Superannuation is important to help you build a nest egg which you then use to create an income in retirement (or semi retirement).
Superannuation is important for your future for many reasons:
- The Age Pension may not be enough for a comfortable retirement.
- You may spend over twenty years in retirement and your money needs to last
- Super enjoys the benefits of compound interest and a long investment timeframe, it could be your largest asset by the time you retire.
- The government is offering attractive tax incentives.
Retiring? Or preparing for retirement? It pays to talk to your financial advisor to plan ahead.
If you are considering retirement we at Centre In Financial Planning can help you to evaluate your Super to plan for the retirement you desire.
Questions to consider:
- How much income do I need for retirement?
- Do I have enough in my Super? How long will it last?
- What can I do to maximise my savings?
- What is a Transition to Retirement Strategy
- Will I be eligible for any "Age Pension"
Do I have enough super to stop work?
Retiring permanently largely depends on whether you have the financial resources available to last for the rest of your life (which could be over twenty years). Especially if you do not have access to the age pension until you're 65 for men and for women the rule is, depends in which year they are born. Calculating how much super you need to retire can be complicated, it is important you speak to a retirement adviser to have a retirement strategy in place.
Transition to retirement - work part-time and acess your super at the same time
If you're aged between 55 and 65 a 'Transition to Retirement' allocated pension allows you to access your super while you're still working, full time or part time.
Transition to retirement strategies to consider
- Less work, same income - reduce your working hours and bolster your reduced salary with income generated from a 'Transition to Retirement' allocated pension.
- More super, less tax - Salary sacrifice contributions to your super and bolster reduced salary with income generated from a 'Transition to Retirement' allocated pension. It's something of a balancing act, not only will you need your employer's approval, you also need to be mindful of legislative changes, which is why we recommend you speak to one of our retirement specialists.
The tax effect of transition to retirement strategies:
In most instances, you pay less tax on income generated from an allocated pension than you do on the same amount of salary, making transition to retirement strategies a tax-effective way to boost your super balance and / or cut back your hours.
Low tax rate - your salary sacrifice super contributions are taxed at 15 per cent instead of your individual income tax rate as long as all your concessional contributions fall within the current cap.
Tax concessions - aged 55 to 59, the taxable component of your transition to retirement allocated pension income is eligible for a 15 per cent tax offset.
Tax free income - if you're aged 60 or over, your transition to retirement allocated pension income is tax free.