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Chapter 8: Doing a lot: making $1 millio... > Your retirement dream is closer than...

Your retirement dream is closer than you think

Did you know that a tax-free income of $54 000 in retirement is the equivalent to a before-tax salary of $68 000 a year while you’re working? After you remove the income tax of around $14 000 on a $68 000 salary, you’re left with an after-tax income of $54 040 (for the 2011–12 year), or $54 353 (from 2012–13, subject to the legislation being passed). In other words, if you’re earning $68 000 a year, you’re really living on $54 040 (for the 2011–12 year), once you deduct the annual income tax that you pay (see the appendix for income tax rates).

In retirement, you don’t pay tax on your retirement income when your income is sourced from your savings within the super system, which means that if you want the same income in retirement that you enjoy today, then you should aim to match your current after-tax salary.


  

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