Transition to Retirement
The strategy works by redirecting pre-tax income toward superannuation while replacing some, or all, of this income with income from an Account Based Pension (“Pension”) account. The strategy's benefit arises from the combination of reducing tax on income and superannuation.
The actual level of savings depend upon a range of factors; most notably age, tax components within superannuation, investment earnings, and income and savings capacity.
For many people this strategy can be used to boost their retirement savings and pay down debt sooner, with cumulative savings of tens of thousands of dollars often possible even for people on modest incomes.
In considering whether a “Transition to Retirement” strategy is right for you it’s important to consider your personal and financial situation and to understand the implications both now and into the future.
While there is the perception among many people (and even some advisors) that a Transition to Retirement strategy adds value to every person over the age of 55, this is incorrect, and it’s critically important you get advice that takes into account your individual financial situation to avoid the tax and legal pitfalls that can accompany this type of strategy.
To understand a little more about how this strategy can be used, click on the link below to hear about how we helped Susan achieve her dream retirement.