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Retirement Planning

Transition to Retirement

There is an Australian Government policy called ‘transition to retirement’ (TTR) that allows you to draw on some of your super benefits, while still working. The policy allows you to add to your salary while saving on tax and also boosting your super before you completely retire.

How do you make the transition?

You can either keep working full-time and boost your super, or reduce your work hours and soften the drop in income.

Once you hit the age that you are allowed to withdraw from your super fund (the ‘preservation age’), you can draw down a pension from your super fund while still working. This allows people who are not quite ready to retire, to reduce their working hours, while still maintaining a comfortable lifestyle.

If you are between the preservation age (often 55) but under 65 and still working, the policy allows you to transfer the total of your super into a super pension, and to then withdraw between 4% and 10% of the pension account balance each financial year. If your fund doesn’t offer you a pension option, you can always open a pension account with a different super fund (but should consider seeking financial advice before doing so).

What are the benefits of the TTR policy?

You can boost your super savings – As your employer continues to make contributions into your super account, your super balance will continue to grow. By salary sacrificing some of your pre-tax income into your super, this can further increase your super savings.

Pay less tax – Your salary sacrificed contributions and employers contributions are likely to be taxed at a lower rate into your super than your highest rate of tax paid. Investment returns on a super pension account are not taxed, and when you turn 60, no tax is paid on the pension income. When under the age of 60 you may even get a tax rebate on your pension income.

Ease into retirement – If you want to progressively reduce the hours you work as a way of transitioning into retirement, taking a TTR pension from your super can add to your employment income (as mentioned above), if the income accumulated from the reduced work load isn’t enough to maintain your existing lifestyle.

Things to consider before taking up a TTR

TTR policy rewards people for staying in the workforce longer. It is a flexible policy that allows you to work longer and retire later, with greater benefits. This article has only touched on the basics, and it is highly recommended that you seek financial advice regarding your particular situation and TTR to determine what is the best option for you.

The material and contents provided in this publication are informative in nature only. It is not intended to be advice and you should not act specifically on the basis of this information alone. If expert assistance is required, professional advice should be obtained.

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The information provided on this website, including the material and contents provided in the website publications, are informative in nature only and you should not act specifically on the basis of this information alone. It should not be used as a substitute for legal, business, accounting, tax, financial planning or other professional advice. If expert assistance is required, professional advice should be obtained. Liability limited by a scheme approved under Professional Standards Legislation

Paul Baggetta is the Founder & Principal of Baggetta & Co (ABN 68 786 233 813).

Paul Baggetta has been a Taxation Accountant since 1981, a Financial Planner since 1998, and in 1993 qualified as a Real Estate Licensee, holding a Triennial Certificate (currently not trading) and operated his own Real Estate business for property investment clients for over 5 years as a second business.

Financial planning services are provided by Paul Baggetta as an Authorised Representative (No. 261469) of Capstone Financial Planning Pty Ltd. ABN 24 093 733 969. Australian Financial Services License No. 223135.


Taxation & Accounting services are provided by Paul Baggetta as a Registered Tax Agent (No.61487008) and is a Member of SMSF Association, FIPA & NTAA.