Transitioning to retirement
If you have reached preservation age, currently 58, the Australian Government has made it possible for you to access your super as a non-commutable income stream while you are still working.
This is called a Transition to Retirement (TTR) pension. It’s designed to help you ease into retirement, but it may also be used in a TTR strategy to increase your super balance in your final working years.
Quite simply, a TTR strategy changes the way you receive your income. Instead of receiving your income from one source (your employer), you receive income from two sources (your employer and your superannuation savings).
Three ways to use a transition to retirement strategy
Lifestyle booster
Ease into retirement by reducing working hours, without having to reduce your take-home pay.
- reduce your working hours
- maintain your current take-home pay
- save on tax
Super booster
Save more super without reducing your take-home pay.
- reduce your working hours
- maintain your current take-home pay
- save on tax
Income booster
Access your super top-up your current income. But be careful, this could eat into your savings.
- Top-up your current income
The tax benefits of a TTR strategy
To access a TTR strategy you need to move some or all of your super into a TTR pension. In most instances, the income you receive from your TTR pension is taxed at more favourable rates than your salary:
Tax concessions
If you’re between preservation age and 59, the taxable amount of your TTR pension income is eligible for a 15% tax offset.
Tax-free income
If you’re aged 60 or over, your income from your TTR pension is tax free.
Quick tips about TTR:
- you must have met your preservation age
- tax breaks are great, and become even better once you reach age 60
- your pension payments can be up to 10% of your TTR balance each year
- you must receive a minimum pension payment of 2% of your TTR pension balance each year (in 20219/20 and 2020/21 financial years)
- you cannot withdraw a lump sum from a TTR pension
