Transition to Retirement has been called “Australia’s best kept secret,” and for good
reason. As the law currently stands, workers aged over 56 can access their superannuation while they are employed, and continue to pay into their superannuation via salary sacrifice, thus lowering their overall tax rate. After all, superannuation is only taxed at 15%, so if you’re in a higher marginal tax bracket, you can effectively lower the tax rate on a healthy portion of your income while maintaining you current standard of living. It’s a bit confusing; but the bottom line is that you have a better bottom line.
But it might all change after the May budget. There is a thought that the government may only allow people who severely curtail their working hours to take advantage of a transition to retirement scheme.
This is a bit counter-productive. After all, the government keeps telling us we need to work longer; I’m told I’ll have to work until I’m 70! The beauty of transition to retirement is that it encourages you to work longer. So, significant changes to the system will make it less attractive to keep working, and more attractive to retire early – either through funding it yourself, or through joining the unemployment lines.
The good news is, the government is unlikely to change the rules for those people who are already taking advantage of transition to retirement. So, if you’re already doing it, you should be safe. If you’re eligible to do it, and you’re not doing it yet, hurry up! Speak with a financial planner today to implement a transition to retirement scheme. Your tax savings will be significant.
If you’re still a bit confused about the entire thing, here are some articles that might help you make sense of it.  And if you’re still confused, or you want to start a transition to retirement scheme, call your financial planner today to make an appointment. If you don’t have a financial planner then contact us on 03 5338 7455 or http://www.ballaratwealth.com.au for a free, no obligation appointment.

Peter Angel

Authorised Representative of Aon Hewitt Financial Advice Limited

Authorised Representative No. 1234567

 Aon Hewitt Financial Advice ABN 13 091 225 642 AFSL No. 239183

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