Now’s the time to look at transition to retirement strategies
Transition to retirement (TTR) strategies are a great way to boost your super balance. And if you’re using these strategies, some adjustments may be needed from 1 July 2013 to make sure you maximise your opportunities and avoid unintended tax bills.
What’s happening?
On 1 July 2013, the minimum income you must receive from your TTR pension will increase from 3% to 4% each year.
At the same time, the superannuation guarantee contributions from your employer will increase from 9% to 9.25% in 2013-14.
Should you do anything before 1 July?
Leading up to the end of the financial year, you can talk to us about making the most of the current concessional contribution cap* cashflow allows.
With retirement likely to be less than 10 years away, you’ll only have limited opportunities to make concessionally tax super contributions which will save on income tax and help you boost your super for retirement.
What about after 1 July?
No adjustments are needed if you’re currently drawing 4% or more from your TTR pension and you keep to your concessional contribution cap. However, its still worthwhile reviewing your financial situation with us to make sure you’re on track for the retirement you want.
If you’re currently receiving a TTR income of less than 4% and are close to (or taking full advantage of your concessional contribution cap), you’ll probably need to alter your strategy to adjust your levels of TTR income and concessional super contributions. For example, you may need to increase your TTR income payments and possibly reduce your concessional super contributions.
You may also receive more income from your TTR pension than need to meet your current living expenses. If that’s the case, we can discuss some tax effective strategies you could use to make the most of your left over money.
We can review your retirement plans and help you work towards achieving your future goals.
If you would like more information, please contact Scholten Collins McKissock on 03 9848 9811 or admin@scmfp.com.au.
* Concessional super contributions currently are capped at $25,000 pa, regardless of your age. The government has proposed to increase this cap to $35,000 pa from 1 July 2013 for people aged 60 and over, and 1 July 2014 for people aged 50 and over.
This document contains general information only. Godfrey Pembroke Financial Advice is not a registered tax agent. If you wish to rely on this newsletter to determine your personal tax obligations, you should consult with a Registered Tax Agent. In preparing this information, Godfrey Pembroke Financial Advice did not take into account the investment objectives, financial situation or particular needs of any particular person. Before making an investment decision, a person needs to consider (with or without the advice or assistance of an adviser) whether this information is appropriate to their needs, objectives and circumstances. This information is based on our interpretation of relevant superannuation, social security and taxation laws as at 1 July 2013.