Transition to retirement
by Wealth Know How in Retirement
At what age a person retires is always going to be an individual decision. There is no set retirement age in Australia. Some jobs and industries have a set age when employees must retire. Most income-earners begin their retirement process in their 60s. In 2005 the Australian government brought in a set of rules called transition-to-retirement (TTR), which enables people to start drawing down some of their super benefits while still working. Under transition-to-retirement, people aged 55 or over can start to get access to their super benefits in the form of a pension (income stream) without retiring or satisfying an additional condition of release.
- sponsor - Wealth Know How
Wealth Know How is the online network helping people manage their wealth through financial education. Whether you are looking for simple ways to better manage your cash, or you are after a complete strategy on how to save for retirement, we can help you understand your options. It is important to have a vision for your future, but its knowledge not dreams that will ultimately deliver financial success.
Published on 07 Mar 15
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At what age a person retires is always going to be an individual decision. There is no set retirement age in Australia. Some jobs and industries have a set age when employees must retire. Most income-earners begin their retirement process in their 60s. In 2005 the Australian government brought in a set of rules called transition-to-retirement (TTR), which enables people to start drawing down some of their super benefits while still working. Under transition-to-retirement, people aged 55 or over can start to get access to their super benefits in the form of a pension (income stream) without retiring or satisfying an additional condition of release.
Sponsor - Wealth Know How
Wealth Know How is the online network helping people manage their wealth through financial education. Whether you are looking for simple ways to better manage your cash, or you are after a complete strategy on how to save for retirement, we can help you understand your options. It is important to have a vision for your future, but its knowledge not dreams that will ultimately deliver financial success.
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Duration 03:16
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Aussie dollar surprises market
Duration 03:10
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Duration 02:31
The TTR pension allows you to supplement your salary and maintain a comfortable lifestyle. You may also be able to use the policy to save tax and boost your super before you retire, by making extra contributions to your super account.
There are two ways to use a TTR pension: keep working full-time and boost your super by salary-sacrificing more into super; or reduce work hours while softening the drop in income.
To be eligible for a TTR pension, you must currently be aged between 55 and 65; be employed; and have transferred some or all of your super account balance into a retirement income account. With this strategy, you have two accounts: a super account, to receive contributions from your employer and your before-tax contributions, and an income account, which is set up with some or all of your super savings, to provide regular payments that top up your income.
This strategy lets you contribute extra to your super from your before-tax salary while receiving income from a super pension. Both the before-tax payments to your super and the income payments from your pension are generally taxed at a lower rate. If the tax you pay on your salary sacrifice contributions is less than the tax you pay on your salary, you can use those tax savings to boost your super.