How they can help your retirement?
Australians are staying in the workforce for longer, and living longer than ever before. There is an escalating need to save more to cover the cost of living further into retirement. However, pre-retirees might be in a good position to take advantage of a tax effective super strategy.
What is a Transition to Retirement Allocated Pension (TRP)?
Following improvements to the super system, it is now possible for those who have reached 55 to keep working but also access their super early, via a pension. In other words, they can use a portion of their super money and convert it into a Transition to Retirement Allocated Pension (TRP) – an income stream that will provide them with regular flexible income payments. A TRP is ‘non-commutable,’ meaning that it cannot be accessed as a lump sum amount.
Accessing your super early can make the transition to retirement easier as it provides additional income if you decide to cut back your working hours as you get older. It is also flexible as you can still make additional contributions to your super while you work.
A TRP can be an ideal way to re-structure your life and boost your retirement planning at the same time.
Who is eligible to start a TRP?
Currently, anyone who has reached age 55 can access part of their super as a TRP. It doesn’t matter how many hours you are working, as no work test applies.
How can I benefit from a TRP?
A TRP primarily benefits those who want to keep working a little but need extra income for living expenses; however, it can also offer significant tax savings for those wanting to salary sacrifice large amounts in the lead up to retirement.
For more information on TRP’s and how you might benefit from one, contact Paul Baggetta on 9317 7300.
February 2, 2017
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The information provided on this website is for general guidance only and is no substitute for professional advice. It should not be used as a substitute for legal, business, accounting, tax, financial planning or other professional advice.