Some things to consider before Transitioning to Retirement

The following are a number of questions you should consider before transitioning to retirement:

Do I really want to reduce my working hours and, if so, is the option available to me?

The desire to work less is one of the main reasons why people choose to make use of Transition to Retirement. If you decide to go down this route you need to be 100% sure that you are actually ready (emotionally and professionally) for a time of semi-retirement. If you can answer in the affirmative you will obviously also have to enquire whether your employer will seriously consider your request for reduced hours.

How will working fewer hours affect my income, and will the income from my super be sufficient to make up any shortfall?

You will have to do a fair bit of number crunching before taking the final step to reduce your working hours. This will enable you to make an informed decision on whether you will be able to maintain your standard of living during this new phase of your life.

How will my choice impact future benefits?

Financial decisions can have very significant long-term implications. You should therefore do some projections on how your decision to access your pension early will affect your long-term income. This is particularly important when a defined pension, where the benefits are related to age and length of service, is involved.

What will the impact of my choice be on my life insurance arrangements?

It may be the case that your existing life cover ceases or reduces if you access your pension early. It could also be that, if new contribution arrangements are entered into, insured sums may reduce or that medical examinations (possibly leading to new conditions being imposed) may be required.

Does my current superannuation fund provide a non-commutable income stream?

Superannuation funds are not under any legal obligation to offer non-commutable income streams. You should therefore find out whether your provider offers products that are compatible with Transition to Retirement. If they don't then it should be possible, under ?portability? arrangements, to move your superannuation savings to a fund that does. Before you do that however, you should make sure that you will be able to comply with all the relevant rules and eligibility criteria of the new fund and that you will not be losing significant benefits by moving.