Senior man looking at view on mountain and hiking alone
As life changes, so can what you want from work, and from your own time. Easing back your hours can shift your ‘spare’ time to the focus, while still staying connected to your job. If you’re not sure that its right for you, trialling it first is worth considering. Here’s how to have the conversation with your manager and what it means for your super.
Why ease back
Maybe you want more time with your family. Maybe you're caring for someone, or perhaps you don’t want to stop work entirely but are looking for more time for yourself. Whatever your reason, it's worth exploring the options available to you.
Making the most of your super as you reduce hours
Fewer hours could mean less going into your super over time. But super’s tax breaks are there to help bridge the gap. The closer you are to transitioning to retirement, the more it’s worth putting them to work.
A transition to retirement (TTR) strategy. If you're 60 or over, you may be able to draw a tax-free income from a pension account like Aware Super’s Retirement Transition account, to top up your pay while you work fewer hours. Accessing your super by setting up a pension account means your super stays invested. At Aware Super, you need at least $6,000 to get started.
Salary sacrifice. Arranging with your employer to put some of your before-tax pay into super is worth considering. It's taxed at just 15%, which could be less than you'd pay on your normal income. The tax saving means it can play a meaningful part of a TTR strategy.
Spouse or after-tax contributions. If your partner can chip in, or you've got savings, or a windfall like the sale proceeds of a property, adding some to your super can help give your retirement savings a valuable lift.
Preparing to ask
Walking in prepared makes the conversation easier.
Be clear on what you’re asking for. Think about which days you’d drop or shorten to achieve your ideal work week. When do you want to start, and do you want a trial period? Getting clear on the fundamentals makes it easier to discuss with your manager.
Check your workplace policies. Many workplaces already have flexible or part-time arrangements. So, it’s important to know what you're entitled to.
Check your current leave entitlements. There’s your annual leave but also check for entitlements such as carer’s leave, if that’s your reason for easing back hours. Long service leave accumulates and, depending on where you live in Australia, there are different state laws on when and how you can access it.
Make it work for them too. Show your employer the upside – for instance the continuity of your performance and experience. Put some thought into how it could work within current work systems and procedures – maybe it’s a clear handover process, or scheduled flexibility. Be ready with solutions to the obstacles your employer may have to move to make it work.
Stay open to compromise. A trial period or a staged reduction can make it easier to come to an arrangement you are both happy with.
What else changes
Fewer hours can also affect:
Savings and debt repayments. You might need to adjust your budget.
Bonuses. Check if they're pro-rata or tied to full-time status.
Leave. Confirm how it affects your annual and personal leave.
Sorting these out now means they won’t catch you off guard later.
Where to from here
The trade-offs between income, super and lifestyle are personal and getting them right is worth a second opinion.
If you’re an Aware Super member, you’re entitled to a Retire Ready Check-in, a 45-minute appointment with one of our super helpful specialists. Book your appointment today.
Members can get advice about their Aware Super accounts at no extra cost, or advice on their broader needs for a fee.
Before contributing, consider the relevant superannuation thresholds including the current annual limit for all before-tax contributions and after-tax contributions. Exceeding any of these thresholds, may reduce any tax benefits you could receive. Visit aware.com.au/grow. Salary sacrifice will save tax in many but not all circumstances and will cause a reduction in your take home pay.