When Bill hits 55 he wants to slow down and spend more time enjoying his hobbies. He talks to his employer, who lets him work part-time.
However, Bill wants to maintain his full-time income. Using his super savings of $582,378, he purchases a Mine Wealth + Wellbeing Pre-retirement Pension – drawing down $26,500 in the first year, or around 4.5% of his account balance, in concessionally taxed fortnightly pension payments to supplement his reduced take-home pay.
At the same time, his employer continues contributing 9.5% of his income to his super for the next five years. After taxes, at the end of five years Bill has managed to save $49,895 in his super, while his pension savings amount to $579,779, giving him a total of $629,674 in retirement savings.
Assumptions:Salary of $100,000 pa. Salary and wages increase at 3% pa. Net rate of return after fees and tax is 7.46% Member has private health insurance. Amounts are in today’s dollars. Source: Mine + Wellbeing Financial Advice July 2014.