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Baby Boomers - Are you planning for super retirement?

In Australia, we have an ageing population, that is, we are living longer and as a result will have more years in retirement which means the need for more retirement savings.

Boost your super with a Transition to Retirement strategy

One way to prepare for your retirement is to take advantage of a Transition to Retirement (TTR) strategy.

If you are aged 55 or over and still working, you can start drawing a superannuation pension. This may allow for reduced working hours, without reduced income. Or if you choose to continue working full time, it can allow greater salary sacrifice contributions to achieve a bigger pool of funds at retirement.

The main points of the TTR strategy are:

• Once you turn 55, you can start a pension with your superannuation. Between ages 55 and 59, income will be taxed at the concessional rate. From age 60, the pension is tax-free.
• In 2009, the Government halved the concessional contributions cap. You can now salary sacrifice up to $50,000pa, but only until 30 June 2012 and the superannuation fund will pay tax at just 15 per cent rather than at your marginal tax rate.
• Income streams drawn while still working must be between 4 – 10 per cent of the total TTR account balance at commencement.

TTR strategies are tax-effective if you have a reasonable amount in superannuation and if your marginal tax rate is higher than 15 per cent. In addition, you should also check if your employer can accommodate salary sacrifice arrangements and that they are able to make tax-deductible superannuation contributions.

The strategy can be used to:

• Boost your superannuation as you near retirement.
• Reduce your hours of work but maintain your available income. (It’s important to bear in mind that this strategy will reduce your superannuation balance).
• Create a new lifestyle as you make the transition from full-time work to part-time work, and later to retirement.

There are many tax implications with the movement of money in and out of your superannuation fund and mistakes could be costly, so it is important to seek the advice from a professional financial planner. A Bridges financial planner will help you with the right super strategy, ensuring it suits your risk profile and your timeframe.

To find out more about the financial issues that affect your generation, Bridges have created a ‘Taking care of MY generation’ guide. Logon to www.bridges.com.au to view an eGuide or call Summerland Credit Union to order a printed copy.

For more information on Bridges’ services or to arrange a complimentary, obligation-free initial consultation with a Bridges financial planner near you, please call Summerland Credit Union on 1300 802 222 and start making the most of your money now.

Bridges Financial Services Pty Limited (Bridges). ASX Participant. AFSL No 240837. This is general advice only and does not take into account your objectives, financial situation and needs. Before acting on this advice, you should consult a financial planner. In referring members to Bridges, Summerland Credit Union does not accept responsibility for any acts, omissions or advice of Bridges and its authorised representatives.