Unlock a comfortable retirement with strategic superannuation planning – taking control of your golden years, one goal at a time.
If you’re on the final stretch to retirement and would love to start winding back your working hours but don’t think you can afford it, retirement planning can help.
Alternatively, if you plan to keep working full time for a while longer and want to boost your super but haven’t got the ready cash to make extra contributions, retirement planning can offer solutions.
Help could be at hand in both cases in the form of a superannuation transition-to-retirement pension or income stream (TTR). This strategy can be used to either:
Depending on your personal circumstances, TTR pensions have much to offer. They can help you:
You start a TTR pension by transferring some of your super from your accumulation account into a pension account.
The transferred funds don’t count towards your transfer balance cap because you’re still working and therefore not in retirement phase. But the funds in your TTR pension account will count towards your transfer balance cap once you do retire. This cap is currently $1.7 million.
You must leave at least a small balance in your accumulation account so that it remains open to receive your employer’s compulsory 10% super guarantee contributions or any voluntary contributions you may want to make.
Investment earnings in both your accumulation and pension accounts are taxed at 15%.
You must withdraw a minimum of 4% of your TTR pension account balance each year (if you’re aged under 65) up to a maximum of 10%. At least one withdrawal must be made each year.
Once you’re over 65, there are different minimum pension payments rates.
Utilising your superannuation is one of the most sure-fire ways to build your savings for retirement planning. While your employer will contribute to your superannuation, it is not the only way to get funds into it and grow your nest egg for retirement. Like with any savings plan, the earlier you start the better off you will be. However, the good thing with superannuation, is there are built-in catch-up mechanics that you can utilise.
Also known as Social Security is the Australian Government-funded income support payment for people who have reached pension age, are under the income and asset test limits and have been an Australian resident for at least 10 years.
A super pension is a series of regular payments made as a super income stream. This doesn’t include government payments such as the age pension. Depending on your age and the type of income stream you receive, you may need to declare different items in your tax return.
Any personal investment not held within superannuation, this can include but is not limited to share portfolio, annuities or property income. As these assets are held in your personal name, there are tax consequences you need to consider, what might have been a good investment while you were working might not continue to be the best option during retirement.
When you reach your preservation age and retire, you can access your super to fund your retirement.
You can also access your super:
You don’t have to cash out your super just because you’ve reached a certain age, however, you need to check if the rules of your particular super fund specify otherwise.
Your preservation age is not the same as your pension age. Your preservation age is the age you must reach before you can access your super and depends on when you were born.
The tax payable on super benefits depends on a number of things, including:
Some super benefits have a tax-free component and a taxable component. The tax-free component generally includes:
ASFA estimates that the lump sum needed at retirement to support a comfortable lifestyle is $640,000 for a couple and $545,000 for a single person. This assumes a partial Age Pension.
ASFA estimates that a modest lifestyle, which covers the basics, is mostly met by the Age Pension. They estimate the lump sum needed to support a modest lifestyle for a single or couple is $70,000.
However, this might not be enough for you, it is important to seek advice on this with a Financial Planner, the team at OakView Financial can sit down with you and work out your required balance to meet your retirement needs.
Non-concessional contributions have the advantage of zero tax on the money deposited into your super. The earnings will be taxed at the rate of 15% like the rest of your superannuation and will be tax-free upon retirement. There are caps to how much you can contribute each year and there is also a bring-forward arrangement you can utilise.
These limits are based on the:
To qualify for the full or partial Age Pension you need to meet the Income and Asset tests limits:
Income Test – you and your partner’s income from all sources are assessed. This includes financial assets such as superannuation. To work out how much income your financial assets produce, the Government use deeming. Pensions have income and asset limits. If you’re over these limits, you get a lower pension.
Asset Test – all asset types are assessed as part of the assets test. How much you are paid depends on the value of your assets and if you’re in a relationship. There are limits on your total assets and the Department of Social Services reviews these limits twice a year.
Your assets include any property or possessions you own in full, in part, or have an interest in. This includes:
To be eligible for Age Pension you must be Age Pension age and meet some other rules.
On 1 July 2021, Age Pension age increased to 66 years and 6 months for people born from 1 July 1955 to 31 December 1956, inclusive.
If your birthdate is on or after 1 January 1957, you’ll have to wait until you turn 67. This will be the Age Pension age from 1 July 2023.
The Department of Social Services reviews the eligibility for the Age Pension each year, increasing the upper limits to scale with inflation. Australian Parliament may also introduce policy changes to the limits, it is best to review your retirement strategy with your Financial Planner each year to ensure you are always taking advantage of the best outcome.
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