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Superannuation & Retirement Planning

Superannuation is one of the most tax-effective ways of saving for retirement. By saving a portion of your income today, you can ensure that you will have enough money to live comfortably by retirement.

The question is, how will you make sure you have enough? It's tempting to answer this question with another: “How long is a piece of string?'.
Assure Financial Services will work with you to determine how much super you'll need to enjoy a comfortable retirement. Considerations we look at together will be:

What you want from your retirement lifestyle;
Your current and retirement budget;
Your retirement income;
Superannuation saved;
How much is needed to ‘top up’ your super;
Your desired retirement age; and
Your life expectancy.

There are three key areas to think about:

1. Having enough savings to begin with;
2. Investing wisely to ensure good returns; and
3. Making your savings last as long as possible.

As a rough guide, people usually need at least 60% of their current annual income for retirement. So if you're earning $60,000 now, you'll need at least $36,000 as your retirement income.


Transition to Retirement (TTR)

With the ageing of the Australian population, the Australian Government is keen to encourage older workers to remain in the workforce. One avenue is the move towards more flexibility to enable a balance between work and retirement with the introduction of Transition to Retirement (TTR) income streams.

What is Transition to Retirement?

TTR income streams allow you to access your superannuation while you are still working. You must meet a number of conditions to be able to take advantage of a TTR income stream, including:

You must have reached your preservation age.
For people born before 1960, this will be age 55. Preservation gradually increases after this date, and for people born after 1 July 1964, your preservation age is 60.
Your TTR income stream will be non-commutable until you reach age 65 or retire from the workforce.
This means you cannot access a lump sum from this income stream while it is in TTR mode.
Your income stream must pay you between 4% and a maximum of 10% of the account balance as income each year.

Unlocking your super while you're working …

TTR presents an opportunity for you to access your super via a tax effective pre-retirement pension once you reach your preservation age. Unlike normal rules for accessing your super, if you're age 55 or over you don't need to retire or change jobs to access your money. You can receive income from the pension while salary sacrificing to super until you decide to fully retire.

If you're aged 60 or over, this strategy may be even more beneficial to you as your pension payments are now tax-free - and you're still able to salary sacrifice.

How can you use a TTR income stream?

TTR income streams form part of a number of financial planning strategies. Two of the more popular are:

To maintain your income while reducing your working hours.
A TTR income stream can be used to maintain your cash flow (income) if you choose to reduce the number of hours you work.
To accelerate your super savings in the run up to retirement.
If you plan to continue working, a TTR income stream can boost your cash flow (income), which will allow you to salary sacrifice a larger proportion of your salary than you may otherwise be able to afford to do. If you are able to utilise this strategy after age 60, it becomes even more effective as the income from your TTR income stream will be tax-free.

 

Life expectancy for Australian males is 84 years and 88 for females. If you plan to retire at 65, your retirement savings will need to last you around 20 years if you're male and longer if you're female.

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The information contained within this website is of a general nature only. Whilst every care have been taken to ensure the accuracy of the material contained herein at the time of publication neither the author or Licensee will bear responsibility or liability for any action taken by any person, persons or organisation on the purported basis of information contained herein.

Without limiting the generality of the foregoing, no person, persons or organisation should invest monies or take action on reliance of the material contained herein but instead should satisfy themselves independently of the appropriateness of such action.

 

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