TRANSITION TO RETIREMENT (TTR) - AS AN INCOME BOOSTER
The Income Booster helps to top up your income to improve your current cash flow position.
With this option, you continue to work full-time and use your super to increase your take-home pay (by moving your super into a retirement account and drawing down an income stream). The catch? While this can improve your cash flow in the lead up to retirement, you will start to deplete your retirement savings.
BENEFITS OF THE INCOME BOOSTER
- Take-home pay increases
How Anne topped up her income.
Anne, aged 60, is working full time, earning $72,000 plus her super guarantee contribution. She currently has a balance of $250,000 in her iQ Super account.
Anne is looking to increase her take-home pay, so she can improve her current cash flow position.
She decides that she is going to set up an iQ Retirement account and use an income stream from her super to help meet her short-term income needs.
Anne takes the maximum pension amount of $25,000 (which is 10% of her super balance). Because Anne is over 60, this pension amount attracts zero tax – so adds an additional $25,000 to her annual overall take-home pay.
This strategy does come at a price to Anne’s retirement savings as it will reduce over time as she draws down pension payments. Anne has spoken with a financial adviser to understand the pros and cons of this strategy, and has a plan in place to ensure she still has enough retirement income when she’s ready to retire or reduce her working hours.
|Current situation||With a TTR|
|Add TTR payment||$0||$25,000|
|Less tax payable||($16,387)||($16,387)|
|Take home pay||$55,613||$80,613|