Setting up a transition to retirement pension
by Wealth Know How in Retirement
Before you set up a transition to retirement pension, you need to consider if this type of income stream is right for you and how it fits with your work and super plans.
You’ll need to check your fund type: TTR pensions are only available for members of accumulation super funds. If you’re in a defined benefit fund, you cannot access a TTR pension. If you run a self-managed super fund (SMSF) you can set up a TTR pension, but your pension account must be separate from the super account that accepts contributions.
- 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 08 Mar 15
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Before you set up a transition to retirement pension, you need to consider if this type of income stream is right for you and how it fits with your work and super plans.
You’ll need to check your fund type: TTR pensions are only available for members of accumulation super funds. If you’re in a defined benefit fund, you cannot access a TTR pension. If you run a self-managed super fund (SMSF) you can set up a TTR pension, but your pension account must be separate from the super account that accepts contributions.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.
-
Venezuela tension heats up
Duration 03:16
-
Aussie dollar surprises market
Duration 03:10
-
Markets climb as investors watch US healthcare bill
Duration 02:31
You’ll need to check your fund type: TTR pensions are only available for members of accumulation super funds. If you’re in a defined benefit fund, you cannot access a TTR pension. If you run a self-managed super fund (SMSF) you can set up a TTR pension, but your pension account must be separate from the super account that accepts contributions.
Next, you’ll need to work out your retirement strategy: do you want to cut back on work while maintaining the same income and lifestyle, or do you want to boost your super while saving tax? The TTR strategy covers both.
You’ll have to decide on your income needs: take into account all your income sources to work out how much money you should draw down from your super. Often people find their income needs reduce as they get closer to retirement and they can afford to salary-sacrifice into super, or reduce work hours, without having to replace the lost income.
Remember that with a TTR pension you can withdraw no more than 10% of your account balance each year. For example, if the account balance of your TTR is $400,000 on 1 July, you can’t withdraw any more than $40,000 for the year.
There is also a minimum payment that you have to withdraw each year: currently that’s at least 4% of the assets financing the pension. So with that $400,000 balance on July 1, you will need to take out at least $16,000 over the 12 months.
When choosing to start TTR, you should also consider your social security entitlements, the tax implications, and also any effect on your life insurance.
If you or your partner receive social security benefits, there could be implications for you or your partner's pension and other entitlements. You should check with your financial adviser if there are likely to be any tax implications from starting TTR, and finally, check on your life insurance - If you have life insurance with your super fund, check with the fund or your financial adviser to make sure your life cover does not reduce or cease on commencing a TTR pension.