Many people are also concerned about whether or not they have saved enough super. A transition to retirement strategy can help you ease into retirement and boost your super in a tax effective way.

What is a transition to retirement strategy?

Transition to retirement strategies are designed to give you greater flexibility as you move towards retirement. Once you reach what’s known as your ‘preservation age’, you can access your super by drawing a pre-retirement pension (a regular income stream drawn from your super savings).

What is a pre-retirement pension?

A pre-retirement pension allows you to draw a regular income from your super while you’re still working, provided you have reached your preservation age. There are restrictions on accessing your super as a lump sum during this pre-retirement phase.

Why start a pre-retirement pension?

A pre-retirement pension gives you the flexibility to draw down an income and at the same time contribute to your super, eg through salary sacrifice, in a way that may be more tax effective
than just relying on your salary. In most cases, you’ll pay less tax on your pension income than you would on the same amount of salary or wages.

Do I have to stop working to draw a pre-retirement pension?

No. In fact, transition to retirement strategies are generally most effective when you continue to work and contribute to your super while you draw a pre-retirement pension.

If you would like to ease your way into retirement, a transition to retirement strategy could enable you to reduce the number of hours you work or retire part time. While working less will mean a smaller pay packet, if you decide to take out a pre-retirement pension, you could supplement your work income with the pension payments. This would give you more time to do the things you want, while maintaining your income and lifestyle.

A transition to retirement strategy could also be beneficial if you have reached your preservation age but want to continue working full time. The tax concessions on offer can make this a great way to boost your super balance in the years before you enter full retirement.

For more information

For some answers to the questions above – download the Transition To Retirement Fact Sheet provided by Financial Wisdom – or contact Rebecca Newton using the form below.

cforms contact form by delicious:days