Ready to start the next chapter in your life?

Retirement marks the beginning of a new chapter in your life. Fortunately, you get an immediate influx of cash to get things off to a good start: the state pension you collect every month, your group insurance proceeds – whether you take them as a one-time lump-sum payout or monthly annuity – and any retirement or long-term savings you’ve squirreled away.

At the same time, you lose the security of a monthly paycheck. All the more reason to steer your finances effectively and make sure you can afford the retirement lifestyle you want.
Maintaining your standard of living in retirement
Don’t wait until after you’ve retired to figure out how much money you’ll need to live comfortably.

Retirement is a major milestone that brings many life changes. Once you step away from the grind of daily employment, you suddenly have plenty of time to embark on new adventures, whether it's travelling the world, investing in real estate or simply spending more time with your family and friends. The only downside is that your meagre state pension will only stretch so far. In many cases, it just won't be enough to maintain your pre-retirement lifestyle, especially when you factor in all the extra expenditure:

  • the loss of your corporate-sponsored hospital plan
  • rising medical costs as you get older and need more services
  • no more luncheon vouchers
  • the loss of fringe benefits such as a company car
  • etc.

Fortunately, if you had a group insurance plan through your employer, you can cash in on this extra nest egg when you retire. When you add any additional retirement or long-term savings to your total pension pot – statutory and complementary retirement benefits combined – then you're probably in good financial shape.

Important tip: figure out for yourself how much you'll need per month to retire without worry or regret, and don't wait until after you've retired. This is an important exercise that involves estimating different inputs such as the length of your retirement and how long you expect to remain in good health but also how much to set aside for home maintenance or improvements and whether you have major expenses in the pipeline (e.g. buying a new car).

Once you've monetised all these factors, you'll have a good idea of how much you'll need to live comfortably and how much will have to come out of your pension pot. Based on your calculations, you may decide that you don't need to use any or just a small portion of your group insurance proceeds to achieve your retirement goals. If this is the case, reinvestment may be a good option.

Reinvesting your group insurance proceeds

Once they retire, many people opt to reinvest some or all of their group insurance proceeds as an opportunity to further grow their nest egg. If you want to go this route, there is a vast array of investment products to choose from. For example, investment funds are a popular solution, especially if you lean in the direction of minimising risk. Some of the best known vehicles are Branch 21 and Branch 23 insurance funds.

  • The main benefit of a Branch 21 fund is the security of a guaranteed return. Profit sharing may be awarded as well, but this is optional, depending on results achieved by the insurer. Branch 21 products work well for cautious investors who favour security over high growth.
  • If you have a higher risk tolerance, you may want to consider a Branch 23 fund, where your premiums and capital are invested in one or more funds with varying degrees of risk. It's up to you to decide how and where you want your premiums invested according to your risk appetite. The return on your invested capital will depend on fund performance.

    In exchange for taking on higher risk and for not having a guaranteed return, you get the potential for a greater investment return.


Your group insurance plan with AG Employee Benefits

If your group insurance plan was with AG Employee Benefits, you can reinvest your retirement proceeds with AG Ascento, AG Employee Benefits' end of career solutions provider.

AG Ascento has come up with three solutions to further grow your complementary pension nest egg. The AG Ascento team is standing by to provide you with a tailor-made reinvestment strategy and recommendations.

Want to find out more?

Don’t wait until after you’ve retired to figure out how much money you’ll need to live comfortably.
What if you want to work past conventional retirement age?
If you’re 65 or have 45 years of qualifying service, you may continue to work as much as you want without affecting your pension entitlements.

The fact that you've reached statutory retirement age doesn't necessarily mean that you have to stop working altogether. If you think you might go a bit stir-crazy in the years of endless summer, work is still an option. Over the past few years, the federal government has put incentives in place to keep people on the job beyond statutory pension age, which is currently 65:

  • If you're 65 or have 45 years of qualifying service, you may continue to work as much as you want without affecting your pension entitlements. The upper limit on earnings no longer applies.
  • If you're under 65 or have worked for less than 45 years, you may also continue to work and receive benefits, but your earnings from professional activities must remain below certain limits. These limits have been set based on criteria such as your age and years of qualifying service as well as marital/family status, job profile, etc. If you earn more than these upper limits, your state pension for that calendar year will be reduced proportionally or even suspended if the earnings are more than 100% above the limits: for example, if you earn 20% above the limit, you'll have to pay 20% of your state pension back to the federal government the following year.

To find out more about working after retirement, go to the National Pension.