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  • Writer's pictureKris Jenkins

How a Transition-to-Retirement strategy could help you

Disclaimer: this blog post contains general information. This is NOT personal financial advice and should not be acted upon. Please speak to your financial advisor or accountant about your specific situation before making any investment decision.

As you approach or reach the age of 60, it is quite common for you to begin to contemplate retirement. It is a time where it is important to consider strategies that can help maximize their retirement savings and minimize your tax liabilities.

One such strategy is known as the Transition-to-Retirement (TTR) strategy, which can be used in various different ways (depending on your goals) but generally allows you to either reduce income tax, grow your super (or both), or gradually reduce work hours while maintaining the same level of income.

One of the key benefits of the TTR strategy is the ability to reduce income tax and utilise those savings to better your financial position. By drawing a lump sum pension payment, individuals can potentially reduce their personal income tax liability by making concessional contributions back to super. This allows an individual to use the tax savings to increase superannuation balances before retirement by making Non-Concessional (after-tax) contributions to super.

Furthermore, the TTR strategy can provide greater flexibility around working arrangements, allowing you to reduce work hours without reducing your income. This particular TTR strategy involves drawing a regular ongoing pension payment from your fund and using it to supplement your income while reducing your working hours. This can help ease the transition into retirement, giving you the flexibility to work part-time or pursue other interests without experiencing a significant drop in income.

Overall, the Transition-to-Retirement strategy can be a valuable tool for those aged 60 and over who are looking to maximize their retirement savings, reduce their tax liabilities, and ease into retirement at their own pace.

However, it is important to consult with a financial advisor to determine if this strategy is right for your individual circumstances and financial goals.


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