Judy is 60 years old and currently works full time, with no plans to change her employment arrangements. She'd like to retire at 65. She has an annual salary of $50,000 and $300,000 in super. Assuming her 10.00% employer super contributions continue until she reaches 65, she’ll have around $453,930 in super by the time she retires, which will give her a minimum income of $18,700 pa in retirement.

After speaking to us, Judy decides to implement a strategy that could significantly boost her retirement savings while having little impact on her day-to-day budget. She uses her $300,000 super balance to start a pre-retirement pension, drawing down the minimum payment allowed which is $12,000 a year. This gives Judy more income than she needs, so she arranges with her employer to make additional contributions to her super from her pre-tax salary under a salary sacrifice arrangement. We work out exactly how much she needs to contribute to super through salary sacrifice so that her after-tax income is unchanged.

Even though Judy is still receiving the same amount of after-tax income as before, by implementing this transition to retirement strategy, she's able to increase her super balance rather than reducing it, helping her build valuable additional retirement savings.

By using this strategy, Judy could end up with approximately $45,000 extra in her super fund by the time she turns 65. These extra funds could increase her minimum retirement income to around $22,940 pa.