Transition to Retirement Strategy: Increase Your Super Balance
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- Опубликовано: 8 июл 2024
- Find out how you can use your super to reduce tax and increase your super balance while you are still working and without it costing you a cent or reducing your net take-home income.
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📈 Resources to boost your super & build your own retirement plan:
► How Much Super Do You Need to Retire Comfortably: bit.ly/364JN5h
► How Long Will My Money Last in Retirement: bit.ly/3hcIibz
► How Much Super Should You Have: bit.ly/3hpcFu1
► How Much Can You Contribute to Super? bit.ly/3jBLH5k
► When Can You Access Your Super: bit.ly/3htrlIC
► Should You Withdraw Super to Pay Debt: bit.ly/3hbtr0V
► When Can You Access Your Super Tax Free: bit.ly/3h95JCh
► How Much Super Do You Need to Retire At 60: bit.ly/3dzy1E1
⏱ Timestamps
00:00 - Transition to Retirement Strategy
00:45 - When Can You Start a TTR Pension?
01:15 - How Does a TTR Strategy Reduce Tax?
02:41 - TTR Strategy Case Study
06:58 - Financial Benefit of TTR Strategy
😍 Like this video? Please hit the thumbs up button👍 and leave us a comment below. ⏬
*Transition to Retirement Strategy: Increase Your Super Balance*
A transition to retirement pension allows you to access your super while you are still working, which can provide you with tax-free super income that can replace amounts contributed to super.
By starting a TTR Pension, you can make larger salary sacrifice contributions to superannuation, which will reduce your personal income tax, but also obviously leave you with less income to cover personal expenses. However, this reduced after-tax income can be supplemented by tax-free income from a transition to retirement pension - giving you a better outcome overall.
This video explains how to calculate your preservation age, how much super you can access once you do, the definition of retirement for superannuation purposes and the tax on pension income.
#SuperGuy #ChrisStrano #Superannuation #RetirementPlanning
DISCLAIMER: The SuperGuy website and SuperGuy RUclips channel contains general advice only. It is not personal advice as it does not take your specific needs or circumstances into consideration. Therefore, you should look at your own financial position, objectives and requirements and seek personal financial advice before making any financial decisions.
General advice is provided by Toro Wealth Pty Ltd trading as SuperGuy Retirement Experts as an Authorised Representative of Core Value FA Pty Ltd (AFSL 480387).
Before acting on any information, you should seek professional advice and verify our interpretation/s before relying on the content or calculators within this website or on the videos, while also considering its appropriateness in relation to your personal situation.
At 58 this is the best video I've seen in a long time, 60 is getting close and could be a real game changer 😅
Glad to hear it!
I've just turned 60 and been trying to get my head around our Australian Super. This one video with case studies is the most enlightening video I've seen. Thanks mate. Will check out you other videos. ❤
I love the way you explain things. And that you are taking the time to look after 'us'.
This really suits my situation. Thank You.
Definitely more on TTR. Thanks
Excellent, clear video. Thank you Chris! Appreciate it. Signing up to the newsletter now.
You're welcome! Thanks for signing up!
I'm 55 and seriously starting to consider my retirement; your videos are really helpful. Cheers!
Great to hear. You're welcome!
Thanks for explaining TTR, especially with the example! I never understood it before but now it actually makes sense. :)
Happy to help!
Thank you for this video, clearly explains the complicated things. 👍
You're welcome. Happy to hear it was helpful.
Very Good - Thanks.
You're welcome!
Thank you Great info
You're welcome. Glad it as useful.
Excellent - thanks Chris.
You're welcome!
Super. Can't explain better than this. Hats off Chris
Thank you for the kind words!
Great video, very useful information thank you! 👍🏻
You're welcome! Thanks for the feedback.
thank you. great information. but what about if you are a casual employee with no access to salary sacrifice? does this strategy still help?
Thanks so much Chris, so much valuable information. Could you discuss any disadvantages of moving all of your accumulation account to a pension account. Is it customary to move as much as possible as soon as possible to the pension account to reduce tax on investment earnings?
All your videos are very clear and concise - thank you! Is a TTR strategy still effective if your employer is already contributing up to the concessional super contribution limits and any salary sacrifice ends up being all non concessional contributions?
Outstanding. I’m trying to explain this concept to my wife and your video will help immensely. Can we use this strategy until we stop working regardless of when?
