What is
Retirement
For many of us, retirement is when dreams become reality. Released from the commitment
of full-time employment, we are able to choose from a range of lifestyle options.
Despite having all of this to look forward to, preparing for retirement can be one of the most stressful and uncertain times of your life.
What is an Allocated Pension?
An Allocated Pension (or what is some times called an Account Based Pension) is the normal transition of your Superannuation account once you reach retirement age, essentially you start turning the income tap on from your Superannuation account.
Its important to note at this time that the level of income in an Allocated Pension (AP) is not connected to the performance, the level of income your draw out of the account is a set level which averages on the low end at about 5% and on the high end at 10% per year. Your investments may or may not generate this level of performance which is why it is highly recommended that you allow us to build a customised portfolio for you that will focus on this income phase of your Superannuation and the longevity of the money through your retirement
At A2Z Finance Solutions (A2Z) retirement is very important issue as all three of our main principles come into play, Diversity of Design, Freedom of Cover, and Simplify with Us. Call us to make an appointment to discuss your retirement needs.
What is a TTR Pension?
A TTR Pension or Transition To Retirement Pension is an optional phase your superannuation account can take once you reach 55 years of age.
It was originally meant to assist those people who wanted to retire early and could phase into retirement gradually reducing their work days, it has however become a viable strategy to boost your retirement.
In essence the Transition To Retirement (TTR) Pension is just like a normal superannuation pension account except you can not gain access to the bulk of the funds, what has now become common is for those still working to take a Transition To Retirement (TTR) Pension and then salary package the same amount into their super account, can be found here for TTR Pension Strategies.
There is a minimum and maximum amount you may withdraw from a transition to retirement pension each year. Until you retire or reach age 65 the maximum income you may draw in any year is 10% of the account balance. If you are under 65 the minimum amount you must take for the 2014/15 financial year is 4%.
It is very highly recommended that you speak to us at A2Z Finance Solutions (A2Z) before attempting any TTR Pension Strategy as it can cause more problems than its worth.
TTR Pension Strategies
The TTR Pension Strategy, basically means you adjust your income in such a way that you retain the same amount of take home money but it will now come from a more tax effective source, the following are two examples of the strategy in action.
For a client between 55 and 60 years of age
For a client over the age of 60
The TTR Pension Strategy, basically means you adjust your income in such a way that you retain the same amount of take home money but it will now come from a more tax effective source, the following are two examples of the strategy in action.
The illustrations above are based on the Tax rates and limits applying for the year 2013/14 (Income tax includes the low-income tax offset and the Medicare levy). The superannuation guarantee is 9.5% and, the concessional contribution limit of $35,000 per annum (up to 30 June 2015) applies; it’s for a full-time employee. Source: Russell Investments.