Investing for retirement

What's the best way to exit SASS?

It’s possible that you’ve been in SASS for up to 30+ years and now it’s time to make one of your most important financial decisions.

Once you’ve met the requirements to have your SASS benefit paid, what are your options for exiting SASS?

• Option 1: Roll over all your SASS into another super fund, and stay invested in super, with the benefits that come with it.
• Option 2: Take your final benefit as a lump sum. Keep in mind that once you take your money out of super, you may not be able to put it back in.
• Option 3: Try a combination of both – take a lump sum big enough to pay off your debts and keep the rest in super.
• Option 4: Some SASS members who were compulsorily transferred from a previous scheme may also have the option of a lifetime pension.
   

An Aware Super financial planner¹ can help you navigate your SASS exit. They can take you through your options and help you decide what’s right for you.

Getting comfortable with the exit process

Once you’re clear and confident about what you’re going to do with your final benefit, you’re ready to go through the exit process. Do you know the steps involved?

Here’s a simple checklist, with three key steps:

1. Notify State Super
   1. Your employer must complete a form (E403) to notify State Super that you’re ceasing employment or if you’re over 65, having your benefit paid while you’re still working.
2. Apply for payment of your SASS benefit
   1. You should complete an application to State Super (known as member form 412), requesting your benefit to transfer to a super fund account of your choice.
3. Finalise your payment / rollover
   1. Benefit payments are generally processed within five working days of receiving all the completed paperwork, including the information from your employer.
       

Things to consider before you exit SASS

Before you leave, here’s a list of important questions to ask yourself:

• Have I accrued the right amount of points?
• Will the timing of my exit maximise my employer finance benefit and basic benefit?
• What will I do with any long service leave?
• Are there any tax implications of my decision?
• Do I know how much I need to live on in retirement?
• Do I know how / where I’m going to invest my funds?
• Are my funds going to remain within the super system?
• Do I know how much income I need from my investments to fund my retirement?
• Am I eligible for Centrelink entitlements such as the Government Age Pension, and how long before I can access them?
   

For more help on deciding whether to take a lump sum or roll over your SASS, reviewing your investment mix for super, or setting up an income stream for retirement, you can attend a SASS seminar or make an appointment with an Aware Super planner.

¹ Financial advice services are provided by Aware Financial Services Australia Limited (ABN 86 003 742 756, AFSL 238430), wholly owned by Aware Super.

The five skills you need to manage your money in retirement

You’ve worked hard to build your savings, so in retirement you’ll want to make sure you’re doing what you can to help protect it.

A sound investment strategy can make all the difference. If you’re planning to manage your own investments in retirement, you’ll need to know enough about investing to:

• Generate an income.
• Make sure you have enough money to last.
   

So, what does it take to manage your money in retirement?

Our experts name the top five skills you’ll need:

1. Assess your tolerance to risk

Investing for retirement comes with risk. That’s because it’s much harder to recover losses when you’re drawing down on your money and you can’t wait for markets to recover. In retirement, four of the key financial risks you’ll face are: 

• Investment risk – the risk that you lose some or all of your savings, or that your investments don’t give you the return you expected. 
• Inflation risk – the risk that the income you earn from your investments is not enough to keep pace with the rising cost of living.  
• Longevity risk – the risk of outliving your savings because of the two unknowns in retirement, how long you’ll live and how investment markets will perform. 
• Sequencing risk – the risk that the order and timing of your investment returns is unfavourable, resulting in less money for retirement. 
   

When you take on the task to manage your own money in retirement, you’ll need to understand how much risk you’re exposed to – and how much risk you’re comfortable taking. Managing your risk in a way that balances growth with a level of security and stability you need can help you sleep easy at night. 

2. Diversify your investments

Spreading your money across different asset classes (such as shares, fixed income and property) and different investments within each asset class is crucial to reduce the risk that your investments lose value at the same time. By diversifying your investments, you’ll increase the chances of a better overall return and therefore a better financial position in retirement. As the value of your assets move up and down, it’s important to re-balance your portfolio regularly to manage your exposure to the different asset classes. 

3. Monitor the markets

When you’re managing your money in retirement, you’ll need to keep an active eye on movements in the markets to ensure you’re optimising the performance of your investment portfolio. In retirement, "time in the market" and "timing the market" will influence your success. 

