Best Time To Retire For Tax Purposes

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16 Comments

  1. Chris Ramsden

    Hi Chris. I have reached preservation age and now have access to my DB PSS pension. I am 58. Can I retire, start my pension then return to work part time or full time for the next 8 years? My $30000 per year indexed pension would be added to my employment income but still have me in the 32% tax bracket. Is this strategy worth considering?

    Reply
    • Chris Strano

      Hi Chris, there are a number of things to consider with retirement planning, especially when it comes to options available with a PSS pension and the decision to continue working. I would strongly suggest obtaining independent financial advice based on what you are specifically trying to achieve now and throughout retirement, as there is no one strategy that is suitable for everyone. Sorry I couldn’t provide a more specific answer, but based on your stage and the options available to you, I believe expert, personal advice would be most appropriate for you.

      Reply
  2. Anthony Alexander

    Hi Chris

    I want to retire from work in the first week of July, but someone stated to me that I would have to work the full month to get any benefits from taxes on my payout.
    Is this correct

    Reply
    • Chris Strano

      Hi Anthony, I’m not sure what that person was referring to. The only thing I can guess is that, if you will be over 65, working for 40 hours over a 30-consecutive day period will allow you to make concessional super contributions to super; whereas if you are over 65 and do not work, you are unable to make concessional contributions. Personal concessional contributions can be claimed as a personal tax deduction to reduce tax.

      Not sure if this applies to you. I am just guessing.

      Reply
  3. Marnie

    I am 62 & have been told I cannot keep doing my job due to WC injury. I have $100,000 in super & $130,000 mortgage. I don’t see any rainbows in my future. Do I continue to risk further injury & continue working or can I retire?

    Reply
    • Chris Strano

      Hi Marnie, whether you retire or not is only a question you can answer. As far as accessing super, you can have limited access to your super via a TTR pension even if you continue to work, because you are over your superannuation preservation age. If you stop working in your current job, you will meet a full condition of release which gives you unrestricted access to all of your super.
      Related Posts
      Access to Super Over Age 60
      What is a TTR Pension?

      Reply
      • David

        Hi Chris.

        I am 61 years old with an 18 year old son living with me. I plan to retire over the next 4-5 months. I have sold my house late 2017 and am renting at $1960 per month. I have 700k in super and 500k in shares. I also have some managed funds and cash approx 300k.

        I am thinking of retiring in Sept/Oct and also thinking of salary sacrificing all of my wages in the new financial year until I retire. Is this a reasonable plan or will my dividends affect my tax etc?

        Reply
        • Chris Strano

          Hi David,
          You seem to have a reasonable level of savings which, if managed correctly, should comfortably be able to provide you with a reasonable income throughout your retirement years.
          Based on what you describe, I would expect there to be several ways that you could minimise tax and build a solid retirement plan.
          With your level of savings and current stage of transitioning into retirement, I would strongly suggest obtaining personal advice. You could probably manage your own retirement, but I have no doubt you could maximise your position with professional advice.
          If you do not already have a financial planner, feel free to browse our website to see if we could help you achieve your objectives https://torowealth.com.au/
          Let me know if you have any further questions.
          Chris

          Reply
      • Grant

        Hi, my wife and I are both currently 58 and we plan to retire end of 2020, I will 3 mths shy of turning 60. At which time we should have 900k in Super between us, plus a freehold investment property worth approx $550k. A freehold family home worth $700k, plus assets to the value of approx $250k
        I have also 32 weeks long service leave to either cash in or take if I can.
        Should I cash in the LS leave or take it?
        If I cash it in what time of year is best re tax implications?
        Cheers

        Reply
        • Chris Strano

          G’day Grant,
          It sounds like you’re in a sound financial position.
          It’s difficult to know how you should opt to take your LSL. In general, smoothing your income over two financial years is better to minimise the risk of incurring a higher marginal tax rate – assuming that you will have a lower taxable income in the second financial year.
          Given the financial position you are in, your ages and your current transition into retirement, I would strongly suggest obtaining financial advice, as I would expect there to be a number of ways to reduce tax and maximise your retirement outcome between now and age 65.
          Hope this helps,
          Chris

          Reply
  4. Janine

    Hi Chris, my husband’s super has approx $250,000 untaxed component due to him being in a hybrid fund. He will be 60 on 22 February 2020. Knowing that the untaxed component will be taxed at his marginal tax rate, would you say that it is better for him to retire on the 1 July following his 60th birthday, giving him a 0% marginal tax rate for that financial year? He will be taking an income stream. Thank you.

    Reply
    • Chris Strano

      Hi Janine, despite being over a ge 60, the taxable (untaxed) component of any pension payments recieved will still be assessable for tax purposes. Only the tax-free and taxable (taxed) portion of pension income is received tax free over age 60 under current rules.
      Related Posts
      Tax on Pension Income Over 60

      Reply
  5. Trish

    Hello, I am 60 and have $400,000.00 in super and would like to retire as soon as possible, but may be not for 12 months. I have about $50,000.00 in savings and co-own a small farm with my sister. Would it be feasible to retire with about $425,000.00 in my super? I live quite modestly.

    Reply
    • Chris Strano

      Hi Trish, one very basic rule of thumb is to assume you could retire on 5% of your balance. However, there are many other factors to consider, such as eligibility for Age Pension. But, most important to consider is how your savings will be invested and what is the probability that those investments will provide a return in line with your expectations and calculations to help achieve your retirement income objectives. Yes, the amount could provide a modest income for the remainder of your life, but whether it actually will or not depends on how it is invested and managed. I would suggest obtaining professional advice to help you prepare for your upcoming retirement, not only in regards to investments, but also to ensure you are maximising your tax position to help your super provide you with an income for longer.
      Hope this helps,
      Chris

      Reply
      • Trish

        Thank you for your response. I’ll speak with my advisor when it gets closer. Trish

        Reply

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