How does boosting your retirement nest egg without reducing your take home pay sound? Too good to be true, perhaps? Well, not if you’re aged 55 or over.
Once you reach age 55, you may be able to access some of your superannuation while you’re still working by starting a Transition to Retirement pension. You can then make additional contributions from your salary into your super and compensate for your reduced salary with a pension payment from your super.
Here’s how the strategy works.
Firstly, you arrange for your employer to pay part of your pre-tax salary into your super fund. This is known as salary sacrifice. The amount you sacrifice into super is generally taxed at a maximum of 15% instead of at your marginal tax rate. Salary sacrificing effectively reduces the tax payable on your salary.
Next, you roll over a portion of your accumulated super into a Transition to Retirement pension. The amount you receive from this pension is potentially tax free and therefore may be less than the amount you salary sacrifice back into your super. The result is that you can accumulate more in your super while retaining your current take home pay.
Of course, the benefits available will depend on your individual situation, so ask your Westlawn Wealth Adviser how a Transition to Retirement strategy could benefit you.
General Advice Warning The advice on this site may not be suitable to you because it contains general advice that has not been tailored to your personal circumstances. Please seek personal financial, tax and/or legal advice prior to acting on this information.
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