Retirement Planning Strategies

Retirement Planning - can I retire early, Transition to retirement, age pension

Key things to consider for retirement planning are:

  1. Can you retire when you want to? Use our “Superannuation Calculator” to find out how much super you may have when you retire.
  2. How do you want to retire… ie. do you want to ease down or stop altogether?
  3. How much super will you need for retirement? Don’t forget, you can use “Retirement planning calculator” to help you.

With your retirement goals worked out, you’ll need retirement planning strategies to put it into place. These could include:

  • Making extra contributions to build your super or re-contributing your super
  • Taking advantage of transition to retirement if you’re able to access your super but you want to ease off from full-time work without giving up work completely.
  • Using a “Super contribution optimiser” to look at the effects of making additional super contributions and/or your planned retirement age.
  • Investigating how best to use an investment property – if you’re thinking of selling, it may help your tax to sell after you retire.
  • Seeing if you may benefit from Government Age Pension by using”Super and pension age calculator“. Particularly if you have less than $100,000 in your super for retirement.

Strategies, such as Transition to Retirement, can improve your super balance and therefore your retirement income.

Transition to Retirement

Transition to retirement strategies are designed to give you greater flexibility as you move towards retirement. Once you reach what’s known as your ‘preservation age’, you can access your super by starting a transition to retirement income stream (a regular income stream drawn from your super savings)and reduce your working hours before fully retiring.

You can also make additional contributions to super after tax, and doing so may greatly reduce your tax in retirement (consider strategies like selling the investment property and contributing the proceeds to super).

We can assist you with an understanding as to how much income you can draw, how long your assets will last and what your entitlement to Social Security will be, so that you can plan for a happy and relaxed retirement. Alternatively, you can use “Retirement planning calculator” from Money smart to work out what income you will have from super and age pension when you retire you or use “Super and pension age calculator” to work out the age at which you can access your super and apply for age pension.

If you would like to discuss this in more detail please contact us.

You can get more information from our “Retirement income” and “Transition to Retirement” fact sheets.

Re-Contribution Strategy

A re-contribution strategy is a withdrawal of your superannuation benefits and a re-contribution back into super.

A re-contribution strategy involves withdrawing a lump sum, paying any necessary tax on the withdrawal and re-contributing these funds into superannuation as a non-concessional contribution. The revised superannuation balance will potentially consist of all, or more, tax-free component.

A great reason to implement a re-contribution strategy is tax; this strategy converts the taxable portion of your superannuation benefit into a tax-free component. Ultimately, this may result in a reduction of the potential tax payable when your super is passed onto your beneficiaries following your death.

This retirement planning strategy can only be implemented if you are able to meet a condition of release to access your superannuation benefits and also be eligible to make a contribution back into superannuation.

The strategy is effective under the following circumstances:

Income tax perspective: A re-contribution is still beneficial for those aged between preservation age (from age 56) and age 60 and who are expecting to receive a superannuation income stream.

Estate planning perspective: This strategy can also be utilised where there is some likelihood that your superannuation benefits will be inherited by those not considered to be dependants under taxation law, such as adult children. A re-contribution can reduce the lump sum tax payable from death benefit proceeds, or in some cases, the adult beneficiaries will not be required to pay any tax at all (see table of tax rates on page 2).

What is my preservation age?

Your preservation age is when you can start to access your super. It will be between 55 and 60 depending on when you were born.

Check out the ATO’s table below to see what your preservation age is.

Date of birthPreservation age
Before 1 July 1960 55
1 July 1960 – 30 June 196156
1 July 1961 – 30 June 196257
1 July 1962 – 30 June 196358
1 July 1963 – 30 June 196459
From 1 July 196460
The information on the Website is of a general nature only and has been prepared without taking into account your, or any other investor’s, particular financial needs, circumstances and objectives. The information on the Website should not be construed as financial, taxation or legal advice.  Lifestyle Financial Services Pty Ltd recommends that you consult a financial adviser for advice that addresses your specific needs and situation before making investment decisions.