Changes to the tax treatment of TTR pensions in 2017 made it less attractive to some age groups. But there are still benefits to this strategy, as long as you plan it correctly. 

You are a few years out from retirement and still a bit unsure about the coming years. 

You may not think your superannuation balance is where it needs to be. Or you may have had enough of the day to day grind ready for semi-retirement. What are your options?

A Transition to Retirement (TTR) pension is  pension that you can commence prior to retirement. It allows you to access a tax effective pension income to supplement or replace your employment income. For some it can be a very useful planning tool approaching retirement. 

So what are the benefits? 

For someone who is thinking about a TTR, we see one of two benefits. It would be either a Financial Benefit or a Lifestyle Benefit.

Financial Benefit

A comfortable retirement is something that everyone strives for.  Although comfortable is quite subjective, the ASFA has put a number on it. In their publication, they calculated a super balance of $545,000 for singles and $640,000 for couples in super would lead to a comfortable retirement. 

So you are a few years out from retirement and want to give your super balance a bit of a kick.  By implementing a TTR strategy you can utilise the tax effectiveness of a TTR pension.  

By combining a TTR pension with  extra concessional contributions, you effectively ‘contribute’ your tax savings into your boosting your super.

This type of strategy is generally more effective for those over 60 due to the more favourable tax rates. However it still may be of benefit for those under 60. 

Things to Consider 

The amount of the strategy’s benefit is dependent on your age and your marginal tax rate. However, due to the complexity of establishment, is it always good to get professional advice. 

Lifestyle Benefit.

You are a few years out from retirement but you are ready to slowly ease into part-time work, however part-time salary doesn’t meet your expenses. You are still too young to access your super and not ready to fully retire. 

Commencing a TTR will give you access to some of your superannuation while you work. You can use this to supplement your employment income thereby working less and being paid the same. 

Things to consider

By accessing your superannuation at a younger age, and not contributing extra into your superannuation you are obviously going to affect your super balance. By seeking advice, an your financial adviser can assist you in modelling that in future years. 

A Transition to Retirement Strategy is a great tool for you to live the lifestyle in retirement you have dreamt of. However no matter if it’s the Lifestyle or Financial Goal you are trying to reach, it is a strategy that needs to be well planned out. 

Schedule a no-cost, no-obligation Discovery Meeting with Louella Jorge – We’ll help your review your current situation, your super and the suitability of a TTR for you. 

Discovery Wealth – The Hills trusted name in financial advice.  

  1. Retirement Standard [June 2020] ASFA available online https://www.superannuation.asn.au/resources/retirement-standard

The views expressed in this publication are solely those of the author; they are not reflective or indicative of RI Advice Group’s position and are not to be attributed to RI Advice Group. They cannot be reproduced in any form without the express written consent of the author. Louella Jorge is an Authorised Representative of RI Advice Group Pty Ltd, ABN 23 001 774 125 AFSL 238429. This editorial does not consider your personal circumstances and is general advice only. It has been prepared without taking into account any of your individual objectives, financial solutions or needs. Before acting on this information, you should consider its appropriateness, having regard to your own objectives, financial situation and needs. You should read the relevant Product Disclosure Statements and seek personal advice from a qualified financial adviser before you act.

Discovery Wealth Advisers

Author Discovery Wealth Advisers

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