How do retirees still earn FF Points, and optimise travel?

[medhead]

Transition to retirement used to be a useful strategy. Something I can only dream about at my age.

Mum has seemed to indicate that the income test is the big hurdle for getting a credit card in retirement.

 

[lovetravellingoz]

Once the superfund goes into pension phase the 15% fund rate seems to no longer apply. You may need to talk to a professional about that. I am not there so I have not studied that idea.
We run our own superfund and esuperfund has been a fantastic option but it only suits those who are used to investing and can use Commsec or ETrade without assistance. Probably only 25% of the community would be a good fit for self run super. The accounting and audit costs a total of $699 per year for the two of us and there are no trailing commissions on our funds.
The fee free Citi option is a very good one and suits folks who are near retiring.

Thanks. I had been eyeing off esuperfund as I have been procrastinating on setting up a SMSF, and have that on my shortlist. So it is good to hear that it works well for you..

Commsec I have been an active user of for many years and I will retain it. I find it works very well for me. However I am going to clean up my portfolio to remove some of the more speculative shares so that I do not have to monitor them as much (Is ok in Oz, but if I am going to do some longer trips it is probably best to not have them in my portfolio.

 

[cove]

Yes you need to get the credit cards in place often prior to retirement. Typically it can be no new cards for folks with incomes under 35,000 but I have managed to get a bank to waive this for widows.

 

[lovetravellingoz]

So my advice is find something to do that not only brings in a bit more money but that can bring you satisfaction and pleasure as well.
Life truly begins at 60.

Yes. This is certainly part of my thinking, and one reason why I flagged perhaps taking a sabbatical rather than permanent retirement.

Another option that I am toying with is doing some overseas aid stints.

 

[lovetravellingoz]

About 2200 night time sleeps and you will be over that hurdle.

It is part of my strategy to live off dividend income till I am 60 and to only dip into my super after then. This will also ensure that my super is more than ample to provide for my wife and I to a good standard of income indefinitely including allowing for "downturns".

The exception to this would be if one is still work then transition to retirement arrangements can have some advantages. having said that, I do not expect to working full-time.

 

[lovetravellingoz]

Yes you need to get the credit cards in place often prior to retirement. Typically it can be no new cards for folks with incomes under 35,000 but I have managed to get a bank to waive this for widows.

Yes agree.

It is one reason why both my wife and I have FTL CitCigs to allow for the scenario that if I unexpectedly drop off my perch, that affairs are set up regardless. It is also this scenario planning that will see me simply my investment (non-super) portfolio.

 

[burmans]

Try this for how pensions are taxed. Pre 60 not quite so good!

http://simplersuper.treasury.gov.au/documents/decision/html/final_decision-01.asp

 

[amaroo]

The glory days of Super will soon be leaving us ... start building an alternative nest egg IMO - YMMV

 

[lovetravellingoz]

The glory days of Super will soon be leaving us ... start building an alternative nest egg IMO - YMMV

Tick.

I am a firm believer of not having all ones eggs in the one basket, and had/have no faith in various governments to not change the rules.

So I have quite deliberately not just invested in super.

 

[JohnM]

Thanks . But I still read that as the fund is paying tax.. So effectively it is not tax free but tax pre-paid as the fund pays the tax. However the rate it pays is much lower than the individual rate can be and particularly if you have other income streams.

Once your super is moved to the drawdown phase when you are over 60 and retired, there is no tax payable on the earnings. Once you are over 65, even if you are still working, there is no tax payable on super fund earnings - but only once you move the funds into the drawdown phase. The 15% tax is only payable on contributions and earnings in the accumulation phase.

 

[JohnM]

Brilliant message from drron. I retired from my 36 year career job at just shy of 57 in July 2006. It was a job that I really loved but I was pushed to transfer to CBR from PER. The project I had been working on had come to a natural conclusion and on top of all that, as a research scientist, I was getting pretty fed up with the grant-applying treadmill. So - no brainer! See ya!

I retired on a Friday but had an epiphany over the weekend . A very good mate of mine has a small business that he was in the fairly early stages of developing so I joined him under the condition that I have 6 weeks annual leave to do my annual xDONEx (now coming up in September to about my 13th consecutive.) But the key thing was that I could relieve him of some of the things that I enjoy like mentoring young recruits and some things where my skills are highly complementary to his. I wasn't chasing the bucks; it was the satisfaction that was most important.

After a while, and a bit of 'filtering' of recruits, we started to get some young folk who 'got' the type of work we do (it's in agriculture, so it's pretty demanding and requires a certain type of highly flexible person) and they started to step up. That meant it became time for JohnM to start stepping down (I think it's important to know when to gracefully depart.)

So, after about 4 years I went to four days a week, the after about another 3 years I went to two days a week and now I just work casually. In the meantime I picked up a bit of private consulting work that kept me moderately, but very flexibly busy - with the all-important ABN for making tax-deductible personal super contributions .

I have LTG well and truly packed away but I haven't been <WP for about 12 years. LTG is my old-age back-up!

So a DONEx every year is my way of earning status, points and optimising travel.

Oh, and did I mention the divorce about 15 years ago? Woo-hoo!

