See The Benefits Of Using a Retirement Calculator
See The Benefits Of Using a Retirement Calculator
It used to be that you could not access the money in your superannuation account until you were 65 or had permanently retired (after reaching your preservation age - currently 55). Thanks to some changes in the law, that's no longer the case. As of 2005 changes in the rules allow you to reduce your working hours and maintain your standard of living from your preservation age. This is done by drawing money from your super fund and putting it into a retirement income stream, commonly known as an allocated pension or a pension fund. This is known as a transition to retirement pension.
If you're thinking of moving your money from a super fund and setting up a transition to retirement pension before you retire, it's wise to see a financial planner before you make any decisions. Before you see a financial planner, you can get a rough idea of your situation by using a transition to retirement calculator.
A transition to retirement calculator will show you how a transition to retirement pension may affect your overall income and how much tax you would be paying for a given year. The calculator will demonstrate the potential benefit of salary sacrificing employment income to super and using your accumulated super to deliver a tax effective income through a transition to retirement pension. A transition to retirement calculator usually compares this to your position if you didn't start a transition to retirement pension.
A retirement calculator will not guarantee its results will be representative of your actual income and tax situation should you take a transition to retirement pension. There are no warranties of accuracy for the information they provide: they are simply a tool to help you get a grasp on the choices you can make with regards to transitioning to retirement. A transition to retirement calculator is not a substitute for financial advice from an actual consultant.
If you are less than 60, the taxable portion of your transition to retirement pension is taxed at your marginal tax rate. If your transition to retirement pension is paid from a taxed source, you will receive a tax offset that is 15% of the taxable part of your pension payment.
When you turn 60, your superannuation income will be tax-free (if paid from a taxed source). Some less common income streams maybe paid from an untaxed source in which case the tax rules are different.
A transition to retirement pension is a wise idea for those who have suitable income and who would like to gradually ease their way into retirement as early as the age of 55. It's highly recommended you visit a trusted financial planner to help you with your transition to retirement pension options.
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