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OVER 55?
Take advantage of
transition to retirement
These days there are some really great
pre-retirement options for people over 55
In the past, most people faced the all or nothing approach to
retirement. Today, we’re able to have much more flexibility when it
comes to retirement through transition to retirement.
A transition to retirement strategy could enable you to make the most of
your super or your lifestyle in the lead up to retirement. You need to be at
least 55 years old to take advantage of a transition to retirement strategy.
There are a couple of options to choose from - read on for how they work.
If you are over 55, our checklist
can help you decide if this
strategy might be for you...
I am still working
I have at least $30,000 in super
I would like to keep working but
reduce my hours to spend more time
enjoying life (with the same income)
or
I would like to keep working the same
hours but boost my super
If you checked any of these boxes, chances are that you are eligible for a
transition to retirement strategy. This booklet shows you how a transition
to retirement strategy works and when you’re ready we can help you take
advantage of these options.
This brochure is issued by Quadrant Superannuation Pty Ltd ABN 82 067 516 938 under our Australian Financial Services Licence no.
290812. It is of general nature only and does not take into consideration your investment objectives, particular needs or financial situation.
These should be considered before investing and investors should consult a financial advisor. It does not constitute, and should not be
relied on as financial or investment advice or recommendation (expressed or implied). Quadrant does not represent or guarantee that the
information is accurate or free from errors or omissions and Quadrant disclaims any duty of care in relation to the information and liability
from any reliance on investment decisions made using the information. Quadrant accepts no responsibility for any loss, cost or expense
arising from use of the information on the website.
You should consider the Product Disclosure Statement before making a decision to join or remain a member of the Quadrant
Superannuation Scheme. Please contact us on 1800 222 209 to obtain a free hard copy of our Product Disclosure Statement. Personal
financial advice is provided by Quadrant First Pty Ltd AFSL no. 284443.
b
ion
1 Boost your
Opt
super savings
Get more money into your super account
before you retire.
Transition to retirement offers an extremely effective
strategy to super charge your savings in the lead up to
retirement. It’s good for reducing the amount of tax you
pay and keeping the same take home pay.
n 2 Reduce your work,
ptio
O
not your income
Semi-retire and spend longer doing the
things you love.
Transition to retirement allows you to cut back your
working hours to sample retirement while you take
some of your superannuation as a pension. This gives
you more time with the grandchildren, to travel or enjoy
long lost hobbies, while keeping the same income.
1
ptio
n 1 BOOst your
O
super savings
By age 55 you may have thought the years of boosting your
super before you retire had passed. If you look at your super
account and think there ‘s still not quite enough, transition
to retirement is an effective way to boost your savings while
you’re still at work. This option involves salary sacrificing part
of your regular income into super. By doing this you only pay
15% tax rather than your marginal tax
rate. You can then supplement
your current income by drawing
money from your super
savings, through a super
pension account.
2
Jane’s a winner!
Jane contributes more to super, saves
tax and keeps the same income.
Jane is 60 and is thinking about all the things she’d like to do in
retirement… overseas travel, upgrade her car and maybe even
renovate the kitchen. She would like to have financial peace of mind
and not have to worry about every bill that arrives in the mail. This
option allows Jane to continue working the same hours and salary
sacrifice part of her regular salary into super, supplementing the
sacrificed amount by accessing funds from her super.
A Quadrant First financial advisor explained that because of the
way super is taxed, Jane does not have to draw as much out of
her super as she pays in because the tax is only 15% (instead of
her usual tax rate).
Jane’s smiling because she is able to
maintain the level of income she is used
to while her retirement savings are
building up faster.
3
This option can be accessed
when you reach preservation
age (55 for most people but this A Quadrant First financial advisor
is increasing over time and may
saved me time and provided
be 60 if you were born after 30
June 1964). valuable advice by crunching the
You can continue working numbers to see if it was the best
the same hours but salary
sacrifice part of your regular strategy for me. Now I’m really
salary into super.
pleased with the boost to my super.
Your current income is
then supplemented by S.F - Burnie.
accessing funds from your
super savings.
You may also be entitled to
receive a tax offset of up to
15 percent on income regularly
received as a super pension.
Investment earnings and
capital gains on the assets
used to fund your pension are
effectively tax free.
If you are over 60 you don’t
pay tax on the income
you receive from a
pension (as long
as your money is
in a taxed
super fund).
4
How does this option work?
