Thinking about your transition to retirement strategy?

19 February 2019

The Transition to Retirement strategy gives you the opportunity to ease into retirement, without taking a big cut to your income.


Previously, working Australians could only access their super funds once they turned 65. Now, if you've reached your preservation age, the Transition to Retirement (TTR) strategy allows you to access your super while you continue to work.

If you're eligible, this gives you two options:

  1. You may be able to reduce your working hours without reducing your overall income, so you can get used to working less.
  2. By maintaining your current work hours, you may be able to use the TTR together with increased concessional super contributions to make significant tax savings in the run-up to full retirement.

How does it work?

If you're younger than 65 when starting a TTR strategy you can draw between 4% and 10% of your super per year, set up as regular payments rather than a lump sum.

It's worthwhile to note that a TTR strategy may not be right for you. That's why it's important to speak to your LGS financial planner, so they can assess your individual circumstances and work out the best plan for you.

How TTR can help to reduce your work hours

By supplementing your salary with your TTR withdrawals, you may be able to top up the difference so your overall income remains similar.

This means:

  • You may be able to maintain your living standards as if you were working full time.
  • Your employer is still obliged to contribute to your super so you can continue to grow your nest-egg.
  • It gives you time to ease into retirement.

It's worth noting that this strategy reduces your overall super amount for when you wish to retire completely.

How TTR may help you save on tax

Even if you plan to continue working full time for the time being, you can still take advantage of a TTR strategy if you've reached the required age. By salary sacrificing into your super, then topping up your salary difference by withdrawing from your TTR pension, you can reduce the amount of tax payable on income without reducing your overall income.

This means:

  • You may be able to pay less income tax as your pension payments are generally tax free.
  • You may be able to pay less tax on your super contributions.
  • You can give your super a boost, so you have more to play with when you’re ready to retire.

Keep in mind that this particular strategy needs careful planning and the tax margins may not be worth it for everyone.

The TTR strategy is a complicated one, so it's important to talk to your LGS financial planner to understand whether or not it matches your retirement goals.

Request an appointment online or call 1300 547 873.

The information on this website is of a general nature only and does not take into account your personal objectives, situation or needs. You should consider obtaining professional financial, taxation and or legal advice tailored to your personal circumstances prior to making any financial decision.