Posted on October 29, 2023 by admin
Not quite ready to take the plunge into full retirement, but ready to make a start?
Transitioning into the retirement phase of your life means undergoing the process of slowly relying less on work-related earnings and more on superannuation and investments to cover your lifestyle expenses.
The time taken to transition into retirement is up to you; it may take as little as 6 months or as long as 5 years.
However, income may be a source of concern during this transition period – this is why transition to retirement pensions can be of assistance.
A transition to retirement (TTR) pension allows you to supplement your income by allowing you to access some of your super once you’ve reached your preservation age.
This type of pension is similar to an account-based pension, but has a few extra rules.
Not only must you first have reached your superannuation preservation age, for TTR pensions in the pre-retirement phase, the minimum pension payment is 4% up to a maximum 10% of your account balance as at 1 July of each financial year or the value from the date your TTR pension started in that financial year. The minimum payment percentage is pro-rated in the first financial year.
If you start a TTR pension part way through a year, the 4% is pro-rata based on the remaining days in the financial year, divided by the total days in the year. The 10% upper threshold remains calculated based on a full year (i.e. no pro-rata necessary).
You can start a transition to retirement pension by contacting your superannuation fund and asking if they offer transition to retirement pensions. If they do and you are comfortable using their product, you can then follow the process to commence the pension. Alternatively, you may choose to start a transition to retirement pension with a different superannuation fund.
However, bear in mind:
There are a number of things you should consider before starting a TTR pension; professional financial advice is recommended. Why not start a conversation with a trusted, licensed adviser today?
Posted on December 10, 2023 by admin
As retirees embrace a new phase in their lives, the concept of property downsizing is gaining momentum as a strategic and rewarding financial move.
Downsizing isn’t just about reducing square footage; it’s a lifestyle choice that can offer a range of benefits for those entering their golden years.
Many retirees find themselves sitting on a valuable asset—the family home. The Australian property market has witnessed significant growth over the years, and this presents a unique opportunity for retirees. Downsizing involves selling a larger property, often the family home, and purchasing a smaller, more manageable one. This shift not only streamlines day-to-day living but also releases equity tied up in the existing property.
One of the primary advantages of downsizing for retirees is the financial windfall it can generate. Selling a larger property in a desirable location can lead to a substantial cash injection. This liquidity can be used to fund retirement activities, travel plans, or simply serve as a safety net for unexpected expenses. Downsizing gives retirees the financial freedom to enjoy their retirement years without the burden of maintaining a larger property.
Downsizing often means trading a sprawling home for a more compact, easily maintainable residence. This can result in reduced household chores, lower utility bills, and a generally more manageable living environment. Additionally, many retirees choose to downsize to a location that offers greater convenience, such as proximity to amenities, healthcare facilities, and public transportation, enabling a more active and engaged lifestyle.
While the benefits of downsizing are clear, the process requires careful consideration and planning. It’s essential for retirees to assess their current and future needs, identify the ideal location, and understand the financial implications of the move. Seeking advice from financial planners and real estate professionals can help retirees make informed decisions that align with their retirement goals.
Recognizing the positive impact downsizing can have on retirees and the property market, the Australian government has introduced incentives to encourage this trend. The Downsizer Contribution allows eligible individuals to contribute up to $300,000 from the proceeds of selling their home into their superannuation fund, providing an additional financial boost for retirement.
Property downsizing for retirees is not just a practical choice; it’s a transformative step towards a more fulfilling retirement. By unlocking the equity in their homes, retirees can enjoy financial freedom, a more convenient lifestyle, and potentially even take advantage of government incentives.
As the trend continues to grow, downsizing is proving to be a key strategy for retirees looking to make the most of their golden years.
