Where does your money come from?

Over the last few weeks we have been running a Pillars of Retirement series.  This series outlines the many ways people fund their retirement. These five major pillars are:

• The Age Pension.  For most people this is the most important source of income in retirement.  65% of people over age 66 rely to some degree on the Age Pension and 80% of people over age 80.  For some people it is their only source of income. Understanding Centrelink’s rules is extremely important.
• The family home.  This is the major source of wealth for most retirees but it isn’t as common for people to use this wealth, also known as equity in the home, to draw an income.
• Superannuation.  After the Age Pension, Super is typically the biggest source of private income in retirement.
• Other savings and investments. This might include cash in the bank, investment properties, shares and managed funds and is the subject of this week’s topic of the week.
• Employment income.  This probably sounds contradictory, after all aren’t we talking about retirees? Well many people retire from full time work but still like to keep very active.  Some volunteer or pursue hobbies while others find they want to return to part time work.  The work bonus can also make it easier to do this by reducing the impact this income has on their Age Pension. We will write more about this next week.

We know many people get their income from multiple sources.  For some it is a mix of the Age Pension and private savings, or maybe investments and super, perhaps even a little bit of part time work.  So a few weeks ago we asked some of our members which of those five pillars played a role in their retirement income.  This is what we found out:

Sources of income in retirement

Now the percentages don’t add up to 100 as people could choose all their income sources, not just the main one.

So the key things we learned were.

• On average people had around 3 sources of income
• Superannuation played a significant  role in most (84%) people’s retirement income followed by savings and investments with 71%
• The Age Pension was significant with 61%.  It was probably lower because many people retire before they reach Age Pension age so initially rely on super and savings at the start of their retirement
• The family home (39%) and employment (38%) were the least utilised.

So thank you to all that completed the survey.  We love hearing from our members and always look carefully at feedback and surveys to see how we can make our newsletter and articles even more relevant and helpful.  So tell us what you think.  Does the survey reflect your experience?  Do you think you might look into some of the lesser used sources such as the home or part time work in the future?

Not everyone has access to super or investments and often they don’t own their own home.  The Age Pension at least provides a safety net so you don’t want to miss out on anything you are entitled to receive.  You can check what you are entitled to receive on our free eligibility calculator below.

Check Your Entitlements