Heather won’t need to sell the family home in order to fund her retirement. Heather’s relieved that she doesn’t have to downsize her home as she loves having the space to host family events and have the grandchildren to stay.

Getting advice has made Heather feel much more relaxed about retiring. She’s also pleased she now has an adviser who understands her situation and can help her make financial decisions in future.

Could a UniSuper financial adviser help you? Get in touch to find out.  

How Heather came out ahead2
+ $2,600  in tax savings in the first year
  • Heather changed her standard member contributions from 7% (after-tax) to 8.25% (pre-tax).
  • Heather is now salary sacrificing up to the concessional contributions cap. This has resulted in a significant tax saving because the contributions tax (15%) is lower than her marginal income tax rate
+ $2,800  in fee savings in the first year
  • By rolling some super into UniSuper from a retail super fund, Heather saved $2,800 in fees in the first year alone. 
+ $13,800  in pension payments
  • Because she is over 65, Heather can start accessing her Defined Benefit Indexed Pension now, before she retires. By doing this, Heather can expect to receive an additional $13,800 in pension payments over the life of her pension.
- $3,800  fee for comprehensive advice
  • The fee for retirement planning advice was deducted from Heather’s super because it was entirely superannuation-related.
…and got ready to retire with confidence.
Age Pension eligibility maximised
  • Heather’s adviser explained that she would maximise her eligibility for the Age Pension by opting for a DB indexed pension rather than a lump-sum when she retires.
An adequate income in retirement
  • The adviser’s modelling gave Heather confidence that she would be able to fund a comfortable retirement without having to downsize her home.
Provision for her children
  • The ‘cash out and re-contribution’ strategy the adviser recommended for  Heather’s super effectively reduced the taxable component of any death benefit payable to her children in the event of her death. This could potentially save her children around $25,000 in tax.

1. Heather is a hypothetical member, but the relevant facts are based on a real member.   2. All figures provided, including this figure, are based on the specific factual circumstances detailed in this scenario. The amounts are not guaranteed and will vary depending on your specific circumstances. Figures are rounded. These calculations are based on legislation applicable in the 2017-18 tax year.

The information contained in this case study is not legal, taxation or accounting advice. It is intended to provide general information only. It has been prepared without taking into account your objectives, financial situation or personal needs. Prior to making any investment decisions, you should speak with a financial adviser to consider whether this information is appropriate for your needs, objectives and circumstances. You should also obtain a copy of the relevant product disclosure statement (PDS) prior to making a decision regarding any investment in any financial product. Whilst care has been taken in the preparation of this information, the accuracy or completeness of the information is not guaranteed. This case study was prepared and issued by UniSuper Management Pty Ltd ABN 91 006 961 799, AFSL No: 235907, which is also the administrator of, and wholly owned by, the UniSuper Superannuation fund (ABN 91 385 943 850). UniSuper Limited (ABN 54 006 027 121) is the trustee of the fund. UniSuper Advice is operated by UniSuper Management Pty Ltd, which is licensed to provide financial product advice to members.