Like it or not, we are all getting older and one day we will stop working in some capacity. Rather than retirement I prefer the term Financial Freedom. This simply refers to the time when the assets that you have built for yourself provide sufficient income to support the way you want to live. After that point if you continue to do any form of paid work, it is not because you need to, but because you want to. When you are financially free and your money works for you, you no longer need to work for money.
A goal that everyone should pursue is to be financially free. There are many strategies that will help you achieve this goal and often a combination of financial planning strategies, along with good legal and tax advice will be the key. Under the current legislation there are some key things to be aware of if you are approaching retirement and looking to maximise your opportunities.
Build your superannuaiton: This is the closest thing to a tax haven that we have in Australia. Money is super is taxed at a maximum rate of 15% and once money is moved into pension phase this drops to 0%. The lower the tax rate, the higher the investment return will be – all other things being equal.
There are several ways you can make contributions to super and it is important to remain aware of the limits that exist and the best way navigate these.
Consider a transition to retirement strategy: This is a complex strategy with a number of important issues to consider, but the benefits can be significant. The main features are that you can receive tax free income, or income at a very low rate of tax from pension, that then allows you to salary sacrifice your salary into super. This means that you don’t have any change to the amount of money you have to live off but because you pay less tax you save more money. You need to investigate how this strategy could be applied to your situation.
Maximise your Centerlink benefits: Centerlink can be complicated and confusing for many people, yet the fact remains, there are things that you can do to maximise your entitlements and working with an expert will mean you will get all the entitlements that you are eligible for.