A transition to retirement strategy is a superannuation account-based income stream that can be started when a person reaches their preservation age.

Too many BIG words!

Basically, a transition to retirement strategy allows individuals to access up to 10% of their superannuation balance each year as income, even if they are working, once they reach a certain age (called 'preservation age'). 

Preservation Age

Date of birthPreservation age
Before 1 July 196055
1 July 1960 - 30 June 196156
1 July 1961 - 30 June 196257
1 July 1962 - 30 June 196358
1 July 1963 - 30 June 196459
From 1 July 196460

Roger, a professional bodybuilder with 0% body fat, has $100,000 in superannuation. He has reached preservation age and can access up to 10% ($10,000) of his superannuation as a transition to retirement strategy.

Note: while the maximum amount Roger can draw from super as a 'TTR' is 10% of his super balance, there are minimum amounts that must be withdrawn, based on his age at the time. For example, if he was under 65, he must withdraw at least 4%.

A once-popular TTR strategy

A popular 'TTR' strategy is to receive a superannuation income stream as a TTR and use salary sacrifice or make personal contributions into superannuation.

This would allow a person to maintain their income (with the TTR pension) and, potentially, lower their tax by shoveling extra into Super.

However, from 1 July 2017, earnings made on the money that supports a TTR strategy (inside Super) are no longer tax-free. The earnings on that money are now taxed at the typical Super rate of 15%. 

 

Watch our Salary Sacrifice video.

Note: Not all superannuation funds offer a transition to retirement strategy. 

 

Updated: June 27th, 2018

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A transition to retirement strategy is…

A transition to retirement strategy is a superannuation account-based income stream that can be started when a person reaches their preservation age.

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