As you approach retirement, the big question looms: should you withdraw your super or keep it inside a super fund? Let’s break it down.
The Temptation of the Lump Sum
You’re about to retire and your super fund might be looking quite healthy. The idea of withdrawing a lump sum for a dream holiday or a new car might be tempting. After all, you’ve worked hard for this money.
But before you do, withdrawing a large chunk of your super can have tax implications. If you’re under 60, you might face a hefty tax bill. Even if you’re over 60, withdrawing too much at once could push you into a higher tax bracket on future earnings. Plus, once the money’s out, it’s out and there are limitations on getting it back in – no more tax-free growth within the super fund.
The Steady Stream of Income
On the other hand, keeping your super in the fund and drawing a regular income stream can be a smart move. This way, your money continues to grow tax-free, and you get a steady flow of cash to cover your living expenses.
Moreover, income streams from super are generally tax-free for those over 60. And let’s not forget the peace of mind that comes with knowing you won’t outlive your savings with a well-planned income stream drawdown. After all, who wants to be the retiree eating baked beans for dinner every night?
Finding the Sweet Spot
So, what’s the best approach? It sometimes boils down to a mix of both. Withdrawing a small lump sum for immediate needs or a special treat, while keeping the rest in the fund to draw a regular income, can offer the best of both worlds. This strategy allows you to enjoy some of your hard-earned money now while ensuring you have a steady income for the future.
Final Thoughts
Retirement is a time to enjoy the fruits of your labor, not stress over financial decisions. Whether you choose to withdraw your super or keep it in the fund, the key is to plan wisely and seek professional advice tailored to your unique situation. Remember, it’s not just about the money – it’s about living your best life in retirement.
DISCLAIMER:
This is intended to be general advice only. Goldsborough Financial Services has not taken into account the objectives, financial circumstances or investment needs of any particular person. For specific advice on your situation please contact your Goldsborough Financial Planner.
