Transition to retirement: Access your super while you keep working

Written By Andrew Ford

A 'transition to retirement' (TTR) strategy lets you access some of your super and keep working.

Setting this up can be complicated, so contact your super fund or financial adviser for advice.

How transition to retirement works

If you've reached your preservation age (aged 60) and still working, you can use a TTR strategy to:

  • supplement your income if you reduce your work hours, or

  • boost your super and save on tax while you keep working full-time

Starting a TTR pension

You can start a TTR pension by transferring some of your super to an account-based pension.

You need to keep some money in your super account to continue to receive your employer’s compulsory contributions. Or any voluntary contributions you make.

Government benefits and TTR

Starting a TTR pension may impact your or your partner's government benefits. Speak to a Services Australia Financial Information Service (FIS) officer for more information.

Life insurance and TTR

You may have life insurance with your super. Check if your cover reduces or stops if you start a TTR pension.

Using TTR to reduce work hours

If you want to reduce your work hours, a TTR strategy can top up your income.

Pros

  • Continue to receive super contributions — This helps to replace the money you take out.

  • Pay less tax — If you are 60 or older, your TTR pension payments are tax free.

  • Ease into retirement — You can start planning what you'll do with your leisure time before you retire completely.

Cons

  • Affects retirement income — If you start drawing down your super early, you'll have less money when you retire.

Case Study

Alisha reduces her work hours

Alisha has just turned 60 and currently earns $50,000 a year before tax. She decides to ease into retirement by reducing her work to three days a week. This means her income will drop to $30,000. Alisha transfers $155,000 of her super to a transition to retirement pension and withdraws $9,000 each year, tax-free. This replaces some of her lost pay.

Using TTR to save on tax

You can use a TTR pension to grow your super and pay less tax in the lead up to retirement.

This strategy works best if you are 60 or older and a mid to upper income earner. (The middle income was around $83,000 a year in 2024.)

Pros

  • Boost your super — A TTR pension can be used with salary sacrificing to top up your super as you approach retirement.

  • Save tax — You pay 15% tax on salary sacrificed contributions. This is likely to be lower than your marginal tax rate.

  • Pay less tax on income — If you are age 60 or older, your TTR pension payments are tax free.

Cons

  • Complexity — You may need to pay for financial advice to understand if this strategy is for you.

Case Study

Kyle reduces his tax

Kyle is 60 and earns $100,000 a year. He intends to keep working full-time for at least another five years. Kyle transfers $200,000 from his super to an account-based pension so he can start a TTR strategy.

He salary sacrifices into his super. This will reduce his income tax, but also his take-home pay. He tops up his income by withdrawing up to 10% of his TTR pension balance each year.

Plan your retirement

When you're preparing to retire, having a plan can help you feel more confident as your life and priorities change. Start planning with a retirement checklist.

Have a chat with us today to start planning for your retirement.

Source:
Reproduced with the permission of ASIC’s MoneySmart Team. This article was originally published at https://moneysmart.gov.au/retirement-income/transition-to-retirement


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Andrew Ford
Marketing expert Andrew Ford, the founder of Social Star, has discovered the secret of ‘Powerful Branding’. With a fire for unleashing people’s inner brand and developing business models to generate profit from an individual’s passions, Andrew leverages ground-breaking digital and social media marketing techniques to create digital strategies for clients to attract maximum opportunities. Having established a strong name for himself in the field, Andrew blends traditional business techniques with now-necessary tools for entrepreneurs to achieve scale, quality, and influence in their niche. Andrew’s comprehensive business background and qualifications consist of a Bachelor of Business (Marketing) (RMIT 2003), a Graduate Certificate in Management (MBA Executive Program, University of Sydney 2005), and a Masters of Entrepreneurship and Innovation (Swinburne University 2011). Continually on the cutting edge of his own education, Andrew has tested his marketing theories in forums such as the BCG Business Strategy Competition, which he won in 2005 against all Victorian MBA schools, and the Venture Cup Business Plan Competition (Swinburne University 2003), which he won in the Masters category. With experience working at Hewlett-Packard, Sensis (Telstra) and IBM, Andrew also has mentored dozens of junior staffs to help them achieve their professional goals. Meeting and influencing high-profile public figures helped Andrew to realise just how many professionals require more understanding and control of their public brands or appearance, and need help with the skills to use the many amazing free tools at their disposal to generate success. At Social Star, Andrew consults with clients to uncover their personal brand – both where it is today and where it can be tomorrow – and refine and define how that should be displayed in social media in order to attract their perfect target audience. Andrew mentors his clients to rapidly grow their business’ audiences, resulting in larger potential client bases and higher revenue. Applying formulas that integrate over twenty years of Andrew’s business experience and fifteen years of formal business education, Social Star specialises in building clarity and velocity for clients’ brands using the ‘Understand, Build and Leverage’ methodology. ‘Having a Personal Business enables people to have an authentic, congruent connection with their valued clients and partners, using their brand as the bridge,’ says Andrew. ‘I’m highly driven to work with the new breed of entrepreneurs and small business owners – people who have a passion for making the world a better place. Traditional business models are stepping aside as people follow their innermost dreams and my role is to see them operate within their values while creating wealth. Some people think you have to sacrifice what you love to be successful in your business, yet it is actually the opposite. Follow your passion and success will come.’ Lecturing at Swinburne University from 2009 to 2011 on brand dynamics and digital marketing, presenting at numerous conferences, and consulting to hundreds of clients, Andrew has seen his philosophy work that if you follow your unique path, based on your skills, experience, values and goals, you will automatically attract the opportunities you desire and achieve the success you deserve. Living his mantra, Andrew has created a successful business and attracts high-profile clients including musicians, athletes, authors, models, entrepreneurs, professionals and small business owners, helping them find their ‘why’ in their business and fulfilment in their lives. Business for Andrew is more than work, it’s personal. Running a personal business means that he is able to fulfil all of his values rather than separating his life from work. It supports his two boys while providing social opportunities, educational development, fitness opportunities, spiritual fulfilment and many valuable friendships. Social Star has now become the vehicle for Andrew to crystallise his mission in the world, to help people love what they do, supporting his ‘why’, that if more people loved what they did, the world would be a better place.
http://www.andrewford.com.au/
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