Time to Reconsider Transition to Retirement
From 1 July 2017, the way Transition to Retirement Income Streams are taxed within super funds changed.
Importantly, you will need to let your super fund know if and when you retire as this will enable you to regain the prior tax advantages for your fund.
Under age 60?
Reconsider if your Transition to Retirement Income Streams remains tax effective. You generally pay tax at your marginal tax rate less a 15% offset. For instance, if you are in the 34.5% tax bracket ($87,000 to $180,000) you would pay 19.5% tax on your Transition to Retirement Income Stream.
Over age 60?
Transition to Retirement Income Streams received are entirely tax free and so the question of whether it’s beneficial for you is much simpler.
What is a Transition to Retirement Income Stream?
Once you have reached ‘Preservation Age’ (55 to 60 depending on your date of birth), you can access your super whilst you are working. A Transition to Retirement Income Stream provides you with income by drawing down upon your super fund. Most super funds, including Self Managed Superannuation Funds, offer Transition to Retirement Income Streams.
Why start a Transition to Retirement Income Stream?
One option is to reduce your work hours whilst maintaining your current standard of living as you replace some of your wage with the super income stream.
For those not wanting to reduce working hours, a Transition to Retirement Income Stream may allow you to salary sacrifice more of your wage to super and save tax whilst maintaining the same lifestyle.
Alternatively, for those who still have a home loan, a Transition to Retirement Income Stream could allow you to increase your loan repayments whilst maintaining your lifestyle – and therefore own your home outright sooner and save interest.
If it’s Time to Reconsider your Transition to Retirement, contact me on (03) 5990 1000 or email bruce@highview.com.au to organise a meeting.
Written by Bruce Chisholm
Financial Planner
Highview Wealth Solutions Pty Ltd T/AS Highview Accounting & Financial ABN 96 135 996 842. Highview Wealth Solutions Pty Ltd is Corporate Authorised Representative No. 337009 of InterPrac Financial Planning Pty Ltd Australian Financial Services Licence 246638.
Bruce Chisholm (Authorised Representative No. 1235025) and Silvio Marinelli (Authorised Representative No. 457162) are authorised representatives of InterPrac Financial Planning Pty Ltd Australian Financial Services Licence 246638.