I am 59 and your impartial thoughts on superannuation is invaluable. Good short easy to understand clips. Thankyou 🙏
You're welcome. Glad you like them. Thanks for watching.
Thank you so much for your video. It explains the TTR pension to me really well. I will be 60 in a couple of months' time and now I know what my options are.👍
No problem! Thanks for taking the time to comment.
Thank you. Super helpful. Really appreciated the diagrams and pictures, very helpful for me.
Glad it was helpful!
Very informative!
Glad to hear
Thanks a lot, I’m learning a lot of super investment tips from you for when I finally retire as im totally lost when it comes to super stuff 😜 🤷♂️
Happy to help!
That was a fantastic explanation. I'll need to watch it a few times for it to sink in.
Thank you. Yes, always good to watch a few times to pick up things that may have been missed.
@@SuperGuyAu I ran my own numbers. I'm not 60 yet, but close. It was a revelation - especially with the tax bracket from FY 25 moving from $120k to $135k.
Can you draw lump sum of the minimum or maximum amount of your TTR?
Thank you 🙏
Great vid, though I have a question about the example of moving the 380k assets from accumulation account to a TTR Pension account. Is there a capital gains tax event triggered when that move happens (especially if using an industry super fund with no in-specie transfer option)? I am confused about how the assets get moved across.
Hi Chris
Can TTR be utilised if you do not receive your salary from an Australian employer? ie...I work overseas but am an AU tax resident and citizen.
Hi Chris, the way the TTR account looks to me, is that you can never access all your money from it not matter what % is withdrawn over the years? Could you achieve the same out come by withdrawing a set amount from your accumulation account each year and then have the flexibility to of that account? (Ie. If you needed to withdraw a lump sum to help the kids etc.)
Do you have any advice on Self Employed contributions? I am soon to become Self Employed and I'm not sure how to make the most of my Super Contributions. Cheers Karen
Great ..new subscriber here. I'm 3 yrs away from retirement and starting to panic as I'm jot sure if we have enough
Thanks for subscribing! Helping you calculate whether or not you have enough (and determine what should be done between now and retirement) is exactly what we do at Toro Wealth www.torowealth.com.au
Do you then have to retire from work once you once you reach retirement age or can you keep working using this TTR strategy? I'd heard you can't use a TTR over 65.
Does the new tax system coming in affect this .
I’m already doing salary sacrifice with my work this goes towards rent, petrol etc… it is cap at $15,899 a year + meal & entertainment cap at $2649 a year… my question is can I still do a salary sacrifice towards my super?
I’m 70 be retiring soon have own home paid of have spoken to my financial adviser about annuity and still get a full pension right now I’m entitled to half the pension for the amount of super I have your thoughts on this please
Really like your work - thank you for putting these together
Is it possible to do a video covering the Transfer Balance Cap? It appears to me that I can only move up to 1.9M into Pension phase of Super, but I heard the Govt is looking to have a higher tax rate on balances above $3.0M, so I am not sure how this can happen if someone can only have $1.9M in pension phase. It would be great if you could review these elements in a video - thank you
Yes, there are many rules and it can be confusing. I will add an explanation of these to the list. Thanks for the feedback!
The higher tax rate is on the increase (not taxable earnings) of the amount over $3MM that is in accumulation phase. Tax rate on super in pension phase account is 0% regardless of overall super balance, and you can currently have up to $1.9MM (current TBC) moved into pension phase.
So, for example, someone who put a lot into super before the caps on undeducted (nonconcessional) contributions came in, might have $5MM in super (or they might have invested their super in BTC 5 years ago and made a small fortune within their SMSF etc). While in accumulation phase $3MM would have earnings taxed at the usual 15% rate, but $2MM would have the pro-rate amount of its increased value for the FY taxed at 30% (eg. if value of fund went from $5MM to $6MM due to $500K unrealised CG and $500K earnings (eg. dividends), then 2/5 of $1M = $400K would be taxed at 30%, and 3/5 of $500K earnings would be taxed at 15%.
If the person was then able to move $1,9MM into pension phase, the situation would then be $1.9MM taxed at 0% and earnings on $3M in accumulation phase taxed at 15% and only the pro-rate increase in value attributed to the $100K that is over the $3MM in accumulation phase would be taxed at 30%.
So you can basically have $4.9MM in super at not be subject to the higher 30% tax rate -- ie. $1.9MM in pension phase and $3MM in accumulation phase.
