Transition to Retirement Strategies still worth it? | Summary and Q&A

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September 21, 2017
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Investor Motivation
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Transition to Retirement Strategies still worth it?

TL;DR

Despite recent changes in superannuation law, a transition to retirement strategy can still offer tax savings and supplement income for living expenses.

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Questions & Answers

Q: What are the two main benefits of a transition to retirement strategy?

The benefits are tax exemptions on earnings from assets and the ability to receive income to supplement living expenses.

Q: Are pension payments over the age of 62 tax-free?

Yes, pension payments in superannuation over the age of 62 are still tax-free.

Q: Are pensions taxable for individuals under age 60?

Yes, pensions for individuals under age 60 are taxable at the marginal tax rate but can also be subject to a 15% tax rebate.

Q: Is there still an advantage to starting a transition to retirement strategy before turning 60?

Yes, starting a transition to retirement strategy before turning 60 allows for tax advantages on contributions made with non-concessional after-tax dollars and the ability to reduce the overall tax burden.

Summary & Key Takeaways

  • The main benefits of a transition to retirement strategy are tax exemptions on earnings from assets and the ability to receive income to supplement living expenses.

  • Pension payments over the age of 62 in superannuation are still tax-free.

  • For individuals under age 60, pensions are taxable at the marginal tax rate, but there are still advantages to starting a transition to retirement strategy before turning 60.

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