I am in the process of studying towards my Masters of Financial Planning. The past week has been spent completing a theoretical case study about a couple approaching retirement. After years of working in an educational institution you would think that I would have listened to the sound advice I gave my students - get started on your assignments early and don't leave everything till the last few days!! Of course not, where's the fun in getting an assignment done early!!!
However, even though the time to reflect on my responses was not extensive, the plain and simple message was clear - smart investing and planning within the new super environment will provide even greater advantages come age 60. Let's go over the two basics:
- After 60, all withdrawals from funds established within a complying superannuation fund will be tax free. There are no limits (now know as RBLs) or distinctions about whether the funds were defined as being coming from pre-July 1983 or post-June 1983 employment.
- If you choose to work past 60, the transition to retirement income streams become even more powerful. You can purchase a pension using your superannuation account and receive regular payments, tax free. This will allow you to re-contribute more money into super by way of salary sacrificing with these contributions being taxed at 15%. This also reduces the amount of marginal tax paid, assuming you are in the 30% or higher tax bracket.
For those who can take advantage of these rule changes it could make a world of difference come the day you want to put your heels up and enjoy a well deserved retirement.