So it isn't too onerous or affect many people, but the fact that this new tax rate applies to increase in balance and not the usual 'taxable earnings' is a sly move to start taxing unrealized capital gains.
ps. This is simply my understanding of the rules, not tax advice, so check with a tax advisor if this is relevant to your situation.
Really enjoyed your informative you tube. Is it possible to arrange a personal consultation on a fee for service basis ?
Yes, you can learn more about our advice service here superguy.com.au/advice-process
In a smsf do you have to transfer a physical amout out of the fund into a seperate fund which is setup solely to fund the ttr or can it be done within the smsf?
Its all done within a SMSF and accounted for by your administrator/accountant in the financial documentation. Just make sure your SMSF trust deed allows for a TTR.
Thanks Chris. As I have most (80%) of my super untaxed and am over 60, would there still be any benefit to salary sacrifice, if on a TTR pension?
Without knowing more of the specifics of your situation, I cannot say for certain. Generally, to start a TTR pension, the untaxed component will be taxed at 15% upon rollover, with the remaining 85% converted to taxable components and added to the purchase price of the TTR Pension. In saying that, each situation is different. Based on your age, the benefits of obtaining personal advice relating to this will usually outweigh the cost. Therefore, I suggest you seek personal advice.
WOuld you be prepared to say how much of the $380K (or any Super balance)as a percentage should be used for the TTR Fund?
would this apply to a government defined benefit scheme? and or just money i have put into super thanks
Usually just money in a superannuation accumulation account, but when it comes to defined benefit income streams, the specifics of your defined benefit and your employment status will dictate your options.
Q: If I were to draw 10% p.a., is there the choice to receive it weekly, fortnightly, monthly or yearly ?
The options for frequency of payments is set by your superannuation fund. Super regulations do not put a restriction on frequencies.
is there an upper limit to the TTR accumulation account? From my reading it is not limited to 1.9m TBC like a pension account would. Later on when the super is truly commencing a pension account the TBC of the day is separately started new.
When the 27.5k super is contributed would it go into the TTR account or the accumulation account? In theory it would be sweet to be able to access that contribution (less 15% tax) nearly straight away. However it may not be so straight forward if the TTR is locked up and cannot accept more money.
The TBC does not apply to TTR accounts.
All contributions can only be made to an accumulation account. An income stream account is unable to accept contributions.
In your example, would it be advisable to contribute the extra $3000 additional income back to the accumulation account as a post tax contribution if the extra cash is not needed?
Do I have to be part time to select TTR ?
It depends what you are wanting to achieve by contributing $3,000 back into the accumulation account. You do not need to be part-time to start a TTR pension. A TTR pension can be started once you reach your preservation age, regardless of how many hours you are working.
Great video. Couple of questions. 1. Can a lump sum be withdrawn from the TTR so long as it is above the required percentage to be withdrawn per annum and 2. Can the ongoing amount withdrawn from the TTR vary per annum, again so long as it is above the required percentage. My thoughts are, I have a reasonably small mortgage balance (less than 100 k) but would like it paid off. If I were to create a TTR with 50 % of my current super and withdraw enough to pay off the mortgage soon after opening the TTR, leaving a reasonable small balance in the TTR, are there any preclusions to this?
Thank you. 1. an income of between 4% and 10% can be withdrawn from your super each financial year. 2. You can change the amounts every month or year, provided the annual amount is between 4% and 10%. The only preclusion is that you need to have attained your superannuation preservation age and be aware that withdrawals from super under age 60 may incur tax. This may help further ruclips.net/video/Kh336VuhWmw/видео.htmlsi=L-9iGi54miFwTh1a
if I split my super from 100% accumulation to 1% with 99% being TTR, will it impact compound earnings? Say in your example, at age 60, if I don't split my super, will I get more net super over 5 years, than if I were to split the amount? Will it stay the same amount? Or am I wrong and you get more net super at age 65. I feel I'm risking my compound leverage that I have worked hard to build upto all my life.
So what step to start open TTR account? Thank
This will depend on your super fund. Each super fund has a different process. However, it would be best to seek personal financial advice prior to implementing a TTR pension.
Unfortunately i cant make this TTR strategy work with a more typical $180,000 super balance and a $120,000 yearly gross salary😢. anyone else?
After I reach 60, would it be better to start a pension account by retiring (or quitting one of the employment) satisfying condition of release and resume work if getting bored later, compared to TTR? My balance is high but fear that retire too early I would be bored.
