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| Case Studies |
Reading about financial planning techniques and strategies is great and can provide you with some great insight as to what is available and how these methods work. However, to see it in action helps you to understand the advantages and effects these strategies can have in real life. Please click on the links below to see what significant impact, if done well, these techniques can have. |
 Power Strategy #1 – The massive effect of return and fees in the long run
Power Strategy #2 – The power of gearing in the long run
Power Strategy #3 – The benefits of Salary Sacrifice
Power Strategy #4 – Self Managed Super Fund advantage
 Power Strategy #5 – The Transition to Retirement opportunity
Power Strategy #6 – Are you paying unnecessary interest |
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| The Transition to Retirement opportunity |
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Joanne is aged 55 and has around $200,000 in her industry super fund with her employer. She is on a total package of $110,000 of which her employer contributes the compulsory $10,000 pre-tax into this fund. This means Joanne has a net income of $71,400 pa.
Joanne has two options to handle her income from now until retirement at 65. Firstly, she can take this as she has normally done and rely on compulsory contributions to build her superannuation. Under this strategy her superannuation will be $550,628. See assumptions below*.
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The alternative is to salary sacrifice to her superannuation fund and top up her salary to the same level through a transition to retirement pension.
Form age 55-59 Joanne can sacrifice a further $24,000 taking her total deductible contributions to $34,000. This results in a tax saving of $1,298p.a. in this period.
From age 60-65, the laws state Joanne can increase her contributions to receive further tax concessions. She is able to sacrifice a further $4,000 to a total of deductible contributions to $38,000 resulting in a total tax saving of $7,120p.a.
With this strategy in place and using the same assumptions, Joanne’s superannuation balance at 65 is now $624,388. The table below shows this in detail: |
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*Assumptions: Super balances are tavable component only, Income of 4.5%p.a., Unrealised Growth of 3.5%p.a., no turnover in the fund, pension payments are paid monthly, Inflation rate of 2.6% p.a., based on tax rates as of 1/7/2008.
 Back to: Financial Planning / Power Strategy #5 – Transition to Retirement
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