Total and Permanent Disablement (TPD) approvals are granted when someone has experienced a life changing health event or injury. Naturally, they come with concerns about future financial security and clients are often quite distressed. If you have had a superannuation TPD claim recently approved, we recommend you seek financial planning advice before you make a withdrawal. TPD payouts allow for some unique and technical financial strategies. Getting the right advice can make all the difference to your state of mind and ongoing financial security, not to mention the amount of tax you can pay!
“When I first met with DFS, I was in quite a pickle financially and very stressed. I had a lot of debt and I just couldn’t imagine how I was going to manage now that I am unable to work. Paul and his team came up with a strategy to use my payout in a way that has cleared debts, saved considerable tax and freed up cash flow. I now feel able to focus on my health and adjusting to a different life.
”
Understand your options before you make a withdrawal
Depending how old you are, it may be beneficial to retain your savings in the superannuation environment. This could save you considerable tax and may even put you in a better position with regards to Centrelink.
If you need an ongoing cashflow from your superannuation, often a disability pension can be created from your super to create a tax effective income stream.
Taking a lump sum withdrawal from super can be a great way to use your benefits to improve your cashflow like paying off debts. Care needs to be taken when doing this as there can be tax of up to 22% on withdrawals.
One or all these options can set you up for success but good advice will ensure you get the right solution for your circumstances.
Minimise tax
If you withdraw your TPD payout before retirement age you may have to pay tax. There are some unique financial strategies that allow people to hold funds in superannuation and income stream accounts, paying minimal tax, while maintaining full access to these funds.
Maximise payout with a good financial plan
A good financial plan will give you a vision for the future and most importantly, peace of mind. When TPD clients come to us we look at their unique circumstances and look for ways to facilitate cash flow. We consider things such as clearing debts, re-evaluating expenses including insurances and the opportunity for partners to access a carer’s allowance.
Financial planning is important for everyone, but it is particularly important if you are dealing with a life altering illness or injury. Having your finances in shape is a key step in helping you to adjust to your new reality. If you need help, get in touch.
General Advice Warning: The information provided in this article is general in nature and does not consider your particular investment objectives, financial situation, or insurance needs; we therefore recommend you seek advice tailored to your individual circumstances before making any specific decisions.
Dobbrick Financial Services (Gympie) Pty Ltd ABN 48 931 205 109 & DFS Oakland ABN 64 340 527 395 and their advisers are authorised representatives of Fortnum Private Wealth Ltd ABN 54 139 889 535 AFSL 357306. DFS (Ipswich) Pty Ltd ABN 86 100 184 521 and their advisers are authorised representatives of Fortnum Private Wealth LTD ABN 54139889535 AFSL 357306.
