A successful Transition to Retirement (TTR) strategy allows you the option to reduce your working hours whilst saving tax and boosting your super before you fully retire.
If you are under age 65 and still working, you can transfer the sum of your super into pension phase to gain the benefit of preferential tax treatment (a 0% tax rate on income and capital gains within the pension) as long as you withdraw between at least 4% and 10% of your pension account balance each financial year. This allows you to break up your income between employment and a pension, potentially providing you with significant tax savings.
At the same time as you are drawing a pension, you can be contributing money back into super, along with your mandatory employer contributions. This money will be taxed at Superannuation rates, providing the potential for you to reduce your tax bill.
A TTR strategy is a flexible option that allows you to work longer and retire later. To navigate the potential complexities of a TTR strategy and determine whether it is right for you, we strongly suggest that you seek professional advice.