Transition to Retirement: Boost Your Super While Still Working
Are you completely prepared and aware of your options? Start with the video below.
After decades of hard work and sacrifice, you deserve to live your ideal life in retirement. But making complex financial decisions can feel overwhelming. Common concerns include:
Am I on track to retire when I want?
How do I turn my super into reliable income?
What's the most tax-effective way to fund retirement?
How long will my money actually last?
What are my spending limitations in retirement?
Can I retire if I don't own my home?
Without a clear strategy, even substantial savings can leave you uncertain about your financial future. This is where a qualified professional with over a decade of experience is your best option. If you're based in Melbourne, we can come to you also.
Transition to Retirement & Superannuation Strategies
Transition to Retirement strategies enable professionals over preservation age to access their super while still working. For high-income earners aged 60+, this creates significant tax-saving opportunities that can add normally around $200,000+ to your super by the time you fully retire.
How It Works
Once you reach preservation age (60 for most people born after 1964), you can start a Transition to Retirement pension from your super without retiring. You can withdraw between 4% and 10% of your super balance annually.
The key benefit at age 60+: All pension withdrawals are completely tax-free.
This creates a powerful tax arbitrage opportunity. Salary sacrifice into super (taxed at 15%) while drawing the same amount as a tax-free pension. Your take-home pay stays the same, but you're saving thousands in tax.
The Numbers
Here's how it works for a professional earning $150,000 with $400,000 in super:
Without TTR:
Earn $150,000, pay $42,782 tax
Take home $107,218
With TTR:
Salary sacrifice $30,000 to super (taxed at 15% = $25,500 net into super)
Draw $30,000 tax-free TTR pension
Taxable income drops to $120,000
Pay $32,782 tax
Take home $107,218 (same amount)
The Result
Same take-home pay
$10,000 less tax paid annually
$25,500 more going into super each year
Over 10 years: $255,000+ additional super
For professionals in the 37% or 45% tax bracket, the savings become even more substantial.
Two Ways To Use TTR
Strategy 1: Boost Super (Most Popular)
Continue working full-time and use the tax arbitrage to build your super faster. This works best for professionals aged 60-67 who want to maximise retirement savings.
Most of our TTR clients use this approach. They maintain their current lifestyle while their super balance grows significantly faster.
Strategy 2: Reduce Working Hours
Use TTR to supplement your income while working fewer hours. Reduce from 5 days to 3 days per week, then
draw a TTR pension to make up the income difference. Your super balance will decline over time, but you gain more time now.
Eligibility Requirements
To start a TTR pension, you must:
Have reached preservation age (typically 60)
Still be working
Have sufficient super balance (generally $200,000+)
Not have permanently retired
TTR Rules
Withdrawal limits:
Minimum: 4% of your balance annually
Maximum: 10% of your balance annually
Tax treatment:
Age 60+: Pension payments are tax-free
Under 60: Taxed at your marginal rate with 15% offset
Investment earnings: Taxed at 15%
Access restrictions:
No lump sum withdrawals (only regular pension payments)
Can convert to account-based pension when you stop working or reach 65
Is TTR Right for You?
TTR works best for:
High-income earners aged 60+ The tax-free pension withdrawals at age 60+ create maximum benefit. If you're earning $140,000+ and in the 37% or 45% tax bracket, tax savings can be $10,000 to $15,000 annually.
Substantial super balances Generally, you need $200,000+ for TTR to make economic sense. The 4% minimum withdrawal requirement means smaller balances don't justify the strategy.
Several years until retirement The longer you can run the strategy, the more it compounds. Starting TTR at 60 and continuing until 67 can add $200,000+ to your super.
TTR may not be suitable if:
Your super balance is below $200,000
You're in a low tax bracket
You plan to retire within 1-2 years
The Setup Process
Establishing a TTR strategy typically takes 2-3 weeks:
1. Assessment and tax savings calculations
2. Establish TTR pension account with your super fund 3. Arrange salary sacrifice with your employer
4. Set up regular pension payments
5. Annual review and optimisation
How We Help
We provide comprehensive TTR analysis including:
Eligibility verification
Tax savings calculations specific to your circumstances
Optimal salary sacrifice determination
Coordination with your super fund
Arrangement of employer salary sacrifice
Ongoing annual reviews
Most importantly, we only recommend TTR when the benefits clearly outweigh the costs. Not everyone benefits from TTR, and we're upfront about when it makes sense.
For professional, personal advice tailored to your circumstances, please reach out below.
Timing Matters
The earlier you start planning, the more options you have. Waiting until you're ready to retire limits your strategic opportunities for tax minimisation and wealth optimisation.
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Property vs Portfolio
If you're planning to fund retirement from investment properties, proceed with caution. Relative to a diversified portfolio, residential property is low-income, illiquid, and time-consuming. It's effective for wealth accumulation but less effective for retirement income.
Did you know...
The average Australian needs $595,000 (single) or $690,000 (couple) for comfortable retirement.
The average Australian couple spends around 50% more in their 60's than their 80's. This means your income needs will naturally decrease over time—allowing for strategic planning.
Couples can have up to $3.4m in their combined super invested tax-free for retirement. This represents a massive tax advantage high-income earners should maximise.
You can access super once you reach your preservation age—between 55 and 60 depending on your date of birth. Many professionals can retire earlier than they think.
Sources: APRA | Australia Institute | Vanguard
7 Steps to the Retirement You Want
What we can do for you...
1. Define Your Ideal Retirement Lifestyle
Money is just fuel for living the retirement you want; which means something different to everyone. Before making any financial decisions, define what your plans and intentions are, and understand what factors will make your golden years fulfilling.
2. Calculate What You Actually Need
Calculate what you'll need to sustain your ideal retirement lifestyle, factoring in travel, hobbies, family commitments, and changing expenses as you age.
3. Accelerate Your Super Balance
Maximise contributions while you're working to accelerate your retirement timeline and increase your tax-free income capacity.
4. Eliminate Debt Before You Retire
Enter retirement with a clear plan to eliminate or manage debt effectively without compromising your lifestyle.
5. Build Your Tax-Free Income Stream
Transform accumulated resources into sufficient, sustainable income through tax-effective structures like account-based pensions.
6. Align Your Portfolio With Your Timeline
Align your investment strategy with realistic expectations and your specific retirement timeline and risk tolerance.
7. Model Your Money's Longevity
Project the likely value of your assets over the course of retirement to gain confidence and freedom to actually enjoy your money.
For professional, personal advice tailored to your circumstances, please reach out below.
At Summit Financial Planning, we excel in precise financial management tailored to your needs. Contact us today for expert assistance.
Summit Financial Planning ABN 28 856 289 615 is a Corporate Authorised Representative of Lifespan Financial Planning Pty Ltd AFSL No. 229892 ABN 23 065 921 735.
Jeremy Douglas is an Authorised Representative (ASIC NO. 001238064) of Lifespan Financial Planning AFSL No. 229892.
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