Transitioning to retirement explained

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Business Advisory
Head of Wealth
March 26, 2023
minute read

What are the benefits and disadvantages of a slow transition to retirement?

Retirement can be a difficult transition to make, both mentally and financially. This is a time in your life when you consider downsizing your home or when you start asking more questions about your super. After spending most of your adult life working hard and planning for retirement, it is natural that you might feel unsure about what comes next.

Nevertheless, retiring from your career doesn't have to mean putting a stop to being productive or fulfilled with life. In fact, taking advantage of all the opportunities available to you during this phase in life can lead to exciting experiences unique to this time in your journey.

In this article, we will explain transitioning from working actively into your retirement phase of life.

If you’re searching for a financial advisor to help you transition to retirement, our team at Liston Newton can help.

What is TTR?

Transition to Retirement - commonly referred to as TTR - is a strategy where an individual may reduce their working hours while continuing to work within their current role. At the same time, they can access part of their superannuation benefits in the form of a regular TTR income stream. This allows individuals to gradually transition from full-time work to retirement and take advantage of the income tax-free concessions available for those who have reached preservation age.

There are both lifestyle and financial benefits for those looking for an avenue to pre-retirement planning, such as having additional funds available for leisure activities or healthcare costs that can accompany aging. 

However, it is important to note that depending on personal circumstances, these strategies should be discussed with your financial advisor before implementing them into your career planning.

The benefits of a retirement transition

Retirement is a major transition for any working-age adult. Still, it’s often seen as a negative – a time to take stock of one's life so far instead of looking forward. However, a transition to retirement strategy can make the process far easier than going from full-time work to nothingness overnight. A slow retirement transition allows retirees to ease into their new life at their own pace while enabling them to make adjustments and changes.

Working less

Working less can result in several benefits, such as better mental and physical health, increased job satisfaction and improved financial security as retirement gets closer. Allowing yourself to gradually transition out of full-time work and supplementing your income with superannuation  can prevent anxiety about the future and help maintain a sense of purpose for retirees. 

Finding your passion

Moving into retirement at a gentle pace allows time to finish work projects, pursue learning opportunities, and discover new passions or refine existing ones. The prospect of having more free time brings with it a variety of options to volunteer in the community, explore travel destinations held close to heart, and engage in activities that inspire satisfaction and joy.

Tax benefits

Slowing down your transition into retirement can provide you with potentially substantial tax benefits. One potential benefit is staying in a lower tax bracket as you no longer have the same income earned from work. Additionally, you can begin withdrawing from retirement accounts without paying higher taxes on your money since superannuation income can enjoy concessional tax treatment.

Grow your retirement savings

A slow retirement transition can make a big difference in helping to grow and preserve retirement savings. Rather than ceasing employment at once and becoming solely reliant on your superannuation balance, a transition to retirement strategy spreads that reliance on income between your employment income and your superannuation income. 

Another benefit to note is that if you’re over 60, you can withdraw some money from your super account tax-free. You may also be able to employ a strategy whereby you contribute additional money to your super to get a tax deduction and reduce your taxable income. You can then withdraw this money tax-free from your super fund.

A TTR strategy example

To better explain how a Transition to Retirement strategy works, we’ll use the hypothetical example of Mary.

Say Mary wants to transition to retirement by cutting down her working hours. She negotiates with her employer to work only three days a week instead of five. Since Mary was born on the 18th of June, 1962, she has reached her preservation age. 

Mary can now speak with her financial adviser  and set up a TTR income stream. Her adviser sets up a TTR pension account and transfers a portion of her super savings to that account. From then on, a set amount of money is transferred from her pension account into her everyday savings every month. 

Mary will still receive the wages from her job, but the extra TTR income stream from her TTR pension account will top-up her wage, so she’ll have an income equal to five days of work when she’s only working three. 

If Mary has surplus cash from her salary or super withdrawals, she is still able to contribute this money back into super, and could get a tax deduction to further reduce her taxable income.  When combining tax free income from a TTR pension, and tax deductible contributions back into her super - Transition to Retirement can be a powerful and effective financial strategy.  


