Transition to Retirement Strategy: How Does It Work?

A transition to retirement strategy, commonly called a TTR strategy, allows eligible Australians to access some of their super while continuing to work.

It can provide greater flexibility during the final years of your career.

How does transition to retirement work?

From age 60, an eligible person can transfer part of their super into a transition to retirement income stream while continuing to work.

This income could be used to supplement your salary if you reduce your working hours. Alternatively, some people continue working and combine a TTR pension with additional super contributions as part of a broader tax and retirement strategy.

Why use a TTR strategy?

A TTR strategy may help you:

• reduce working hours without reducing your disposable income as significantly

• gradually move from full-time work into retirement

• make additional super contributions while maintaining cash flow

• potentially improve the tax efficiency of your retirement strategy.

However, TTR strategies aren't automatically beneficial. Tax, contribution limits, investment earnings, fees, insurance and your longer-term retirement objectives all need consideration.

How much can you withdraw?

A TTR pension has withdrawal restrictions. Moneysmart currently states that annual payments must generally be between 4% and 10% of the account balance. At age 65, a TTR income stream moves into retirement phase.

Is transition to retirement right for you?

The answer depends on your income, super balance, tax position and intended retirement date.

Before starting a TTR pension, consider modelling the strategy against simply continuing with your existing super arrangements.

General information only. Obtain personalised advice before implementing a TTR strategy.