When transitioning to retirement, it is possible to reduce the hours you work without reducing your income, by tapping into part of your super. The calculator below is a useful and straightforward tool to help you work out how you could achieve this, by looking at your current and future retirement goals.
The purpose of this calculator is to provide you with an initial indication of what you might be able to achieve using a few basic strategies. Transition to Retirement plans can be complex. We recommend you speak to your Industry SuperFund before making a decision.
Here’s how we worked out the initial numbers you saw when you reached this screen
Because you're 57, you can contribute up to $27,500 to your super before tax each year via salary sacrifice. It is called a concessional contribution, because you're getting a tax concession. These contributions are taxed at a flat rate of 15%, instead of your usual income and Medicare tax rate of 50%.
Your concessional contributions are made up of all your employer contributions, including Super Guarantee contributions which is usually an additional 11% of your salary. Based on the information you provided it looks like your employer is already paying $6,350, so you have an extra $28,650 you can contribute before reaching the limit.
Because you've turned 57, you are also eligible to withdraw from your superannuation account.
*These withdrawals are tax free!*
So... by salary sacrificing $28,650 and withdrawing only $20,000 each year, your take home pay doesn't really change, and you will have $5,730 high in your super account at retirement.
That sounds a lot like free money doesn't it? Well essentially it is, because this is a benefit from the Australian Government to assist people approaching their retirement age to prepare for retirement. That's why we call it "transition to retirement".
As your situation changes each year, you need to revisit your TTR settings regularly, and you'll need a financial planner to help you set this up. Speak to your Industry SuperFund about getting financial advice to get you started with TTR.
So... by salary sacrificing $28,650 each year, you will have $5,730 extra in your super account at retirement.
*These withdrawals are tax free!*
So... when you reduce your hours of work you can salary sacrifice $28,650 and withdraw $20,000 each year. We calculated these numbers to get you as close as we can to having the same take-home-pay, within the rules. The TTR strategy will leave your super account $5,730 extra at retirement.
That sounds a lot like free money doesn't it? Well essentially it is, because this is a benefit from the Australian Government to assist people approaching their retirement age to prepare for retirement. That's why we call it "transition to retirement".
As your situation changes each year, you need to revisit your TTR settings regularly, and you'll need a financial planner to help you set this up. Speak to your Industry SuperFund about getting financial advice to get you started with TTR.
*These withdrawals are tax free!*
So... if you withdraw $20,000 with $28,650 salary sacrifice, this is an extra $20,000 take home pay each year but you will have $5,730 high in your super account at retirement.
So... if you withdraw $20,000 with $28,650 salary sacrifice, you pay 15% tax so this is an extra $20,000 take home pay each year but you will have $5,730 high in your super account at retirement.
That sounds a lot like free money doesn't it? Well essentially it is, because this is a benefit from the Australian Government to assist people approaching their retirement age to prepare for retirement. That's why we call it "transition to retirement".
As your situation changes each year, you need to revisit your TTR settings regularly, and you'll need a financial planner to help you set this up. Speak to your Industry SuperFund about getting financial advice to get you started with TTR.
For transition to retirement to work for you, you would need a higher starting income. This is because your current income tax rate is below or equal to the Transition to Retirement contribution rate.
You could take a look at making after tax contribution to your super instead.
The "Transition to Retirement" outcome uses an actuary projection and the following assumptions, some of which you can change:
The outcome relies on the following fixed assumptions and settings which cannot be changed:
This calculator generates information illustrating the impact of making salary sacrifice contributions and effecting a Transition to Retirement Income Stream, based on certain assumptions. Some factors that may affect your retirement outcomes may not have been taken into account.
The tool is not intended to be relied upon for the purposes of making a financial decision. Consider a fund’s PDS and your objectives, financial situation and needs, which are not accounted for in this information before making an investment decision. You are responsible for your own investment decisions and should obtain individual tailored financial advice whenever necessary.
The assumptions used in this calculator are, in our opinion, reasonable for the purposes of working out the estimates. The assumptions are based on objective evidence on long-term net returns, fees, relevant economic forecasts and analysis on wages, prices and productivity.
With the exception of fixed statutory assumptions, you can alter default assumptions to the extent that they can be reasonably expected to change. It should be noted that any change to the assumptions will apply for the whole of the calculation period. Any changes made to the default assumptions is likely to impact the final results. Over time small changes can have a significant impact on final results.
While we have made every effort to ensure these assumptions are reasonable, you should review them to match their own expectations/circumstances and not take them as the most appropriate assumption in all cases.
Transition to Retirement (or TTR) is a retirement strategy that can be used in different ways as you gradually move into retirement. You can use it to top up your income as you ease back on the hours you work. You can also use it to give your super a boost before you retire. The TTR calculator covers all of this.
You may start using a TTR strategy when you turn 55, and enjoy a 15% tax offset, but the bigger tax-free benefits don’t begin until you’re 60, which is why most people wait until then to begin their transition to retirement.
It’s a good idea to do a quick review every year in case your goals have changed.
Your ability to use a TTR scheme stops when you turn 65, however, by then you can be enjoying a tax-free income stream through your super, even if you are still working.
Yes it could. Normally, there are caps on how much you can salary sacrifice each year – but you may be able to carry forward your unused caps from previous years, which means you can salary sacrifice more than usual.
No. TTR is the same across Australia, so whether you live in NSW or WA, or you’re working in Vic with retirement dreams in Qld, the TTR rules and benefits are the same.
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