Transition to Retirement Example

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14 Comments

  1. Jim Nixon

    Hi,
    Congrats on your articles, they are very informative. I have a query about a TTR strategy. I’m 57 and work part time and my wages from that are approx $50,000 pa. I have $560,000 in super and approx $300k in shares which I trade regularly and $200k in a internet cash account. I salary sacrifice the maximum I can without passing the limits and top up my weekly spending shortfall from my cash account. Would a TTR be better form me or should I just keep reducing my cash account and let my super accumulate.?
    Cheers
    Jim

    Reply
    • Chris Strano

      G’day Jim
      Thanks for the message.
      The benefit of commencing a TTR is that all earnings received from assets backing the TTR will be received tax free, as opposed to 15% in accumulation phase. E.g. if your $560,000 earns 4% p.a. income ($22,400), this would incur $3,360 (15%) income tax is accumulation phase, but would be received tax free in TTR Pension phase. However, this needs to weighed up against the ‘taxable’ portion of the TTR pension payments being taxed at your MTR (less the 15% rebate).
      Your super can still accumulate by contributing pension payments back into super as Non Concessional Contributions (provided you are under the cap)
      Hope this makes sense????

      Reply
  2. Steve Ellis

    Hi Chris,
    Am seeking clarity as BT (My provider are less than good on advice) I am currently in a TTR at 58.5 years old .
    I have 1.9M in a TTR Super account .
    I believe that I need to set up a new Pension account and place the 1.6M max in there by July 1st 2017 and am thinking I also must cancel my TTR to achieve this as it appears with that amount of Super overall i is less tax effective to stay within the TTR ?
    Please expand thanks Steve

    Reply
    • Chris Strano

      G’day Steve
      As of 1 July 2017 a TTR Pension will no longer receive tax free earnings from investments within the account, whereas a standard account based pension will.
      However, a standard account based pension can only be commenced by a person under age 60 who has retired, with no intention of returning to full-time or part-time work.
      I am not sure of your situation, but a person still working under age 60 is generally only able to access super via a TTR Pension.
      Read this article for more Can I Access My Super At 55 and Still Work
      The Transfer Balance Cap of $1.6 Million from 1 July 2017 does not apply to TTR pensions – TTR pensions do not count towards the cap.
      Hope I have answered your question.
      You may want to consider obtaining personal advice from a licensed financial planner.

      Reply
  3. Denise

    Hi, I am 62 and have 346,000 in super. I will be working until I am 70. I wish to access money to purchase a house deposit. What can I do?

    Reply
    • Chris Strano

      Hi Denise
      Unless you have met a full superannuation condition of release, your only option will likely be to commence a TTR pension with your superannuation savings. A TTR Pension allows you to receive an income of up to 10% of your account balance each financial year. This TTR pension can be rolled back to a superannuation accumulation account at any time. Keep in mind though, commencing an income stream with super savings while under age pension age will cause this amount to be assessed by Centrelink and may affect your entitlements if you are receiving any social security benefits. Also, you may consider keeping a small balance in an accumulation account so that it remains open to accept any future contributions to your account. Contributions are unable to made into TTR pension accounts. It would be best to discuss your objectives and options with a financial planner.

      Reply
  4. Cheema

    Hi, my mother is 62, past the preservation age and getting divorced. Her soon to be ex husband lives in a caravan that he will not sell and will not work, so my mum who is working 2 part time jobs to support them, needs to access some super to get her own caravan. She has $15000 in an old MLC super and 22 years of super with Australia post. She will need to keep working for a long time yet. Surely she can get $15,000 from her super, she is 63 in April.

    Reply
    • Chris Strano

      Having unrestricted access to superannuation is available for people who have had an employment arrangement come to an end after reaching age 60. This is done by notifying the superannuation provider. Apart from that, full unrestricted access is available upon attaining age 65.

      Partial access is available under age 65 whereby a TTR Pension income stream is commenced with some or all of a superannuation balance. An income of up to 10% of the TTR Pension balance can be withdrawn each financial year.

      I hope this helps. Click here to read more http://www.superguy.com.au/superannuation-retirement-rules/

      Reply
  5. William Iguwe

    Hi Chris,
    I will be 57 next year March. I am finding it difficult to find a job. Do I access my supper or go unemployment benefit.

    Reply
    • Chris Strano

      H William, if you access your superannuation it is likely to affect your eligibility or level of potential unemployment benefits. The sooner you access your super, the quicker it will run out.
      Whether you access your super or not is up to you. Think about how much income you need to cover living expenses and where the income is going to come from.
      Also, accessing super prior to age 60 may result in income tax.
      Related Posts:
      Can I Access My Super at 55 and Still Work?

      Reply
  6. Dieter

    Hi Chris,
    I am 60 now and am considering starting a TTR fund with my super fund. Are the benefits worthwhile?, as I would also like to have the option of withdrawing some super as lump sum for emergencies.

    Reply
  7. John Graham

    Hi Chris. On the subject of non-commutable Superannuation pensions, my SMSF provides me with a Market Linked Pension which cannot be commuted unless the proceeds are rolled over to another complying (non-commutable) Pension or annuity. I want to wind up my SMSF and roll the funds to a public (preferably Industry) Super Fund. My problem is that I am unable to find one which accepts the proceeds of a Market Linked Pension, I.e. a Fund that offers a non-commutable Complying Pension. Are you aware of any Fund that offers such a Pension?

    Reply
    • Chris Strano

      Hi John, I have heard of this being an issue, but I have not heard of a solution. My best guess would be to try annuity income stream providers, as I believe they would be the closest to having a solution for people in such situations due to the type of income streams offered. Challenger is an example of an annuity provider.

      Reply

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