Build your superannuation more while you can.
Retirement is getting nearer, yet you don’t feel like staying home and doing nothing yet. Is there anything you can do in your late days that can be beneficial for future you?
Yes, sure. If you think you’re fit enough to continue working even when you reach retirement age, then go ahead and do it! You can sign up for the Transition to Retirement Strategy, or TTR, for short. With TTR, you can continue working and withdrawing some of your super benefits at the same time. But how do you do this?
First of all, TTR only applies for people aged between 55-65 years old. Then make sure your super account accommodates TTR pension – most accounts do, except defined benefit super funds. If your super account doesn’t accommodate TTR pension, then it’s completely okay to create another account!
Remember that you can’t transfer all your money to your pension account. You need to have some amount left so your super account stays alive and can receive more contributions to come. And each financial year, you can withdraw 4-10% of your pension account for your living cost.
TTR is considered beneficial because it can help maintain your lifestyle with one of these two ways:
1. Working fewer hours
As you age, you may want to spend more time with the family instead of working full time, 9-5 in the office, while still making enough money to support your lifestyle. This is not an impossible wish. You can ask your employer to have your work hours reduced.
Your work hours might be fewer now, but you’re still an employee. Therefore, your employer will still contribute to your super account. And with less time spent behind the desk, you get more time exploring other things you love – like trying out new hobbies or having some quality time with the loved ones. But remember, with less time spent in the office, you get less salary too! And this is where the 4-10% you take from your TTR pension comes to the rescue.
However, you need to manage the amount of TTR pension you withdraw. Because the more you withdraw, the less money you have when you are finally, fully retired. So, plan and manage your finance well.
2. Save tax
Did you know? You can keep working while boosting your super fund with TTR pension. When you reach the age 55 and don’t quit your work, and you maintain your regular work hours, your super fund will grow through increased concessional contributions. As usual, these contributions can come both from your employer and yourself.
Other than that, maintaining work hours on TTR pension can help you save on tax – both taxes on super contributions and income.
On papers, TTR pension might sound like a shortcut to a nice retirement life. But you can’t waste your TTR pension and you still need to plan good money management to prepare you for the coming retirement. Always be wise with your finance and click here to learn more about planning for a comfortable retirement.