Retirement Income Streams

You've worked hard and it's finally time to enjoy life! But how do you fund your retirement? Here are the most common sources of income for retirees:

Superannuation Pension

Superannuation pensions (or account-based pensions) are one of the most flexible income streams. You can start one once you retire, converting your super into an income stream with tax-free earnings. However, it’s not guaranteed for life and depends on your drawdowns and investment performance.

Age Pension

The Age Pension is a government payment based on your income and assets. It’s means-tested, and most Australians will qualify for some amount, depending on their circumstances.

Rental Income

Investing in property can provide steady rental income and potential growth. However, relying heavily on property can be risky—property values fluctuate, and managing tenants can be tricky.

Share Dividends

Shares can generate income through dividends and capital growth. While riskier due to market fluctuations, diversifying across sectors can help reduce risk.

Annuity Income

An annuity provides a guaranteed income in exchange for a lump sum. It offers predictability, but the long-term returns tend to be lower than growth investments like shares and property.

Defined Benefit Pensions

These are guaranteed income streams, often offered to employees in government sectors. The amount is based on your salary and years of service, and it continues for life, often with adjustments for inflation.

Bank/Term Deposit Interest

While safe and accessible, relying solely on bank interest isn’t ideal due to inflation. It’s a good backup for emergencies but doesn’t provide growth over time.

How to Pay for Retirement

To fund your retirement, first assess your income needs and future expenses. Then, work with a retirement planner to optimise your assets for income, tax efficiency, and Age Pension eligibility.