Transition to retirement

Are you considering reducing your working hours or looking for a tax-effective way to build your super? This strategy could be for you.

Are you over the age of 55, thinking about retirement but not ready to stop working yet?

Transition to retirement (TTR) is a strategy that allows people of preservation age (between 55 and 60 depending on your date of birth) to continue working while drawing down some of their super benefits.

So how does it work? The rules allow a worker to salary sacrifice up to $25,000 a year into super, while drawing between 4% and 10% of their super savings to supplement any loss in take-home pay. For workers in a higher tax bracket, this strategy can provide a significant tax saving.

Some TTR strategies to consider include:

  1. Ease into retirement.
    If you are thinking of cutting down your working hours, it might be possible to do this without reducing your income using a TTR strategy. If you are eligible, a TTR pension may allow you to draw an income from your super while working part-time, which means you can maintain your lifestyle while working less. The downside of this strategy is that you will be accessing your super savings earlier than usual.
  2. Boost your super without changing your lifestyle.
    If you are looking to maximise your super, you can continue to work full-time while making salary sacrifice contributions. You can then top up your reduced salary with a TTR pension. Your salary sacrificed contributions will be taxed at 15% and, in most cases, TTR pensions are taxed more favourably than your salary.

We also recommend you discuss your individual needs with a financial planner before commencing any TTR strategy.


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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.