From the more aggressive investments you might prefer in your younger years, to lower-risk products once you’re further along, we’ll help you convert savings into retirement income in a way that’s tax-efficient and stress-free. With us doing the hard work, you can take it easy long before you retire.
Retirement is an entirely new chapter in your life, with life expectancy increasing year by year, the specialists at VFS will guide you through the various retirement and pension options to assist you with securing your financial future.
Our mission is to provide you with quality ongoing strategic financial and Investment Advice tailored to meet your personal objectives and lifestyle aspirations.
Our financial advisers can help you:
- generate competitive Investment Returns
- protect your Investment Savings or income
- maintain a secure and steady income in retirement, and
- save on tax and qualify for social security benefits.
Are you over the age of 55 and looking for a way to boost your super and retirement savings without hurting your hip pocket? A Transition to Retirement Strategy can help you do this by boosting your super and retirement savings and making sure you take home the same net pay.
Transition to Retirement strategy
Retirement has changed. These days, many people are choosing to make a more gradual transition from the world of work to the world of retirement.
A Transition to Retirement (TTR) strategy can be a very powerful way to increase your super balance as you near retirement, without reducing your after-tax income. Effectively, you draw on your super to provide an income while continuing to work and making extra contributions to your super.
You use a salary sacrifice strategy to improve your super savings.
If you have reached preservation age, you may withdraw up to 10% a year of your existing super savings to replace the income you sacrifice.
That super income is highly tax effective. It is currently tax free if you are over 60, and tax advantaged if you are aged 55 to 59.
Once you start drawing a pension from your super, the earnings within the fund are also tax free. That effectively increases the return on your retirement savings.
TTR in practice
There are two main ways you can use a TTR strategy
1. Less work, same income
Cut down your working hours while maintaining the same level of income.Let's look at how this works in practice. Let's say you're over 55, you earn $75,000 a year and you have $250,000 in your super.You want to cut back from 35 hours a week down to 25 hours, which will reduce your salary from $75,000 to $53,500.By using a TtR strategy, you can maintain your after-tax income, despite reducing your work hours.
But it does come at a price - your super will dwindle over time as you continue to draw down your pension payments.
2. Same hours, more super
The other option is to maintain your work hours, but increase your salary sacrifice contributions to super, and supplement your income with a TtR pension.
So let's say you've reached 55, are self-employed and you're earning $60,000 a year.
You have $200,000 in your super, and you chose to use the full amount to start a pension.
Together with your pension income, you can make a pre-tax contribution of $24,380 a year and still receive the same amount of money in your pocket.
The net result after a year?
You've boosted your super by $953.
Add that up over 10 years and you can see the long-term advantages. And as you refresh your TtR strategy every year, there are potentially even more tax benefits that can flow through to your bottom line. Essentially you can boost your super without taking any less income home!