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Elizabeth is looking forward to retirement and being mortgage free at such time after almost 45 years of service in the teaching profession.
Until she sought advice, she was paying up to 60% of her fortnightly take home pay towards her mortgage so as to fulfil her key objective of being mortgage free at retirement.
In doing so, Elizabeth was paying a significant amount of PAYG income tax before making any payments towards her mortgage.
Whilst she felt she was on track in this regards, Elizabeth nonetheless sought retirement planning advice with Palladium Wealth Partners for peace of mind.
Upon meeting with Elizabeth, we understood and concurred with her objectives, yet felt that it could be done in a more tax effective manner.
We made Elizabeth aware of strategies relating to transiting to retirement coupled with salary sacrifice and how to indirectly pay her mortgage via her superannuation.
We recommended Elizabeth rollover a portion of her accumulated superannuation and draw the maximum 10% as a transition to retirement income stream.
The income stream would be tax free non assessable given her age of being over 60 years of age.
Coupled with a strategy to salary sacrifice a portion of her pre-tax income, Elizabeth was able to retain a similar amount of post-tax income yet save near on $7,200 of PAYG income tax per annum.
Given Elizabeth wanted to ensure whatever she contributed to superannuation would be there as to pay her mortgage within a couple of years, we recommended she redirect the salary sacrificed amount into a cash like investment option with minimal investment risk.
This is, we explained an indirect way to pay her mortgage with the peace of mind of knowing that she would achieve her objective more tax effectively.
By seeking advice from us at Palladium Wealth Partners, Elizabeth was better able to understand all her options and make a more informed decision as to choose the right strategy for her.
The advice helped Elizabeth maximise her cash flow today, legitimately minimise her income tax and accumulate a higher amount of retirement capital to the tune of $45,000 for her future – irrespective of investment market performance.
John was easing into retirement over the last several years by reducing his hours of work as a teacher with a view of retiring wholeheartedly within the next 12 months.
He had just become eligible for an Age Pension by way of age yet was under the impression he had to stop work to claim any Age Pension entitlement.
John was also salary sacrificing up to the concessional cap into his public sector superannuation fund.
Joan, his wife was already retired and had commenced a retirement income stream (allocated pension) with her superannuation.
John and Joan came to us at Palladium Wealth Partners seeking to determine their overall retirement options over the coming 12 months with a view to John applying for an Age Pension.
Upon meeting with them and assessing their current circumstances, we identified a number of strategies that could immediately be put into place as well as the options available to them at retirement.
We advised John that the concessional cap does not apply for his public sector superannuation fund and he could consider salary sacrificing more into his fund as to maximise his retirement capital as well as minimise his PAYG income tax until retirement.
We informed John that he could immediately apply for an Age Pension and he did not need to stop work to be entitled to claim his benefit. In addition, we highlighted that his public sector superannuation fund was unique in that given he could not access his benefit until ceasing work, the value of his superannuation would not count as an asset when determining his Age Pension entitlement under the Assets test. We suggested he obtain a letter from his fund outlining this fact as to provide to Centrelink when applying for his Age Pension benefit.
Given Joan was under Age Pension age, we suggested she rollover the majority of her retirement income stream back into accumulation such that it would not count towards the Assets test.
The immediate strategic advice enabled John to maximise his Age Pension entitlement, salary sacrifice a significantly higher amount into his public sector superannuation fund and thus maximise his retirement capital as well as reduce his PAYG income tax.
By seeking advice from us at Palladium Wealth Partners, both John and Joan were better able to understand all their options and make a more informed decision as to choose the right strategies for them.
