1 December 2022
As you approach retirement age, there are many options for your future – even if you’re not ready to retire just yet. Maybe you’re ready to wind down your work hours and want to use your super to top up your pay. Or perhaps you’re keen to work for longer and put more money into your super. Find out how you can work less on your terms with a transition to retirement (TTR) strategy.
If you’re eligible, a transition to retirement account lets you access some of your super and keep working1. With a TTR strategy, you can choose to either:
- work less and top up your income with your super savings, or
- add more of your salary to your super to save more and pay less tax.
You can start a TTR strategy by opening a TTR Income account alongside your regular super account. This way you could save more before you retire or you could wind back on work, while topping up your take-home pay.
When you can transition to retirement
You can start a TTR strategy once you reach your ‘preservation age’ – the age when you can access your super. Preservation age is set by the government and depends on the year you were born.
Find out your preservation age:
| BIRTH YEAR | YOUR PRESERVATION AGE |
|---|---|
| Before 1 July 1960 | 55 |
| 1 July 1960 to 30 June 1961 | 56 |
| 1 July 1961 to 30 June 1962 | 57 |
| 1 July 1962 to 30 June 1963 | 58 |
| 1 July 1963 to 30 June 1964 | 59 |
| 1 July 1964 or after | 60 |
Visit the ATO website for the latest information.
If you reach your preservation age and you’re not quite ready to retire, you can consider opening an AustralianSuper TTR Income account.
The benefits of a TTR Income account
If you’ve reached preservation age, you can access some of your super while you’re still working with a TTR Income account (also known as a ‘transition to retirement pension’).
How a TTR Income account can help you work less or save more
Work less:
- Transfer some of your super to your TTR Income account. If you want to work less, you can top up your take-home payments with super from your TTR Income account.
Save more:
- Add more to your super through salary sacrifice contributions.
- This can help you pay less tax while boosting your super.
When receiving income payments from your TTR Income account to top up your salary, there can be some additional tax benefits too:
- Before you turn 60, you’ll receive a 15% tax offset on income payments.
- Once you turn 60, you generally won’t pay tax on TTR income payments.
Use super to cut down your hours but not your pay
A sudden shift to retirement may not be right for everyone. A TTR Income account can help you gradually reduce the amount you work, without reducing your take-home pay. This allows you to maintain a similar income while you ease out of the workforce.
Save more on tax and grow your super
Using a TTR Income account to top up your salary can offer tax benefits once you turn 60.
If you’re aged 60 or over and still working, you can use a TTR Income account to grow your super while saving on tax. You can do this by paying more of your salary directly into your super account (also known as salary sacrifice) on top of your employer contributions, where it’s generally taxed at a lower rate.2
You can use money from your TTR Income to offset the amount you have salary sacrificed. This helps keep your take-home pay similar to what you’re used to while boosting your super.
TTR Income account eligibility requirements
- To open a TTR Income account, you need a minimum balance of $31,000 in your super account. At least $25,000 of that needs to move into the TTR Income account, while the remaining amount ($6,000 or more) needs to stay in your super account.
- If you want to keep your insurance cover, your remaining super account balance needs to be enough to cover the cost of insurance.
- Consider combining any super you have with other funds into your AustralianSuper super account before setting up a TTR Income account.3
- Contribution limits may apply, so check with your employer that salary sacrificing into super won’t affect your employee entitlements.
Make sure a TTR Income account is right for you
A TTR strategy can help you make the transition into retirement. But it can be complex and isn’t suited to everyone, so it’s important to get advice to see if this strategy is right for you.
As a member, you can access general information or simple, personal advice on TTR by calling us on 1300 300 273. For more comprehensive personal advice, a financial adviser can help make sure it’s the right solution for you.4
References:
- Government prescribed minimums and maximums apply. For details view the TTR Income Product Disclosure Statement at https://www.australiansuper.com/retirement/our-ttr-income-account
- Salary sacrifice may affect some Government benefits and employee benefits. Consider getting financial advice before deciding if a salary sacrifice arrangement is right for you. Before adding to your super, consider your financial circumstances, contribution caps that may apply, and tax issues.
- Before making a decision to combine your super, consider any fees and charges that may apply, and the effect a transfer may have on benefits in your other fund such as such as insurance cover. We recommend you consider seeking financial advice.
- Personal financial product advice is provided under the Australian Financial Services Licence held by a third party and not by AustralianSuper Pty Ltd. Fees may apply.
Investment returns aren’t guaranteed. Past performance is not a reliable indicator of future returns.
This information may be general financial advice which doesn’t take into account your personal objectives, situation or needs. Before making a decision about AustralianSuper, you should think about your financial requirements and refer to the relevant Product Disclosure Statement. A Target Market Determination (TMD) is a document that outlines the target market a product has been designed for. Find the TMDs at australiansuper.com/TMD.
AustralianSuper Pty Ltd ABN 94 006 457 987, AFSL 233788, Trustee of AustralianSuper ABN 65 714 394 898.