The Home Stretch towards Retirement
Monday 31 December 18
Some of us are getting a bit more serious about our superannuation. In the early days it was something for a time that was so far away, why worry? Now we wish we had taken it a bit more seriously. But it may not be too late.
One of the ways to have extra to retire on for those over the age of 55 and still working is a salary sacrifice to superannuation strategy incorporating a pre-retirement pension. Income and capital gains within the pension account are tax free. Income drawn from the pension receives a 15% tax rebate until you turn 60, and after that it’s tax free!
Given that you want to maximise your retirement savings, a typical approach is to salary sacrifice a portion of your income, having it paid before tax into your superannuation fund. The fund is only taxed 15% on those contributions, so that’s likely to be a considerable savings as compared to having it taxed at your marginal rate. Even though you are drawing on a pension, the total of your superannuation accumulation account and the pension is actually growing faster than what it would have been without the strategy.
There are limitations on how much can be contributed to superannuation, and other important factors are involved, so this is a matter that you should receive advice for from a licensed financial adviser.
Those limitations, coupled with a lack of willingness on the part of your employer to cooperate, may cause you to use a pre-retirement pension along with another strategy for converting that additional income into retirement savings. Some people are very comfortable with investment property. Given that other factors are right, with as little as ten years a person may consider creating an investment property portfolio targeting very significant weekly income at the end of that period. This is not something that should be taken on without careful consideration and planning. There is a wide range of investment property available with a great variation in returns. An investor would want to do his or her best to select one that’s most likely to be on the winning side of the spectrum. In addition, planning is needed to anticipate the required cash flows and target the end outcome desired. Professional advice will assist you in being able to do those things.
Note that all of the above information is general advice only. It doesn’t take into account your personal needs or circumstances. Those matters will make a big difference in working out whether any of these strategies are appropriate for you, so we recommend that you receive specific advice tailored for you from a qualified and licensed financial adviser.
James Massey at Grace Financial Services can provide such advice. Experienced in wealth creation and retirement income, he is also one of a small number of advisers in Australia qualified to provide property investing advice. In addition to these matters, Grace provides a full range of financial planning services, including investments, superannuation and life insurance advice. They are a fee for service practice, so you simply pay for the service you receive, and your first consultation is free. James Massey and Grace Financial Services Pty Ltd are authorised representatives of HNW Planning AFSL 225216. Give them a call on 4905 0250 or call in at Suite 2, 35 The Boulevarde, Toronto (adjacent to Toronto Diggers). For more information visit www.gracefinancial.com.au.