July is the most popular time of year to retire. People finishing up then receive their final payments for unused long service and annual leave in a new financial year, meaning they will usually pay less tax on them.

People planning to retire this July may have a range of financial objectives in mind. Top of the list will likely be the need for a regular income that will allow them to live comfortably.

They will want that income to increase as living costs increase, to be indexed to inflation. Naturally they will want the income to continue as long as they live.

Another objective is usually to have access to emergency cash reserves for unexpected costs such as a new car or hot water system. Some retirees may also want money for one-off events such as overseas trips.

Many retirees are keen to maximise their age pensions, or at least qualify for the Seniors Healthcare Card. 

Others may wish to help their children financially during their lifetime, when it will be of most benefit. Most retirees want to preserve some or all of their capital for their family after they are gone.

Finally most retirees want their financial arrangements to be understandable and worry free.

These multiple objectives mean retirement needs to be planned carefully. The financial products available can be rated against these objectives.

Lifetime annuities are the best option to provide a guaranteed income at a known rate, for life, indexed to inflation if chosen. Annuities also have discounted income and asset values in the Centrelink means tests, allowing retirees to receive more age pension, or the Seniors Healthcare Card.

However annuities are not good for preserving capital. Termination payouts are usually less than the amount invested and will be nil if the person lives past their life expectancy.

Account based pensions are good for preserving much of the capital invested. They also provide regular, reliable income, though it isn’t guaranteed and can diminish in the long term. Lump sums can be drawn out if needed. The account values may fluctuate, depending on the investments chosen.

Investment properties provide income that is fairly reliable and increases, and values usually grow long term. However the rental income may be low relative to the sum invested. Residential rents are often around three per cent per annum. Commercial property rents are higher.

Major company shares pay regular dividends that usually increase over time, but they can vary. Share values usually increase too. Again, some dividends are at low rates.

Retirement planning is complex and professional advice can help.