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Transition to Retirement - Unlocking Your Super Whilst Still Working - 6/5/2015

By Mathew Wilkshire

Are you 55 or over and wanting to boost your retirement savings, tax effectively, while you’re still working? Would you like to wind back your work hours without winding back your lifestyle?

 

Everyone has their own goals heading into retirement. Some would like to make a gradual transition by reducing their working hours. Others are looking for ways to boost their retirement savings while still working full time.

 

If you have reached age 55 a Transition to Retirement (TTR) strategy can help you meet either of these objectives – allowing you to top up your regular income with pension income from your super, or boost your retirement savings tax-effectively.

 

There are 2 main ways you may be able to use a TTR strategy.

 

  1. Tax-effectively boost your retirement savings while you’re working full time

If you are still working full time, you may be able to contribute some or all of your pre-tax salary into superannuation and withdraw a tax-effective TTR pension to make up for the reduction in your take-home pay.

When you contribute some of your pre-tax salary into super, it is generally taxed at a flat rate of 15% by the super fund, provided the amount you contributed is within your concessional contribution cap.

 

  1. Transition to part-time work without reducing your income

If you reduce your working hours leading into retirement, a TTR strategy can help you supplement your reduced salary with a tax-free or tax-effective income payment from your TTR pension.

In other words, you are working less but receiving the same income, and maybe paying less tax while you are at it.

Consideration for this strategy is likely to result in less retirement savings as you are starting to draw on your super earlier.

 

If you have any questions or would like to find out more contact your financial advisor today. 

 

Reference: Asgard Capital Management Limited



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On this entire website, information is of a general nature only and has been provided without taking account of your objectives, financial situation or needs. Because of this, we recommend you consider, with or without the assistance of a financial adviser, whether the information is appropriate in light of your particular needs and circumstances.

No representation is given, warranty made or responsibility taken about the accuracy, timeliness or completeness of information sourced from third parties. Because of this, we recommend you consider, with or without the assistance of a financial adviser, whether the information is appropriate in light of your particular needs and circumstances.

Anthony Klatt, John Grocke and Mathew Wilkshire are authorised representatives of Paragem Pty Ltd. Paragem Pty Ltd ABN 16 108 571 875, is the holder of Australian Financial Services License number 297276 and these authorised representatives trade as Johnston Grocke.

AG Finance Group is a Corporate Credit Representative (396686) of BLSSA Pty Ltd, ACN 117 651 760 (Australian Credit License Number 391237).