The 3 key income streams every retiree should know about

As people near retirement age, one of their primary concerns is how they will support themselves financially during their post-working years.

While some may have built up substantial savings, others may not have been able to do so. Fortunately, there are several income streams available to retirees that can help them maintain their desired standard of living.

These income streams can take many forms, including government benefits, personal savings, and employer-provided retirement plans, among others.

So what are the top income streams for retirement?

While there are numerous income streams that can benefit retirees to support their post-work lifestyle, Starts at 60 took a deep dive with Stockspot’s head of client care and advice Sarah King into the “three major income streams for retirees” which include superannuation, the age pension, and personal savings and investments.

• Superannuation pension income stream – when you move your funds from your accumulation account over to a pension account. This is the most tax-effective income stream for retirees with the earnings usually being tax-free when you’re 60 or older. Superannuation is an important income stream for retirees because it can provide financial security, tax benefits, long-term growth, and mandatory contributions, all of which can help retirees maintain their standard of living and support themselves in retirement.

• Government Age Pension: Income from the government to help support the basic living standards of older Australians. It is means tested, with an assets and income test applied to assess eligibility. Some retirees will be eligible for full age pension, or part pension whereas others won’t be eligible based on their assets and/or income exceeding the thresholds. The age pension provides financial security, support for low-income retirees, access to essential services, and social inclusion. It is a critical safety net for those who may not have had the opportunity to save for their retirement or who have experienced financial difficulties during their working years, and it helps ensure that all retirees have a basic level of income to support themselves in their later years

• Personal savings and investments: Owning investments (like shares) or other savings accounts, or term deposits outside of super in your own name, joint names, or in a trust structure. This is an additional source of income that can be drawn down on to supplement your cost of living needs in retirement. While other income streams such as the age pension or superannuation can provide a reliable source of income, personal savings, and investments can give retirees more control over their financial future and help them achieve their retirement goals.

Properly managing retirement income streams, such as the three above, is essential to ensure a comfortable retirement, as well as to protect against financial risks such as inflation, longevity, healthcare costs, and other unexpected expenses.

By understanding your income sources, you can plan for retirement, maximise your income, manage financial risks, and make informed decisions about your financial future.

IMPORTANT LEGAL INFO This article is of a general nature and FYI only, because it doesn’t take into account your financial or legal situation, objectives or needs. That means it’s not financial product or legal advice and shouldn’t be relied upon as if it is. Before making a financial or legal decision, you should work out if the info is appropriate for your situation and get independent, licensed financial services or legal advice.