Pre-Retirement

So, you are nearing retirement and probably asking yourself questions like; "Do I have enough super?", "How much super is enough?", or "Do I have the right strategy in place to get me where I want to be?" At this time of life, super should be one of your main focuses as it has the potential to provide you with some great tax advantages, which can further help to boost your retirement savings. There are other areas that should be considered as well, such as the potential for Centrelink benefits in the future, as well as estate planning aspects. However one of the most powerful strategies in the lead up to full retirement is the Transition to Retirement Strategy. Below is a range of useful information below relating to some of the most common questions.

A transition to retirement strategy can give you more flexibility and allow you to take advantage of tax concessions to help achieve the lifestyle and super balance you want.

The years before you retire can be challenging. While you are probably looking forward to having more time to do the things you enjoy, you may not be ready to stop working just yet. Many people are also concerned about whether or not they have saved enough super – especially with retirees living longer than ever before. A transition to retirement (TTR) 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 down a pre‑retirement pension (a regular income stream drawn from your super savings).

What’s your preservation age?

By law, all super contributions are locked away or ‘preserved’ until you reach your preservation age. Your preservation age is based on your date of birth. Once you reach your preservation age, you can begin drawing a pre‑retirement pension. You will need to check with your super fund as not all funds offer pre‑retirement pensions.

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.

Is a pre‑retirement pension right for you?

Transition to retirement strategies don’t suit everyones circumstances. You should discuss the following factors with your financial adviser when deciding if a transition to retirement strategy is right for you:

  • Whether you have sufficient super to support drawing a pre‑retirement pension
  • Whether or not your employer will:
    • allow you to work part‑time at a rate that suits you
    • allow you to salary sacrifice
    • agree to continue to pay your super guarantee (SG) contributions at the pre‑salary sacrifice level
  • Your tax position
  • Your financial objectives and retirement needs
  • The costs associated with this strategy.

Professional financial advice can make all the difference as it helps ensure you are not disadvantaged from a tax or social security perspective if you decide to implement this type of strategy.  For more information contact Rowland Financial Advisory.