Newspaper article The Chronicle (Toowoomba, Australia)

,CyTTR' Strategy Worth Considering

Newspaper article The Chronicle (Toowoomba, Australia)

,CyTTR' Strategy Worth Considering

Article excerpt

FOR those contemplating retirement or scaling back their working hours, a Transition To Retirement (TTR) strategy can seem very appealing. Under this strategy, you may be able to reduce your working hours without reducing your income by topping up your part-time income with a regular C[pounds sterling]income streamC[yen] from your super savings.

This works by transferring some or all of your super over into a retirement income stream.

The main benefit of TTR is that it is one way to financially confront retirement at your own pace. But it depends on your personal circumstances; as for many it can be an unsuitable solution.

TTR income streams may not suit your needs.

By law, the regular scheduled payment amount you choose must be between a government-determined maximum and minimum amount. Depending on your circumstances, this amount may too much or too little for your needs.

TTR income streams may reduce the amount of super you can access.

The payment of income streams is deducted from your super fund in the following order; C[pounds sterling]unrestricted non-preservedC[yen] funds first, then C[pounds sterling]restricted non-preservedC[yen] funds, and finally C[pounds sterling]preservedC[yen] funds. As a result, this may have an impact on your ability to take a lump sum until you meet another condition of release, such as retirement.

Similarly, you will need to monitor your cash flow to ensure you are achieving your income needs, as there may be complex tax and cash flow issues involved.

TTR income streams may reduce your retirement savings.

Ongoing employer contributions may not be sufficient to cover the amount you are drawing down as an income stream. You need to consider whether setting up a TTR income stream will result in your future superannuation benefit being less than what it would have been had you not taken out an income stream before you permanently retire. …

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