Transitioning to retirement

According to the Australian Taxation Office, the transition to retirement (TTR) rules allow Australians aged 55 and over (depending on your preservation age) to access their superannuation while still working. This can be beneficial if you want to reduce your work hours without sacrificing income or if you want to boost your super through salary sacrificing.

Key retirement rules include:

You must have reached your preservation age (between 55 and 60, depending on your birth year).

• Funds can only be accessed through a TTR income stream, which means you can’t take a lump sum.
• There are limits on how much you can withdraw, typically between 4% and 10% of your super balance per year.

A TTR strategy needs careful planning to ensure it aligns with your financial goals and doesn’t negatively impact your long-term savings.

The age at which you can begin a transition to retirement strategy depends on your preservation age, which is determined by your birth year:

• Born before 1 July 1960: Preservation age is 55
• Born between 1 July 1960 and 30 June 1961: Preservation age is 56
• Born between 1 July 1961 and 30 June 1962: Preservation age is 57
• Born between 1 July 1962 and 30 June 1963: Preservation age is 58
• Born between 1 July 1963 and 30 June 1964: Preservation age is 59
• Born after 30 June 1964: Preservation age is 60

Once you reach your preservation age, you can access your super through a TTR income stream while still working.

The time it takes to transition into full retirement varies depending on your goals and circumstances. Many people start with a transition to retirement (TTR) strategy, gradually reducing their work hours over several years.

Common timelines:

• 1-3 years: For those who are financially prepared and emotionally ready to retire fully.
• 3-5+ years: For individuals easing into retirement by working part-time while drawing a TTR income.

The transition period allows you to adjust both financially and emotionally, ensuring a stable retirement when you’re ready.

The income tax you pay on a TTR income stream depends on your age and whether your super fund is taxed or untaxed:

• Under 60: Your TTR pension payments are taxed at your marginal tax rate, but you may receive a 15% tax offset if drawn from a taxed fund.
• 60 and over: TTR payments from a taxed super fund are generally tax-free.

If your TTR strategy includes an account-based pension, the fund’s earnings may be tax-free, helping to further grow your retirement savings.

We’ll help you structure your TTR strategy to minimise tax and maximise your income during this transition phase.

The 5-year rule for retirement refers to the guideline that retirees should have a financial buffer to cover their first five years of retirement expenses without needing to sell growth assets.

Key benefits include:

• Protecting your retirement savings from market volatility during the early years.
• Providing a reliable income stream for essential expenses while giving your other investments time to grow.

We’ll help you build a financial plan that aligns with this rule, ensuring stability and growth throughout your retirement.

Under a transition to retirement (TTR) strategy, you’re still working while you reduce your hours, and you can begin to draw from your superannuation. You can also continue making super payments as you work. You’re not able to make lump sum withdrawals of your super savings.

Under a superannuation pension, you can withdraw your super in an income stream or receive it in one lump sum. Additionally, your superannuation balance continues to generate investment earnings, which can provide ongoing growth even as you draw down your income.