Jane is 60, has $200,000 in super and wants to increase her super
savings. Jane has a salary of $60,000 and due to her lifestyle
commitments needs around $40,000 after tax per year. She is already
salary sacrificing 17.5% of her pay to super. Let’s see how a transition to
retirement strategy could benefit Jane:
Gross Less salary Taxable Less Tax & Annual
salary sacri ce income Medicare net salary
levy
CURRENT
SITUATION $60,000 $10,584 $49,416 $9,416 $40,000
TRANSITION $60,000 $20,000 $37,125 $22,875 $2,875 $40,000
TO RETIREMENT
Jane will now need to access her super
to maintain the same income
Why this works
Receiving income from a pension is more beneficial to Jane than her
normal salary because it’s tax free. This allows Jane to put an extra $2,560
after tax into her super and keep the same take home pay.
Other things to think about
Less worth
If access to capital is an issue for you it issalary bearing in mind
Less Tax &
Medicare levy
that while this strategy is in place thesacri ce pension is non-
super
commutable (which means you can’t take it as a lump sum) and your
superannuation balance is preserved. You can only access your super
as a regular income capped at 10% of the account balance per year so
you may need to set aside money in a non-superannuation investment
for unforseen circumstances while the transition to retirement strategy
is in place.
Don’t put it off - call us today! Your Quadrant First financial
advisor can fill you in on more details about this option.
Call 1800 222 209 to make an appointment.
5
ptio
n 2 Reduce your
O
working hours,
not your income
In the past, most people faced the all or nothing approach to
retirement. But thanks to different rules, you now have more
flexibility and choice in your pre-retirement years. If it’s time to
take a step back from your full time job and scale back your
hours to get a taste of what retirement might be like, this option
might be for you.
Bill’s job description now expands to
captain of his grandson’s pirate ship…
Bill is 55 and now works part time. He was able to reduce his hours
after negotiating with his employer and now spends Thursdays with
his grandson sailing the high seas (and landing the occasional fish)
and Fridays on the golf course. His working week has reduced but
his income has remained the same.
Bill’s never felt so relaxed!
6
Transitioning has allowed
Bill to spend more time
doing his own thing and
take a gradual approach to
retirement. By accessing
his super he has been
able to keep the same level of
income but work less hours.
7
There are no set hours that
you have to work.
Transition to retirement has
Your super can only be
taken as a pension. let me test drive retirement
You can withdraw a regular
and given me lots of freedom
income but not a lump sum (it’s
designed to supplement income and flexibility. I’ve now got an
rather than drain your savings).
idea of what it might be like
Once you turn 65 or
permanently retire, your to take the plunge and retire.
pension will turn into a
normal income stream G.T - Kingston
which has more flexible
payment rules.
8
How does this option work?
Bill is 55 and wants to cut back on his working week from five
days to three days while maintaining the same income. He has
$250,000 in super and earns $50,000 a year. Bill can use his
existing super to start a pension and draw sufficient funds to meet
his income needs.
Gross Taxable Less Tax & Annual
salary income Medicare net salary
levy Bill receives a
CURRENT
tax offset of
SITUATION $50,000 $50,000 $9,600 $40,400 15% which
reduces his tax
TRANSITION $30,000 $16,407 $46,407 $8,468 $2,461 $40,400
TO RETIREMENT
Bill will now need to access his super Add pension
to maintain the same income offset
rebate
Why this works
Because Bill is under 60 the income received from a super pension
is more tax effective as he is entitled to a tax offset of 15% on
the taxable component. In Bill’s case, he takes a pension of
$16,407 and his tax is reduced by $2,461 ($16,407 x 15%).
Less salary Less Tax &
Other things to think about
sacri ce Medicare levy
This calculation does not take into account the effect that
reducing your hours has on your employer’s superannuation
payments into your super account.
Being over 50 years of age, the maximum annual amount that
you can contribute at the 15% concessional tax rate (employer
contributions plus salary sacrifice) is $50,000.
Call 1800 222 209 to make an appointment with a
Quadrant First financial advisor - they can help you
decide if this strategy will work for you.
9
Call the super Hotline:
1800 222 209
Drop us a line at:
Quadrant Superannuation
GPO Box 863
Hobart TAS 7001
see us at:
Level 5/85 Macquarie St
Hobart TAS 7000
Email us on:
info@quadrantsuper.com.au
Log on to us at:
www.quadrantsuper.com.au
