Transition to Retirement
Your superannuation is money that is set aside for your retirement. In many cases though, if you’ve reached your preservation age and you’re still working you may be able to access your super to start your transition to retirement.
You can use the TTR strategy to either:
- Grown your superannuation before you retire; or
- Reduce your working hours and maintain your income
The grow your super through tax savings strategy lets you contribute extra super from your before tax salary while receiving an income from a retirement account.
Savings occur if the tax you pay on your salary sacrifice contributions is less than the tax you pay on your salary. And it’s these tax savings that are turned into extra super. It’s a particularly tax-smart strategy once you turn 60 when the payments you receive from a retirement income account become tax-free.
Here’s an example:
Danny has just turned 55 and wants to boost is $100,000 of super through salary sacrifice. Danny works as a mechanic and earns $60,000 per year. He’s looking forward to spending more time on the golf course when he retires at 65.
After consulting with an iprosper financial planner about a TTR strategy, Danny saw that he could implement a strategy that could boost his super by around $18,000 into his retirement savings over the ten years all the while taking home the same annual salary.