I can't tell you what you should do. But, provided you cease an employment arrangement after attaining age 60, then you are permitted to work in another role without affecting your ability to access super. I would suggest obtaining personal retirement planning advice to optimise your strategy and ensure it is implemented in a compliant manner.
As you mentioned I asked what portion of my balance is concessional to Hesta. Could not get a clear answer. I have "Unrestricted non-preserved" in my statement but is this concessional or non-concessional? They sent me a document called "How super works" 😕
If you would like to find out the tax components, you should ask how much is 'taxable', 'untaxed' and 'tax-free'. Unrestricted non-preserved relates to accessibility, as opposed to taxation. The unrestricted non-preserved balance is the amount you have access to. If you are around age 60, I would strongly suggest obtaining personal advice from a retirement planning specialist. You can learn more about our fees and service here superguy.com.au/advice-process
Are people with substantial super balances better off going straight to pension phase after turning 60 where I understand earning are tax free as opposed to opening a ttp account and having earnings taxed at 15%. In other words is this ttp approach best for people with modest super balances.
The best solution for anyone is determined by their individual needs and circumstances. However, generally an account based pension is more tax-effective and flexible than a TTR pension. The main reason people have a TTR pension rather than an account based pension is because they have not satisfied the condition required to commence an account based pension.
Does your tax figure include the Medicare levy?
Yes, it does.
😊❤
So if you are already sacrificing the maximum amount into Super this achieves nothing? Does the establishment of a TTR pension affect your balance limits? In other words by doing this early does it reduce the chance that your balance limits could index by a larger amount?
youtube.com/@SuperGuyAu Hi Chris - Any reply to my queries?
Could you put the $3,200 back into the accumulation account??
👍
Would this strategy also be beneficial for someone on a lower income say $40,000?
Yes, it could be beneficial for anyone earning over, say $25,000.
I only have 2.5 years of TTR time till I am 65, and a low Super balance of only 250k , I already salary sacrifice my max (plus catch up) and my employer contributes11% plus a 5% match, Is it worth me doing a TTR given TTR has set up and ongoing fees?
The main benefit of TTR is generally if you need additional income to cover any cashflow shortfall, but if you're maximising all that and don't need additional income, then a TTR is probably not required. If you're still unsure, you should seek personal financial advice. We offer this through Toro Wealth www.torowealth.com.au
Hi was wondering if i put $300,000 from my own funds in my super in 2019 can i add another 300,000 from my own funds in 2023
Hi Michael, it depends on your age, account balance, and the types of contributions you have made between then and now. Also, the non-concessional cap is now $110,000 per year, which equals $330,000 by using the bring-forward rule. Read more www.superguy.com.au/superannuation/non-concessional-contributions-cap/
Not sure it gives you a benefit if your contribution by your employer is at or over the maximum contribution allowed.
Im 43 82k only in super need to increase
Depends on what you're wanting to achieve
If one were to take the 10% option and receive $38,000 p.a. and contribute extra $22, 800 (the amount over $15,200) back into the accumulation account as non-concessional contributions, the earnings on those contributions would now not be taxed within the fund? We are looking to start TTF in September this year.
Good point. You can still make Non Concessional Contributions up to the $110k limit on top of this strategy.
You might be confusing two separate rules. Making non-concessional contributions to super does not result in tax-free earnings; however, it can reduce potential death benefits tax. There are benefits in taking the maximum allowable (10%) and recontributing the surplus as a non-concessional, but there are also disadvantages of doing so, too.
@@SuperGuyAu Yes, thanks for clearing that up, all earning in the accumulation phase are taxed 15%.
Is this still effective for someone with a 1 million dollar super balance?
Can we do a breakdown for a balance like this please 👍
Yes, it can still be effective for a larger balance. Keep in mind, you do not need to use your total super balance to start a TTR pension.
@@SuperGuyAu ahhh thanks I get it now you’d only use enough to get the tax benefits
Rather than spending the additional $3727 wouldn't it be ok and better to put that back in to your accumulation fund and not claim a tax deduction on that amount?
Yes you could. If you don't need that extra money saved. And you then benefit both ways. It is better if you can afford to do it.
Which country are you talking about ?
Australia
Not to mention the PAYE tax saving !
You cannot take 4% of $380000 if you also want to leave a balance in accumulation
This is correct. But you could, for example, take 4.1% of $370k and get the same income.
No way near retirement age, and likely changed by the time I do. But this is great. Another reason for boomers to rejoice 😅😅