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Client Profile
Ken and Sue are long-serving teachers preparing for retirement and looking to make the most of their strong financial position. With solid household income and established superannuation balances, they are focused on eliminating their remaining home loan, maximising their retirement savings, and ensuring they can comfortably meet their desired living expenses of $75,000 per year. As they approach Ken’s 65th birthday, they are seeking strategies that help them retire debt-free, strengthen their super, and minimise tax along the way.
- Name: Ken and Sue
- Age: 61 and 59
- Occupation: Teachers with the Department of Education
- Employment Income: $130,000 (Ken) & $120,000 (Sue)
- Superannuation: $1m GESB Gold State Super (Ken) and $400k West State Super (Sue)
- Home Loan Balance: $200,000 at 6% (repayments of $2,000 pm)
The Challenge
Ken and Sue had accumulated strong benefits in Gold State and West State Super but were unsure how to structure their retirement strategy. Their cash flow was positive but inefficient and lacked a cohesive investment and tax plan. They still had a small mortgage which constantly sat at the back of their minds and while they knew this would eventually be paid off, it did cause some angst.
1. Transition to Retirement (TTR) Strategy
Ken rolled over most of his Gold State Super into a transition to retirement pension, using a goal-based bucket structure generating tax-free income of up to $85,000 pa.
He left a small balance ($1,000) in Gold State to keep the account open and continue accumulating super benefits.
2. Salary Sacrifice Optimisation
With the commencement of the new TTR pension income, Sue was able to salary sacrifice $80,000 of her income into West State Super, converting taxable income into concessional contributions reducing her assessable income.
3. Debt reduction
Increasing the amount of income being received, allowed Ken and Sue to make extra repayments on their mortgage of $35,000 per year. The extra repayments reduced the amount of interest they paid and cleared the mortgage faster.
The Outcome
These strategies delivered a strong financial outcome for Ken and Sue, helping them reduce tax, clear debt faster, and strengthen their long-term retirement position. They achieved meaningful income-tax savings, paid off their mortgage years earlier, and were able to draw a tax-free pension while still working, allowing them to maintain their preferred lifestyle and travel plans. Their superannuation grew substantially, and with a clear plan for the future, they gained the peace of mind that their retirement is secure and on track.
Approximtely $25,475 in income tax (Sue)
Over $5,000 saved in interest and mortgage paid out 3 years sooner
Received tax-free pension income while still employed
Maintained desired lifestyle and travel plans
Boost to Sue’s superannuation of $68,000 (net of deferred contribution tax). Continued accumulating defined benefits in Gold State
Both could relax having comfort in their finances and a picture of what their retirement looked like
Key Takeaways
GESB Gold State and West State funds offer unique opportunities when paired with strategic advice, and a well-structured TTR plan can significantly improve retirement readiness without reducing income. Additionally, because both funds have lifetime contribution caps, they are not subject to the normal concessional contribution limits, providing greater flexibility for members.
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