Quick Look
• Focus: How to use your super to supplement income and boost retirement savings before fully retiring
• Key Takeaways:
TTR pensions let you draw income from super once you reach preservation age — without fully retiring
Combined with salary sacrifice, TTR can reduce tax and grow super faster in your final working years
Recontribution strategies can reduce tax for your beneficiaries and improve estate planning outcomes
• Reading Time: ≈ 6 minutes
Introduction
Not quite ready to retire — but want to cut back on work? That’s where a Transition to Retirement (TTR) strategy can help.
A TTR strategy allows you to access part of your super while still working. It’s designed for people who’ve reached their preservation age (between 55 and 60 depending on your birth year), and want more flexibility in how and when they retire.
Used correctly, TTR can help you supplement income, reduce tax, or grow your super in the years leading up to retirement.
As more Australians aim for a gradual or flexible retirement, many want to reduce their work hours without compromising their lifestyle — or their super growth.
A TTR strategy allows you to:
Reduce your hours without reducing income
Maintain full-time income while boosting super through salary sacrifice
Start accessing your super in a tax-effective way before retirement
But the rules are specific, and the benefits depend on your income, tax rate, and super balance. If misunderstood or poorly managed, a TTR pension can erode your super faster than planned.
A TTR (Transition to Retirement) pension is a type of income stream you can start once you reach your preservation age and are still working.
| Birth Year | Preservation Age |
|---|---|
| Before 1 July 1960 | 55 |
| 1960–1964 | 56–59 (increases by year) |
| From 1 July 1964 | 60 |
You convert part of your super into a non-commutable income stream, with these rules:
You must draw at least 4% of the TTR balance per year
You can’t withdraw lump sums unless you’ve met a condition of release
Earnings within the TTR account are taxed at up to 15% (unlike 0% in full pension phase)
This is where the real strategy comes in. A common approach is:
Reduce your take-home pay by salary sacrificing more into super (taxed at 15%)
Use TTR income payments to replace the reduced take-home pay
Because salary sacrifice is taxed less than your marginal rate (up to 47%), and TTR income is tax-free after age 60, you can save on tax while boosting your retirement balance.
Example:
Karen, age 60, earns $90,000 and salary sacrifices $20,000 into super.
Her employer pays SG at 11% = $9,900
Karen receives a TTR income stream of $15,000 from her super
Her take-home pay stays roughly the same, but she pays less tax and increases total super contributions
Tip: The concessional contributions cap is $27,500 per year (2024–25). This includes SG + salary sacrifice + personal deductible contributions.
If you want to cut back hours:
Reduce your work days (e.g. from 5 to 3 days/week)
Use TTR pension income to top up your reduced salary
This allows you to ease into retirement gradually, without a sudden income drop.
Once you’ve met a full condition of release (e.g. retirement after age 60 or turning 65), you can:
Withdraw a lump sum from your super
Re-contribute it as a non-concessional contribution (after-tax)
Why do this?
To reduce the taxable component of your super, which may lower the tax your adult children pay if they inherit it.
Important points:
You must meet eligibility (e.g. under the $1.9 million total super balance cap)
Non-concessional cap is $110,000 per year, or $330,000 under the bring-forward rule
It doesn’t help everyone — best done with tax advice if your beneficiaries are non-dependants
Sam’s TTR Success
Sam, 61, earns $100,000 and wants to retire at 65. He sets up a TTR pension with $250,000 from his super and draws $15,000 per year.
He salary sacrifices $20,000 of his salary into super and uses the TTR payments to maintain his take-home pay. Over 4 years:
He boosts his super by nearly $50,000 (net of tax and drawdowns)
Pays around $6,000 less in tax
Retires with more super and a smoother financial transition
“Is a TTR pension tax-free?”
Only after age 60 are TTR income payments tax-free.
Before age 60, payments are taxed at your marginal rate (with a 15% tax offset). Earnings inside the TTR account are still taxed at 15%, unlike full retirement pensions.
“Can I start a TTR if I haven’t retired?”
Yes — that’s the point. Once you reach preservation age, you can start a TTR income stream without fully retiring.
“Can I access lump sums in TTR phase?”
No. TTR income streams are non-commutable — meaning you can’t take lump sums unless you meet a full condition of release (e.g. retirement or turning 65).
“Will a TTR reduce my super balance?”
Not necessarily — it depends on how much you withdraw versus how much you contribute. A well-planned TTR strategy can actually increase your net super balance.
“Is a recontribution strategy always worth it?”
Only if your super has a large taxable component and your beneficiaries are non-dependants (e.g. adult children). Otherwise, it may not change your tax outcome.
Transition to Retirement strategies can be powerful when used well — whether you’re aiming to reduce tax, ease into part-time work, or grow your super faster before stopping work entirely.
But they’re not set-and-forget. Make sure your strategy fits your age, tax position, income, and retirement goals. Done properly, it’s one of the most flexible ways to make your final working years really count.
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Disclosure: General information only. Consider your objectives, financial situation and needs, and seek professional advice before acting.
How We Keep It Trustworthy
Every article includes a Review & Fact Check section below — so you know exactly where our facts come from, what’s uncertain, and whether there’s any bias.
Review & Fact Check
Fact References
• Transition to Retirement pension rules – Australian Taxation Office (ato.gov.au)
• Super contribution and withdrawal caps – ATO, updated 1 July 2024
• Recontribution strategies and estate planning – MoneySmart and ATO guidance
Unverified or Inconclusive Items
• Case study of “Sam” is illustrative and based on common TTR modelling
• Tax outcomes vary based on income, fund performance, and individual strategy
Time Sensitivity
• Contribution caps, TTR rules, and pension tax rates may change after 1 July 2025
• Strategies like recontribution rely on stable legislative settings
Bias Assessment
This article is neutral and educational. It does not promote specific products or providers and aligns with official guidance from the ATO and ASIC.
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