TRANSITION TO RETIREMENT (TTR) - AS A LIFESTYLE BOOSTER
Want to ease yourself into retirement? A Transition to Retirement strategy may allow you to work less for the same income.
By moving your super into a retirement account, you can access extra income to top up the reduction in your take-home pay. It is important to understand that this option can eat into your retirement savings.
BENEFITS OF THE LIFESTYLE BOOSTER
- Ease into retirement by reducing your working hours
- Take-home pay remains the same
- Save on tax
How John reduced his working hours without having to reduce his income
John, aged 58, is working full time, earning $75,000 plus his super guarantee contribution. He currently has a balance of $250,000 in his iQ Super account.
John is looking for a lifestyle change, and has been considering reducing his working hours to 25 hours per week.
John decides that he is going to set up an iQ Retirement™ account so he can take an income stream from his super to replace the reduction in his salary.
By starting a Transition to Retirement strategy, John pays $4,006 less tax. This enables him to work 10 hours less, but maintain the same take-home pay.
This strategy does come at a price as John’s retirement savings will reduce over time as he draws down pension payments. He has factored this into his long-term retirement income plans.
|Current situation||With a TTR|
|Add TTR payment||$0||$17,494|
|Less tax payable||($17,422)||($13,416)|
|TAKE HOME PAY||$57,578||$57,578|