What is a transition to retirement (TTR) strategy

As you get closer to retirement, you may decide to ease into it gradually with part-time work, or use your last few years in the workforce to build your super balance. One way you can do this is through a transition to retirement (TTR) strategy.

A TTR strategy is where you start receiving payments from your super while you're still working – giving you flexibility, without reducing your income. With most super funds you can do this by opening an account-based pension, such as QSuper's Transition to Retirement Income account.

Turn your super into income

Whether you decide to work less, or redirect more of your salary to your super, a regular income stream from a TTR Income account can help you keep the same take-home pay.

Save on tax

If you earn more than $37,000 a year, it could benefit you to salary sacrifice more of your before-tax salary into your super and supplement your pay packet with tax-effective payments.

Grow your retirement savings

Because you're still working, your superannuation balance will continue to receive contributions – helping to make all the difference to your lifestyle when you retire.

Work less or save more – the choice is yours.

A TTR strategy may either help you slow down your work life or speed up your savings near retirement

Slow down your work life

As you approach retirement, you may want to reduce your working hours so you can spend less time at work and more time doing the things you love. Drawing an income from a TTR Income account can help supplement your salary and maintain your current lifestyle while you work less.

While there are annual limits set by the Australian Government on how much you can withdraw as an income stream, you can choose the amount of your payment and how often you want to receive it within these limits. You may also want to consider the effect that working less hours has on your super in the future.

Speed up your super savings

Even if you're not planning to retire any time soon, a TTR strategy could help you boost your super balance and save on tax while topping up your pay packet with a tax-effective income stream. If you're 60 or older, the payments from your super will be tax-free, and even before age 60 you could still benefit from a tax offset.

You could also choose to add any tax savings to your super for an additional boost.

How a TTR strategy works

Enjoy life today while you save for tomorrow

Open a TTR Income account

As long as you have reached your preservation age and are under 65 and still working, you can transfer part or all of your superannuation balance to a TTR Income account. If you transfer all of your super balance over, it will close your Accumulation account.

Keep working

If you want to keep your Accumulation account open for employer or voluntary contributions, you must leave a minimum of $10,000 in your Accumulation account, and use your TTR Income account to access some of your super while you're still working.

Draw an income from your super

With a TTR Income account, you can receive regular payments from your super paid straight into your bank account.

How TTR Income accounts are taxed

  • If you are 60 or older, there’s no tax on payments
  • If you’re between preservation age and 60, the taxable portion of your income will be taxed at your marginal tax rates, however you will receive a 15% tax offset. For more information, refer to the Income account guide (pdf).
  • Investment earnings are taxed at 15%.

What else to consider

There are limits to what you can tax-effectively contribute to your superannuation before-tax, so make sure you understand the contribution caps. There are also rules regarding withdrawing your payments, including minimum and maximum limits per year. For more information on how a TTR Income account works, read our Income Account Guide (pdf).

TTR strategies can be complicated and aren't suited to everyone. It's a good idea to get advice from a qualified financial adviser to see if a TTR strategy is right for you. As a QSuper member you have access to professional, personal advice from QInvest.1

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