Table of Contents
My retirement pay cheque
There are several income sources that could make up your ‘retirement pay cheque’.
Retire with Confidence tool
Are you confident your retirement income is secure? Use our tool to learn about a comprehensive retirement income plan.
A lifetime annuity can work alongside your account-based pension
People often think they must choose between an account-based pension and an annuity. But you don’t have to put all your super or savings into just one or the other. You can put some money towards an annuity, while the rest stays in your super or other investments.
A lifetime annuity can provide another layer of protection in retirement and with guaranteed regular income payments for your lifetime. You can feel more confident about your retirement spending now.
Account-based pension | Lifetime annuity | |
|---|---|---|
| Regular payments | Yes. | Yes. |
| Income payments | Payments generally continue until your investment runs out. | Payments are payable for life. |
| Easy access to your capital/ability to make partial withdrawals | Usually, yes. | You can access a lump sum usually for a long period based on your life expectancy if your circumstances change. Partial withdrawals are not generally available. |
| Inflation protection | No – you can increase your payments in line with inflation, but generally your capital isn’t protected as you are simply just withdrawing more from your balance. | Yes - option to index payments to inflation. |
Navigating potential risks
We all look forward to enjoying a long, healthy life but outliving your savings could make the reality less appealing. To help your money last for your retirement it’s important to consider the following retirement risks when setting up your retirement portfolio.
Market risk
Exposure to investments such as shares and property comes with the risk of market volatility. When investments earn negative returns, your retirement savings are falling in value even if you don’t make any withdrawals to pay for your expenses.
Sequencing risk
In retirement, timing is everything. If the order and timing of your investment returns is out of sync with your income needs, it could result in less money for your retirement. Poor returns on your investments when your savings are at their peak may have a bigger impact.
Longevity risk
Not knowing how long you’ll live makes planning your retirement income more difficult. It’s important to consider the risk that you could outlive your retirement savings when planning your retirement portfolio.
Inflation risk
Even small increases to the cost of living over time can have a significant impact on how far your money will go. Without the right strategies in place, increases in inflation could mean your retirement income won’t cover your living costs.
Diversifying your income streams
Diversifying your retirement income can help manage your financial risks in retirement. Answering these questions gives you some idea of whether you need to revisit your retirement income plan. As a general rule, the more questions you answer ‘Yes’ to, the more diversified your retirement income is likely to be.Income sources
Does your retirement income come from a range of different income sources?
Market movements
If there’s a significant downturn in the markets, will your income still cover day-to-day expenses?
Income certainty
Does your retirement portfolio bring you regular income certainty, balanced with potential for greater returns?
Balancing risk
Does your retirement portfolio include both low risk and higher risk investments?
Lifetime income
Do you have income that is payable for life, no matter how long you live?
Secure retirement income
Every type of income has its benefits. A smart retirement portfolio can help manage risk and make sure your money is working for you at every stage of your retirement. Like any kind of investing, tapping into diverse sources of retirement income can be key in helping you balance risk and return.
Our lifetime income product delivers guaranteed regular income payable for life, regardless of how long you live.
When you know you have your income needs covered, it can free you up to enjoy life more. Knowing you have a resilient retirement portfolio can help give you the peace of mind to spend with confidence and make the most of your time in retirement. After all, underspending in retirement can be a bit like under retiring.