Transition to Retirement Strategy Explained
A Transition to Retirement (TTR) strategy allows Australians aged 60+ to access their super as a steady income stream while still working. It’s a powerful tool to either supplement your income while reducing work hours or boost your super through tax-effective salary sacrifice without reducing your take-home pay.
On this page:
Intro
Turning 60 can feel like standing at the edge of two worlds. You’re not exactly done with work, but you might want fewer hours, fewer deadlines, and a clearer plan for the golden years of your life.
A Transition to Retirement (TTR) strategy is a way to start using some of your superannuation after you reach preservation age (now 60), while you’re still employed. It’s designed for a gradual shift into retirement life, instead of stopping work in one hit.
It gives you flexibility to:
- top up your income if you cut back hours, or
- keep working full-time and use the rules to reduce tax and add more into super.
Since 1 July 2024, preservation age is effectively 60 for everyone reaching it now, which makes the starting line easier to understand.
How TTR Strategies Work?
A TTR usually starts when you move part of your super from your accumulation account into a Transition to Retirement Income Stream (often called a TRIS).
Once it’s set up, there are a few important rules:
- You must take payments as an income stream, generally not as a lump sum while you’re still working.
- You must draw between 4% and 10% of the TRIS balance each financial year, and at least one payment must be made.
- You keep your main super account open so your employer contributions can keep going (and so any insurance in super can stay funded).
For example, if you start a TRIS with $200,000, the annual income range is usually $8,000 to $20,000.
3 Main Ways People Use a TTR Strategy
These are the most common goals:
| Goal | What you do | Why it helps |
|---|---|---|
| Work less | Reduce hours and use TRIS payments to replace some lost salary. | You keep your lifestyle steady while easing into retirement. |
| Pay less tax, add more to super | Salary sacrifice (or personal deductible contributions), then use TRIS payments to top up your take-home pay. | Concessional contributions are generally taxed at 15% up to the cap ($30,000 in 2024–25), which can be lower than your marginal rate. |
| Meet certain super thresholds | In some cases, planned withdrawals can reduce your total super balance on 30 June. | This can help you qualify for certain contribution rules that depend on your total super balance (speak to an adviser first). |
Who it applies to?
These are the most important rules concerning a TTR strategy:
Eligibility
You generally need to be 60 or older and still working to start a TTR strategy.
Withdrawal Rules
4% minimum and 10% maximum each year, plus at least one payment. Regular payments, not lump sums, in most cases while you stay employed.
Tax Treatment
TTR pension payments are generally tax-free if you are 60+. Investment earnings inside the TRIS are generally taxed at up to 15% until you meet a full condition of release (such as retiring or turning 65).
Centrelink and Insurance
Starting a TTR pension can affect your (or your partner’s) government benefits, so check before you set it up. If you hold life insurance through super, make sure you leave enough in your super account to keep premiums paid.
How to Set Up
A TTR can be simple on paper, but it can cause problems if it’s set up for the wrong reason or with the wrong numbers.
- Talk it through with a licensed adviser (best interests duty) before you start – especially if Centrelink is part of your plan.
- Gather your key numbers like income, tax rate, super balance, contributions, and spending needs.
- Contact your super fund and ask to start a TRIS. You’ll usually complete forms and provide ID and proof of preservation age.
- Choose how much to transfer and how often you want payments, staying within the permitted range.
Is It Worth It?
A TTR strategy can be a solid option if you want to work less without a big income drop, or if you want to add more into super while keeping your take-home pay steady. The downside is that drawing super earlier can leave you with less later.
If you’re a wealth builder, pre-retiree, or retiree based in the Sutherland Shire or Sydney CBD, book a 15-minute no-obligation call with James Hayes to sense-check whether a TTR strategy fits your situation and how to set it up.
FAQs
At what age can I legally start a TTR strategy?
Most people start a TTR strategy once they reach preservation age, which is now 60 for people reaching it today. You can start a restricted income stream while still working, then later move to full retirement rules once you meet a full condition of release.
What are the mandatory withdrawal limits for a TTR pension?
A TTR pension has an annual withdrawal range. You must take at least 4% and no more than 10% of the TRIS balance each financial year, and you must make at least one payment. Payments generally need to be taken as a regular income stream, not a lump sum while you’re still working.
How can a TTR strategy reduce my tax bill?
A common approach is to increase concessional contributions (like salary sacrifice), which are generally taxed at 15% up to the concessional cap (listed as $30,000 for 2024–25), then use tax-free TRIS payments (age 60+) to top up your take-home pay. This can lower your taxable income while keeping your cash flow steady.