superannuation

Transition To Retirement

Transition to retirement strategies = less tax and more in your pocket!

Are you 60yrs+ and wanting to (legally) beat the taxman?

EARN MORE MONEY ON THE SAME INCOME THROUGH SUPERANNUATION TAX STRATEGIES.

You can access a transition to retirement pension of between 4-10% of your account balance if you’ve reached preservation age and you are still working.

Tax treatment

If you are under 60, part of your pension payments will be taxed, but you may receive a 15 per cent tax offset on the taxable component. Once you have reached age 60, all pension payments are tax-free including lump sums.

How does the Transition to Retirement strategy work in practice?

Case study

John is 60 and earns $70,000 p.a. He has accumulated $140,000 in his superannuation fund. With the help of his Senior Financial Planner, John is keen to implement a Transition to Retirement Strategy whereby he elects to salary sacrifice $18,000 p.a. and draw a superannuation pension of $11,570 p.a.  This provides John with a substantial increase in his super benefit, without reducing his personal cashflow.

Without strategy With strategy
Gross Salary $70,000 $70,000
9.5% Contributions $6,650 $6,650
Salary Sacrifice       - $18,000
Super Pension       - $11,570
PAYG Tax Paid $15,697 $9,267
Net Cash $54,303 $54,303
 
Change in Net Cash      -      -
Superannuation Asset $145,652.50* $149,382.50**
Increase in super      - $3,730
Net Benefit of Strategy      - $3,730p.a
5 year Benefit of Strategy to retirement      - $18,650

* Balance of $140,000 plus super contribution of $6,650 (less 15% contribution tax)

** Balance of $140,000 plus super contribution of $24,650 (less 15% contribution tax) less $11,570 in pension payments

People with higher balances and taxable income will have higher tax savings.

Seek professional advice

Transition to retirement provisions can mean reducing your working commitments and pressures without necessarily reducing your standard of living.  There are, however, various levels of complexity and the strategy is not suited to all investors.

Only a Financial Planner can help you determine the best approach for you. Ensure your retirement planning is on track by seeking professional advice.

Want more information?

For further information about your superannuation or retirement options, please contact our office on:

P: (03) 9633 7180

E: info@directsm.com.au

General Advice Warning

This document has been prepared by Direct Super Management, a corporate authorised representative of The FinancialLink Group (AFSL 240938). The advice provided in this document is general advice only. It has been prepared without taking into account your objectives, financial situation or needs. Before acting on this advice you should consider the appropriateness of the advice, having regard to your own objectives, financial situation and needs.

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