PRE-RETIREES are missing out on thousands of dollars of potential tax savings each year by failing to embrace one of superannuation’s “best-kept secrets” a transition to retirement strategy.
Known in the advice industry as TTR, it allows pre-retirees to lower their tax bill by salary sacrificing into super while simultaneously starting a low-tax or no-tax super pension account to top up their income.
However, widespread use of TTR is limited, largely because fewer than 40 per cent of Australians have ever sought financial advice, according to the Australian Securities and Investments Commission.
ASIC says TTR allows people to work longer, retire later and be rewarded, but it can be complex so seeking financial advice is important.
Suncorp describes TTR as the best-kept secret to boosting retirement savings.
Suncorp head of advice Stephen Daly says it can make a difference of tens of thousands of dollars by the time you retire.
“A TTR strategy is a powerful retirement planning approach that’s custom made for pre-retirees aged 55 and over,” he says. “It enables you to make extra contributions to your super and take advantage of the tax benefits of salary sacrifice, without affecting your current take-home pay.”
“Particularly if you are over 60, it’s an absolute must to have a look at. You can turn your super into tax-free earnings, even if you don’t do the salary sacrifice,” he says.
“If you are earning over $37,000 a year, I say to people ‘would you rather pay 34 per cent tax or just 15 per cent?’.”
For financial advice on boosting retirement savings, please call us on (02) 9894 1844.