In the years before you retire, you’re probably looking forward to having more time to do the things you enjoy, but many people are also concerned about whether or not they have saved enough money to fund their retirement.
Whether you’re dreaming of something big like the ultimate world tour, uncovering passion for a new hobby or something as simple as having a nice lunch out each week, you can start planning today for your ideal retirement.
Once you reach what’s known as your ‘preservation age’, you may be able to access your superannuation by drawing a pre-retirement pension – a regular income stream drawn from your super savings. However, there are restrictions on accessing your super before you reach retirement age.
In most cases, you’ll pay less tax on income received through a pre-retirement pension than you would on the same amount of salary or wages, making this a great way to boost your super balance.
With a transition to retirement strategy, you could reduce the number of hours you work and supplement your income with payments from your pre-retirement pension. This would give you more time to do the things you want, while maintaining your lifestyle.
Alternatively, you could continue working full-time but take advantage of the potential tax concessions on offer to boost your super balance in the years before you enter full retirement.
For example, you might keep working full-time while drawing a pre-retirement pension from your super balance. You could then salary sacrifice to super the same amount, or more. This would maintain your after-tax income while reducing your taxable income, which may in turn decrease the amount of tax you have to pay.
If you’d like help deciding whether this strategy is right for you, you can schedule a complimentary, no-obligation consultation with a Commonwealth Financial Planner and start planning today.
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