16th May 2012
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Transition to retirement
Author: YourLifeChoices

Maybe you’ve enjoyed a good working life and now is the time to kick back a little with less work and more play? So what exactly are your transition to retirement rules and opportunities?

Salary sacrificing
If you are over 50 years of age and have less than $500,000 in superannuation, you may wish to consider maximising the amount of salary you sacrifice into superannuation, which in turn will minimize your tax bill. You can sacrifice up to $50,000 per annum, which includes your employer superannuation guarantee, into your superannuation fund, and only pay the 15 per cent tax mandatory to superannuation contributions. This can affectively reduce your tax liability while boosting your super balance.

Transition to Retirement (TTR)
For those over 55 years of age, a TTR arrangement may help you reduce your work hours without losing your much-needed income. From the age of 55, superannuation is available in the form of an allocated pension which will replace the reduced income. A 15 per cent tax offset can be claimed against tax payable on the income stream and when combined with possible salary sacrificing, an allocated pension and reduced work hours may be a more tax-effective way to derive an income. From the age of 60, you can make lump sum withdrawals, which in addition to any income stream, will be tax-free.

Super Co-Contribution Scheme
Having reduced your income, you may also wish to consider taking advantage of the Government’s Super Co-contribution Scheme. If you earn less than $31,920 and make after tax personal contributions, up to a maximum of $1,000 to a complying super fund, the Government will match this 100 per cent. Therefore your $1,000 contribution is equal to $2,000 added to your super fund. If you earn over $31,921 but less than $61,920, the Federal Government will still make a contribution but this will be reduced by 3.33 cents for every dollar over the lower limit your earn.

Mature Age Worker Tax Offset (MAWTO)
The MAWTO is available to those who are 55 or over at the end of the financial year and is based on income derived from working, net of any related income. You can claim an offset of $500 for any income up to $53,000. If you earn between $53,001 and $63,000, you can still claim the offset but it is reduced by five cents for every dollar over $53,000. This offset will be calculated by the ATO when you file a tax return.

Seniors card
If you no longer work full time, you may be entitled to a Seniors Card, which offers discounts on transportation and services from participating business in your state or territory. For more information on Seniors Cards in your state or territory, click YOURLifeChoices link.







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