Strategic Advice Program Case Study
The Issue
Wendy at the age of 60 was enjoying her work and did not want to permanently retire anytime soon. She did however want to reduce her working hours so she could spend more time with her grandchildren. She wanted to work three days per week and permanently retire at the age of 65. Wendy was working full time earning $120,000 per annum. She had a superannuation fund with an account balance of $300,000 (70% taxable and 30% non-taxable). She indicated that she would require $50,000 per annum to cover her living expenses.
The Solution
After Wendy sought our strategic advice we recommended that she commences a Transition to Retirement Income Pension (TRIP) from her accumulated superannuation benefits and salary sacrifice $90,000 per annum to super. To supplement the loss in salary, Wendy would draw a TRIP of $30,000 per annum. Since Wendy was over 60 years of age, this pension income would be tax free.
Services we provided
- Problem solving and an independent sounding board
- Strategic planning
- Tax planning and structuring
- Superannuation and retirement strategies
- Estate and succession planning
- Risk management in the case of your death or disability
- Investment advice
- Banking, finance and debt management
- Cash flow management
- Personal budgeting
- Bill paying
- General financial advice to children under 30 years of age
The Result
The result of this strategic advice is a saving of approximately $20,000 per annum. The difference is in tax payable and disposable income between her current and proposed situations.
Wendy is able to reduce her working hours to 3 days per week while continuing to have sufficient income to meet her living needs. By salary sacrificing more of her income to super than what she is drawing out of as a pension, she will ensure that her superannuation balance continues to accumulate. As she is in pension phase, any earnings and capital gains within the TRIP fund will not be taxable, as opposed to a 15% tax environment which is applicable during the accumulation phase of superannuation.
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