- Published on 29 Jan 2024
- - Self Managed Superannuation, Investment & Financial Advice, Transition to Retirement
Understanding Non-Commutable Account-Based Pensions
For Australians over 60, non-commutable account-based pensions offer a flexible retirement income stream. Unlike traditional annuities, these pensions allow you to access your savings as needed, providing financial freedom post age 60 in retirement or whilst still working. The positive aspect lies in the control and flexibility they offer, empowering retirees to tailor their income to their lifestyle.
The Positives
One significant advantage is the ability to manage your investments within the pension account, potentially growing your retirement savings. Additionally, any earnings within the pension account are tax-free, contributing to a more tax-efficient retirement strategy. Moreover, upon your passing, any remaining balance can be passed on to your beneficiaries, offering a legacy benefit.
The Drawbacks
Non-commutable account-based pensions come with some limitations. They are subject to market fluctuations 9as is the case with accounts in accumulation phase as well), which means your income may vary depending on investment performance. Furthermore, there's a risk of outliving your savings if not managed prudently. Additionally, there are restrictions on lump-sum withdrawals to a maximum of 10% of the opening balance each year, limiting access to your funds in certain situations.
Final Thoughts
Non-commutable account-based pensions offer retirees flexibility and control over their retirement income. While they provide tax benefits and potential investment growth, they also come with market risks and limitations on withdrawals. Understanding these pros and cons is crucial in making informed decisions about your retirement strategy. Consulting a financial advisor can help you navigate these complexities and tailor a plan that aligns with your goals and circumstances.
Why not take the next step and talk to a qualified financial planner?
LifeTime Financial Group are specialist (holding appropriate accreditations) advisors who are ideally positioned to assist you with your access to lump sum needs.
If you would like to discuss your wider financial planning needs, why not call us today on 03 9596-7733? There is no cost or obligation for our initial conversation/meeting.
Alternatively, please make an appointment using our online Book an appointment (Blue button above)
Why not take the next step and talk to a qualified financial planner?
LifeTime Financial Group are specialist (holding appropriate accreditations) advisors who are ideally positioned to assist you with your SMSF requirements.
If you would like to discuss your wider financial planning needs, why not call us today on 03 9596-7733? There is no cost or obligation for our initial conversation/meeting.
Alternatively, please make an appointment using our online Book an appointment (Blue button above)
LifeTime Financial Group. A leading privately-owned Melbourne-based Financial Planning practice with no ties to any financial institution.