Inspirational Case Studies

Common transition to retirement myths

Transition to retirement only applies to high net worth individuals

 Seagrim's transition to retirement optimisation strategy substantially increases superannuation benefits for all Australians - it is not restricted to high-income earners. In fact, it could be argued that it is those on the lower levels of superannuation at age 55 who need it most.

Draw maximum 10% income from the TTR pension provides the best result

The optimal results generated from a transition to retirement strategy are far from linear. There are far too many tax interactions and opposing forces at work to make this assumption. There have been comments in the media that drawing 10% pension income will provide the best result. This is not true. In fact the minimum pension level is generally the best outcome where superannuation benefits are large relative to income and will generally always be the case if the transition to retirement pensioner has utilised Pension Refresh strategy each year.

Salary sacrificing down to $35,000 will give you the best outcome

This is a classic mistake in relation to TTR. It is assumed that salary sacrificing down to this level will mean the investor will fall below the 31.5% tax bracket (beginning at $25,001). What they are failing to realise is that the income from the pension income is assessable to age 60 - which will push their total income back above the 31.5% level. What's more is that there are a number of benefits, such as the low income tax offset which are extremely attractive at income levels lower than the income tax threshold of $35,000. The low income tax offset can provide up to $1,200 for 2008/09 as a rebate to total tax payable and this occurs well below $35,000.