 

[cove]

Retirement and divorce don't go together too well. Do the frequent flyer points get split down the middle or does the previous partner get the "big half" ?

 

[JohnM]

Retirement and divorce don't go together too well. Do the frequent flyer points get split down the middle or does the previous partner get the "big half" ?

That, and thankfully my super, are the things that I did get all of. She opted for her share up-front, so there went almost all the proceeds from the house sale. Fortunately, I was able to buy a comfortable unit before the boom in house prices.

Kids were grown so there were no financial (or deep emotional) issues there.

I am still far better off in all sorts of ways . It's all a distant memory and life is sweet.

 

[Pushka]

Once your super is moved to the drawdown phase when you are over 60 and retired, there is no tax payable on the earnings. Once you are over 65, even if you are still working, there is no tax payable on super fund earnings - but only once you move the funds into the drawdown phase. The 15% tax is only payable on contributions and earnings in the accumulation phase.

There is no tax on the payments you receive from a super fund in pension phase from the day you turn 60 but there are limits (10%) as to what you can withdraw. Once you have decided to retire and are over 60 then there are no limits. You pay 15% on contributions from 55- 59 years and 364 days. You can decide to retire after 55 and then decide say a month later, to go back to work if you change your mind.

 

[JohnM]

There is no tax on the payments you receive from a super fund in pension phase from the day you turn 60 but there are limits (10%) as to what you can withdraw. Once you have decided to retire and are over 60 then there are no limits. You pay 15% on contributions from 55- 59 years and 364 days. You can decide to retire after 55 and then decide say a month later, to go back to work if you change your mind.

Correct - but I think the questioner was asking about taxation within the fund. I was pointing out that contributions to, and earnings within, the accumulation phase of a fund are taxable at 15%. But once certain age and working requirements are satisfied and the fund (or part of it) is moved to drawdown phase, there is no tax payable on the earnings of the drawdown fund.

If you wish to keep working after 65 (or change your mind about retirement after 60) and want to continue contributing to super, you need to maintain an accumulation phase fund separate from the drawdown fund as it is not possible to contribute directly into a fund in drawdown. Over 65, you also need to satisfy the work test of 40 hours' work in any 30 day period within the year to be able to contribute to super.

Once turning 75, it is not allowable to contribute to super at all.

 

[Flying mermaid]

We started our SMSF in 1984 and as soon as we turned 55 I moved it to a transition to retirement. I trade a lot, so it worked well for us as all capital gains and earnings became tax free. We were still working in the business and drawing a salary so tax was paid on the pension we drew, but there was a 15% rebate on the pension tax. We continued to contribute the maximum and 15% was paid on that. It worked for us and now we are over 60 it is all tax free.

At at the moment we earn enough that applying for a new CC doesn't seem a problem even though we have declared ourselves as retirees - we have never tried to earn points via CC churn, so not really an issue. There are definitely good discounts to be had on pointy end fares and I am diligent in planning our travel to take advantage of these sales. We are still earning a lot of points on CC spend.

We are not trying to grow the super fund any longer, just to earn enough to enable us to draw a 10% pension plus keep pace with inflation. So far it seems to be working. If it doesn't in the future then I guess we cut our travel. I think an SMSF is a great way to organise your retirement, but I think you need to enjoy investing and run it yourself in order to get the most out of it.

 

[cove]

We get hit up with an additional surcharge on our super contributions just to keep the country running. I have paid those taxes on a CC so we don't get left behind when the plane is going.
At 65 my super fund is going conservative. I have more than 3,500 night time sleeps before I am ineligible to contribute at 75.
Having had Woolies CC move to half a point per dollar over 2500 per month makes me think it will be goodbye at the renewal time.

 

[Sprucegoose]

Mrs Rugby and I have lifetime Gold status in the plan as part of our retirement to assist us when we will no longer be chasing status. I think of it as the superannuation of frequent flying.

Yes agree. Future proof yourself to the extent you cannot guarantee the future !!

 

[kpc]

Ps....I've been thinking about this thread today (quiet day)...in my line of work, I see many people who wait til they retire so they have the time to go to all those bucket list destinations OS...then tragically illness strikes and they can no longer go OS or they can't get travel insurance. ..so personally, I'm going to do all my OS bucket list destinations now, and will keep domestic destinations up my sleeve for my latter years (of course I will still go OS if health and cash allows)...cash then will be derived a la drron' s methods now

 

[Flying mermaid]

Ps....I've been thinking about this thread today (quiet day)...in my line of work, I see many people who wait til they retire so they have the time to go to all those bucket list destinations OS...then tragically illness strikes and they can no longer go OS or they can't get travel insurance. ..so personally, I'm going to do all my OS bucket list destinations now, and will keep domestic destinations up my sleeve for my latter years (of course I will still go OS if health and cash allows)...cash then will be derived a la drron niw

The problem is there are too many places to go to, especially if you like to spend a reasonable time in each place rather than a Cook's tour. We travelled overseas extensively while the kids were growing up but still seem to have dozens of places on our bucket list. We are following your scenario though and trying to do the tougher destinations now and leave Asia and Aus for later. When we were in Vic Falls we became friendly with two couples from the UK - they were in mid 70s to 80 and still going strong, so hope for all us gray nomads.....