Menu
Menu
For many Australians, the idea of retirement can feel daunting. Even with years of hard work and a steady income, it’s common to worry about whether there will be enough money to retire comfortably. This was the case for one of our clients who had dedicated her life to caring for others but felt uncertain about her own financial future.
Within a year of seeking professional advice, they had not only saved more than $36,000 in tax but had also gained a clearer path to retirement. Her story highlights how the right strategies, implemented at the right time, can make a substantial difference.
Making use of super contribution rules
One of the first opportunities identified in this case was the ability to use carry-forward concessional contributions. Since 2018, Australians with a total super balance under $500,000 at the end of the previous financial year have been able to make extra contributions using any unused concessional cap amounts from the past five years.
Because our client’s balance was just under the $500,000 threshold, she was eligible to ‘catch up’ on unused contributions. Had she delayed seeking advice, her balance would have exceeded the cap, and she would have missed the opportunity. By contributing these amounts and claiming the deductions, she reduced her taxable income, resulting in more than $36,000 in tax savings in the first year.
Transition to retirement – what it means in practice
Another strategy we put in place for this client was a Transition to Retirement (TTR) income stream. For Australians aged between preservation age and 65 who are still working, a TTR strategy allows them to draw a limited income stream (up to 10% of the balance at the start of the financial year) from their Transition to Retirement Pension while continuing to contribute through salary sacrifice.
In this case, our client was able to:
- Salary sacrifice into super at a concessional tax rate of 15%.
- Draw income from her super to replace part of her take-home pay
- Benefit from ongoing tax savings, as less income was taxed at her marginal rate
This approach gave her the dual benefit of growing her retirement balance effectively while also reducing her mortgage faster.
Had we not recommended this strategy, she would not have had the cashflow to maximise her concessional contributions and use all unused concessional catch-up contributions as she did not have the funds to do this. By implementing the TTR strategy we were able to withdraw 10% of her balance before the end of the FY and then again at the beginning of the following FY. This allowed her to contribute back to her superannuation fund, saving her around 22% in tax (37% marginal tax rate including Medicare Levy minus the superannuation contribution rate of 15%). We were able to start paying her mortgage quicker, which was a goal of hers.
Rather than seeing retirement as an uncertain prospect, she now had a structured plan aligning short-term needs with long-term goals.
Confidence through clarity
While the numbers were compelling, the real outcome was the peace of mind that came from understanding how the strategies worked and how they supported her goals. Having a clear roadmap allowed her to look ahead with greater confidence and less stress.
Final thoughts
This case study shows the difference that timely financial advice can make. By making use of concessional catch-up rules, implementing a TTR strategy, and balancing debt management with super contributions, it’s possible to save on tax and strengthen retirement outcomes.
For anyone feeling uncertain about their financial future, exploring these strategies with a qualified adviser can provide the clarity and confidence needed to make the most of retirement.
Meet Patrica at Your Vision Financial Solutions or Find a Planner near you!
Your Vision Financial Solutions Pty Ltd ABN 64 650 296 478 and its Advisers are Authorised Representatives of Fortnum Private Wealth Ltd ABN 54 139 889 535 AFSL 357306. This article has been prepared without taking into account your personal objectives, financial situation or needs. Before acting on any information on this article you should consider the appropriateness of the information having regard to your objectives, financial situation and needs.
The Money & Life website is operated by the Financial Advice Association Australia (FAAA). The views expressed in this article are those of the author and not those of the FAAA. The FAAA does not endorse or otherwise assume responsibility for any financial product advice which may be contained in the article. Nor does it endorse or assume responsibility for the information.
