Will ‘Transition to Retirement’ work for you?

Transition to Retirement

Gone are the days when you can only access your superannuation when you retire or become 65 years old.

Now, it’s possible to access some of your super while you’re still working. Even as you reduce your work hours you can still maintain your standard of living with a ‘transition to retirement’ strategy.

Top things you need to know about transition to retirement:

  • Not all super funds allow transition to retirement
  • Self managed super funds or SMSFs may not be eligible, except those with amendments to the trust deed or segregation
  • You should be of minimum preservation age
  • It is an effective strategy to ease into retirement
  • You will pay less tax on your PAYE income
  • It can boost your superannuation savings
  • You can reduce your working hours and still maintain your income

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How can transition to retirement help you?

Transition to retirement is a popular choice for those who want to maximise their superannuation savings during their pre-retirement years. A transition to retirement is considered successful when it substantially increases your super fund’s balance and improves the quality of your lifestyle.

 

A transition to retirement is an effective strategy to reduce your working hours without cutting your income.

Who can use ‘transition to retirement’?

Once you’ve reached your preservation age, you can already be a candidate for transition to retirement. In most cases if you are 55 years and older, now is your chance to fully maximise this opportunity. Although you can work until your retirement age, let’s face the fact that many seniors today are losing their job and it is usually difficult to find another job. If this happens to you, you’re left with 10 years or less of income-earning years that may include long periods of unemployment.

How does ‘transition to retirement’ work?

There are many ways of implementing transition to retirement. The most common is through salary sacrificing pre-tax PAYE income into your superannuation savings account and at the same time drawing from your fund’s pension account.

 

Transition to retirement is often complex. It is always better to seek expert financial advice so that you can know your options and avail what will benefit you most.

Turning 55 soon? Be prepared now.

Planning for your retirement is crucial especially if you are nearing your transition years. As early as now, you must be talking to your financial advisor to lay down your financial goals and plan strategic ways to achieve them. Even if you’re not yet 55, it is important that you have your current financial status assessed by an expert to see potential problems that you need to give attention to (such as debts) before you finally transition to retirement.