is an Authorised Representative of RI Advice Group Pty Ltd Are you entering the ‘T-Zone’?

Disclaimer 2 RI Advice Group Pty Ltd, ABN , holds Australian Financial Services Licence Number and is licensed to provide financial product advice and deal in financial products such as: deposit and payment products, derivatives, life products, managed investment schemes including investor directed portfolio services, securities, superannuation, Retirement Savings Accounts. The information presented in this seminar is of a general nature only and neither represents nor is intended to be specific advice on any particular matter. RI Advice Group strongly suggests that no person should act specifically on the basis of the information contained herein but should obtain appropriate professional advice based on their own circumstances. Important Notice

3 Agenda What is the ‘T-Zone’? Also known as Transition to Retirement The benefits to you: 1. Boost your retirement savings in a tax effective way 2. Ease into retirement by working less 3. Pay off your mortgage sooner and more tax effectively How we can help

4 What is Transition to Retirement? Transition to Retirement pensions can allow you to: A tax-effective way to build on your retirement savings while maintaining – or even improving your lifestyle! Income remains the same  Boost retirement savings Income remains the same  Reduce working hours  Increase income Own home sooner

5 Accessing your super Date of birth Age you may qualify to access your super Before 1 July Between 1 July 1960 and 30 June Between 1 July 1961 and 30 June Between 1 July 1962 and 30 June Between 1 July 1963 and 30 June After 30 June

6 The T-Zone model Traditional model ‘T-Zone’ model Earned incomeSuperannuation income Earned incomeT-ZoneSuperannuation income Retire at age 65 Preservation age

7 How does it actually work? $ Time 9.5% SG Super accumulation phasePension phase The T-Zone 15% tax on earnings 0% tax on earnings Salary sacrifice Extra cash (0% tax) Drawdown capital

8 Let’s take a closer look We will now go through some case studies to explain how you can: Boost your retirement savings Ease into retirement by working less Pay off your mortgage sooner 123 All with 0% tax on earnings to boost your super

How to save tax and boost your super

10 Salary sacrifice… and receive the same income! Don’t forget there is 0% tax on earnings to boost your super! Superannuation fund (accumulation) Pension income Cash salary Account balance Account-based pension (non-commutable) Salary sacrifice Salary

11 What are T-Zone benefits? Net income unchanged Boost super savings Reduced tax

12 Meet Elizabeth Elizabeth is 55 years old. She earns $100,000. She has $220,000 in her super account. Elizabeth loves her work and is happy to work another ten years. By age 65 Elizabeth’s retirement savings would grow to $543,202 if she does nothing...

13 Elizabeth’s strategy Implement a Transition to Retirement strategy, draw $16,000 from the pension and salary sacrifice $20,000 into super. The outcome... Her salary falls to $96,000 (before tax) while she supplements her income with pension payments. Elizabeth receives the same income after tax.

14 Elizabeth’s income position – Year 1 Any earnings on her pension account is now tax free Without strategyWith strategy Salary package$100,000 Less salary sacrificeNil($20,000) Pension incomeNil$16,000 Taxable income$100,000$96,000 Net tax and Medicare levy$26,947$22,987 15% pension tax offsetNil$2,400 Net cash after tax$73,053$73,013

15 Elizabeth’s retirement savings Retirement savings on reaching age 60 are tax-free... With strategy Retirement savings with strategy will be $589,168, a whopping $45,966 more than if she hadn’t used this strategy. Retirement savings $589,168 Without strategy If everything was left in super, Elizabeth’s retirement savings would grow to $543,202. Retirement savings $543,202 Assumption: Earnings at 7%, CPI at 2.5%, 9.50% SG paid on full salary package and no loss of employment benefits.

16 How does Elizabeth benefit? More savings for Elizabeth Pension payments tax-free from age 60 Salary sacrifice taxed at 15% not 39% or 34.5%

How to ease into retirement

18 Meet Samuel Samuel has a full time salary of $60,000 pa Samuel has just turned 60 Wants to start easing into retirement and has decided to only work 3 days a week. Samuel has $160,000 in his super account. Samuel can afford to reduce his take home pay a little and use his super to soften the drop!

19 Samuel’s strategy 1.Reduce working hours and receive a reduced salary of $36,000 pa before tax. 2.Commence a Transition to Retirement pension to supplement this reduced income. 3.Draw $15,510 per annum tax free from the pension. The outcome... Samuel can still receive the same take-home income as he did working full time – even after reducing his work hours. This may start eating into Samuel’s retirement savings so long-term planning is required.

20 The outcome Samuel can now work less – and earn the same income! Without strategyWith strategy Salary package $60,000$36,000 Pension income NA$15,510 Taxable income $60,000$51,510 Net tax and Medicare levy $12,147$3,657 Tax offsets NA$0 Net cash after tax $47,853 Assumption: Earnings at 7%.

21 How does Samuel benefit? Pension payments tax-free from age 60 Superannuation guarantee by employer Samuel works less hours but has same income

Pay off your mortgage sooner and more tax-effectively

23 Meet Brian Brian is 60 years old and earns $50,000 pa Looking to pay off his mortgage before he retires in 3 years time. Mortgage of $50,000 at 5.88% with monthly repayments of $553 (9 years to run). Superannuation of $300,000. If everything was left in super, after three years Brian’s balance would be $374,830 and he would still have a sizeable mortgage of $37, Assumption: Earnings at 7%, CPI at 2.5%, 9.50% SG paid on full salary package.

24 Brian’s strategy 1.Rollover super balance of $300,000 into a Transition to Retirement pension 2.Draw a pension of 4% or $12,000 p.a. 3.His financial adviser suggests Brian use all this as additional payments off the mortgage The outcome.. Brian gets to pay off his mortgage sooner. Saves over $11,000 in interest payments. He can retire when he plans to – without debt! Assumption: Account-based pension return of 7.07% and superannuation return of 7.00%.

25 How does Brian benefit? With strategy Mortgage paid off in three years instead of 9, saving $11,901 in interest. Account-based pension and superannuation has a balance of $344,108. Net position $344,108 Without strategy If everything was left in super, after three years Brian’s balance would be $374,830. Mortgage would still be $37,909. Withdraw from super to pay mortgage. Net position $336,921 Assumption: Account-based pension return of 7.07% and superannuation return of 7.00%, CPI 2.5%

26 In conclusion Recap of the T-Zone strategies we have covered Contact me to learn how you can personally benefit from the transition to retirement strategy. Boost your retirement savings Ease into retirement by working less Pay off your mortgage sooner 123 All with 0% tax on earnings to boost your super

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