While retirement can be an exciting time for most, for some people the lead up can feel daunting. Losing the stability of a regular pay cheque can leave retirees-to-be nervous. So, what are some of the options when you reach retirement? 

Account-based pensions

As the name suggests, an account-based pension is when you draw a regular income from your superannuation account. This is sometimes referred to as an 'income stream'. Your superannuation remains invested and continues to generate gains and losses according to investment markets. There’s a minimum amount of super you need to withdraw each year, otherwise the amount of money you withdraw is flexible and can be changed. 

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Lifetime Pensions

Considered the new kid on the block, some super funds – including TelstraSuper – are now launching types of guaranteed income products. This follows on from government reports that called on super funds to provide products that give more certainty and confidence to retirees of the longevity of their retirement savings.

TelstraSuper offers a RetireAccess Lifetime Pension. This is where the member gets a guaranteed, regular, and tax-free income payment in exchange for a lump sum purchase price. These payments continue for your lifetime, and you can even opt to have them last for your spouse’s lifetime too. 

In this case, depending on the features you choose at the time you set it up, it doesn’t matter what happens to investment markets, you are still guaranteed the set amount of income for your lifetime. 

Alternatively, one feature TelstraSuper offers is a market-linked option where the income isn’t guaranteed and the actual payment amount may differ from year to year, based on the performance of the market.

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Check out our latest podcast with Money Magazine where Caroline Rees from TelstraSuper Financial Planning shares how retirees should think about longevity and how expenditure changes over time.

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Income layering

You don’t have to pick one option or another, in fact it’s often recommended to use a mix of approaches. This is called income layering.

A typical scenario could be a retiree investing 30% of their retirement savings into the Lifetime Pension, with the remaining 70% invested in the fund’s account-based pension. Many retirees would also draw a third income from the Age Pension.  

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TelstraSuper members can get simple advice about their TelstraSuper accounts over the phone at no additional cost – it's part of your membership. You can also get more complex advice – for instance about income layering - from TelstraSuper Financial Planning for an additional fee. Simply call 1300 033 166 to find out how we can help.