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Transition to retirement disadvantages

When considering retirement, it is prudent to consider the financial repercussions of a slow and gradual transition away from work. It is essential to consider the following before deciding whether a slow transition to retirement is the most appropriate choice for you.

Contribution and withdrawal limits to your super

One factor many retirees overlook is the contribution and withdrawal limits to their super funds. Australia’s retirement savings systems have been designed to help people save over long periods; if you withdraw too much or too quickly, you could jeopardise your financial security in later years. 

You will also face restrictions on how much you can contribute overall or in any given year before tax penalties kick in. Suppose you're planning a slow transition to retirement. In that case, it's important to be mindful of these limits and monitor your super fund regularly to ensure your wealth is invested wisely for the future.

Having to negotiate working hours

Certain disadvantages come with a slow transition to retirement, including having to negotiate working hours. Employers may not be willing to accede to preferred schedules. Therefore, retirees may find themselves in an awkward predicament between wanting more flexibility and having less job security than before. Retirees must understand the potential hurdles they may face while negotiating different work arrangements so they can adequately prepare mentally and professionally.

When are you eligible to transition to retirement?

In Australia, individuals can transition to retirement when they reach preservation age. Preservation age ranges from 56 to 60 depending on the individual's date of birth, with 60 being the applicable number from 1 July 1964 onwards. If a person has reached their preservation age, they can access part or all of their superannuation balance without complete retirement. This allows individuals to start planning their retirement with income and lifestyle strategies while remaining in the workforce, which provides them with financial security during their Golden Years.

The ATO lists the preservation age as:




[th]Date of birth[/th]

[th]Preservation age[/th]





[td]Before 1 July 1960[/td]




[td]1 July 1960 – 30 June 1961[/td]




[td]1 July 1961 – 30 June 1962[/td]




[td]1 July 1962 – 30 June 1963[/td]




[td]1 July 1963 – 30 June 1964[/td]




[td]From 1 July 1964[/td]





What is a transition retirement pension, and how does it work?

A transition retirement pension, commonly known as a Transition to Retirement (TTR) pension, offers a unique pathway for individuals nearing retirement age who may not be ready to retire fully. 

This innovative strategy enables you to gradually move your superannuation balance from the accumulation stage, where your retirement savings are invested, to the pension stage, which allows you to access those funds. 

As you may continue working part-time, the TTR pension provides supplementary income to maintain a comfortable lifestyle while reducing your overall workload. In essence, the TTR pension offers flexibility and financial security for those wishing to enter retirement and strike a balance between work commitments and personal endeavoursendeavors

The pros and cons of a TTR pension

A TTR pension is an excellent way for individuals to save for retirement as it combines investment and tax benefits with flexibility. These retirement pensions offer several advantages, including access to funds before retirement age, the potential to make larger contributions than other retirement accounts, and the option of beginning withdrawal payments at any time following retirement.

However, there are some disadvantages to consider when deciding whether or not a Transition to Retirement pension suits you. These include the inability to pay out large lump sums from your account and the possibility that changes in taxation law could affect withdrawals. It is important to weigh all of these factors carefully before deciding to begin TTR pension payments.

What to consider before transitioning to retirement?

Before transitioning to retirement, it is important to consider:

  1. Your long-term goals and financial objectives.
  2. Your current financial situation and potential future income.
  3. The amount of money you will need to maintain your lifestyle in retirement.
  4. Any tax implications that may arise from the transition.
  5. Your investment strategy and the risks associated with it.
  6. The potential impact of taxation laws or market conditions on your retirement savings.

Get assistance from a retirement planning expert

Our team at Liston Newton combines best practices from years of experience in finance with the latest retirement strategy knowledge to ensure that you have the most comprehensive and personalised plan possible for a secure retirement.

As we navigate this complex process, our expert advisors are here to guide you every step of the way and answer any questions. Contact us today to start planning your transition to retirement.

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