4. Navigate your behavioural bias 

As humans, we’re wired to veer on the safe side. A body of research¹ called ‘The loss aversion theory’ suggests we feel twice as much pain from a loss than the pleasure we feel from the same amount of gain. When it comes to investing, it can mean we miss out on opportunities for gains by settling for a lower rate of return than we need to. While biases such as these keep us feeling safe in the short term, playing it too safe over the longer term could see your retirement savings fall short. 

5. Manage a budget for the next 30 years

As you get older, you’ll spend your money on different things. Adapting your budget for each stage of retirement and ensuring you have enough money for now and for later will need to be one of your core skills. 

Managing your money in retirement can be rewarding, but it also takes time, vigilance and skill. If that sounds like a lot to handle, an Aware Super financial planner can help keep your finances on track. 

They’ll help you make decisions by giving you the pros and cons of each option as well as saving you time and energy. They can be your personal financial coach for your retirement, and knowing how retirement plans can change, they can adapt your plan for any unforeseen events. 

Our retirement planning experts have helped thousands of SASS members successfully prepare for retirement. To talk through your personal circumstances and options, book an obligation-free appointment.

¹ Financial advice services are provided by Aware Financial Services Australia Limited (ABN 86 003 742 756, AFSL 238430), wholly owned by Aware Super.

What SASS members say about the value of ongoing advice

When you seek one-off advice from a financial planner, such as on your tax, super or investments, this advice will be for one point in time. After that, it’s up to you to make sure you stay on track with your plan - both now and in the future. 

Ongoing advice means you’re checking in on a regular basis with an expert who’ll review how your strategies are performing. As your circumstances or goals change, your financial planner makes the necessary adjustments to keep you heading in the right direction.  

Check out the top five reasons why SASS members value ongoing advice with their planner:

'I can sleep easy at night, knowing there’s a plan.’

Whether you’re planning your retirement, or already retired, keeping an eye on issues such as financial markets, the local and global economy, and policy movements can be stressful. With a planner by your side, you don’t need to constantly look over your shoulder. They’ll work closely with you to develop a long-term plan based on your financial and lifestyle goals, which also considers your tolerance for risk. You can rest easy knowing your planner reviews your plan along the way, and can help you make adjustments if things change down the track. 

‘My planner keeps me up to date with the latest super rules.’

The rules around super are complex and change on a regular basis. Without knowing about these changes, or their impact on your savings, you may be missing out on opportunities, or putting yourself in a vulnerable position. Your planner knows the ins and outs of these complex super rules.

‘My planner helps me review and adjust my investments to ensure my plan is on track.’

Investing is complex, especially when you’re approaching or in the early stages of retirement. As the markets or your circumstances change, your planner will review whether you need to change your investment choice or re-balance your portfolio, keeping you informed and in control.

‘They’ll advise me on how to invest and minimise my tax bill.’

Your planner can help you structure your super contributions and investments to reduce your tax and keep more money in your pocket. That’s because a planner understands tax laws and how to make them work for you. In some cases, your planner will also work closely with other advisers, such as your accountant, to ensure all your bases are covered.

‘They’ll help me plan ahead for my family.’

Many SASS members are surprised at all the factors that need to be considered when planning financial protection for themselves and their families. Having an expert help you get your estate planning and insurance in order means your loved ones will be protected should the worst happen. And, when it’s time, you can be confident that your money and assets will end up in the right hands.

Read Brian’s story – a better position for retirement

At 60, Brian wanted to set himself up for the best possible retirement, so he decided to seek financial advice. He made an appointment with Tony, an Aware Super planner.¹

Tony worked with Brian to estimate his retirement income needs and determine the sources of that income. Tony also helped Brian to determine how much he’d need to save in the lead up to his retirement.

With Tony’s advice, Brian maximised his employer-financed benefit, set up salary sacrifice, and topped up his super with voluntary contributions. Brian retired at 63 knowing that he could afford the life he wanted in retirement.

After leaving work, Brian found that retirement was quite an adjustment in terms of his lifestyle and finances. He made the decision to continue to partner with Tony for ongoing advice to: 

• revisit his money projections on a regular basis 
• rebalance his investments to maintain the right amount of growth and liquid assets  
• stay on track with his spending 
• make the most of any government benefits. 
   

If you want to get professional financial advice like Brian, book an appointment.

¹ Financial advice services are provided by Aware Financial Services Australia Limited (ABN 86 003 742 756, AFSL 238430), wholly owned by Aware Super.