Ease into retirement with a TTR pension.
Thinking about easing into retirement but still need a steady income? Want to trim your tax bill while growing your super? Or maybe you’d love to knock down some debt before you stop working?
If you’re aged 60 or over, you can do just that — with a Transition to Retirement (TTR) pension.
Who can start a super pension / TTR pension?
Using your super to start a pension can give you the cashflow flexibility you need to reach your financial goals. Not everyone can start one, but if you’re 60 or over, you can.
Once you retire or turn 65, you gain access to a fully flexible account-based pension — with no maximum withdrawal limits, provided you meet the minimum pension requirements.
If you’re between 60 and 65 and still working, you may not qualify for a fully flexible pension. However, you can start a TTR pension. While a TTR pension has some limits — such as a maximum annual withdrawal of 10% of your starting balance — it can still be a powerful tool.
If you’re looking to supplement your income, reduce tax, or boost your super, a TTR pension could be the solution you need.
Common goals of a TTR pension
Let’s look at three common goals where a TTR pension can make a real difference.
1. Replace income while cutting back on work
Want to work fewer hours but keep the same take-home pay? A TTR pension can help.
As retirement nears, many people begin to reduce their work hours, which usually means reduced income. By drawing on your super through a TTR pension, you can replace lost wages with tax-free pension withdrawals.
Case Study – Theodore
Theodore (63) is a town planner. He decides to cut back his work hours by one day per week, reducing his taxable income by $25,000. To maintain his lifestyle, he draws $17,000 tax-free from his TTR pension.
The result: Less work, lower tax, and the same income — a win all around.
2. Reduce tax and boost your super
A TTR pension can help you free up extra cash for salary sacrificing, allowing you to swap taxable income (which could be taxed at up to 47%) for concessional super contributions taxed at just 15%.
Case Study – Matilda
Matilda (62) is a marine biologist earning $160,000 annually. She starts a TTR pension with $100,000 and withdraws $7,075 tax-free.
To receive the same amount after tax from her salary, she’d need to earn $11,600. Instead, she salary sacrifices that $11,600 into super.
The result: She saves $4,525 in personal income tax. Her super grows by an extra $2,785 (after super tax). That’s a win-win — more super, less tax.
3. Pay Off Your Debt Sooner
Have some unwanted debt? A TTR pension can help you eliminate it sooner, so you can retire with peace of mind.
Case Study – Simon
Simon (60) is a self-employed shopfitter. He has $300,000 in super, a $300,000 mortgage on a holiday home, a 6% interest rate and monthly repayments of $3,300 (loan repaid in 10 years at age 70).
Simon wants to be debt-free by age 65. He starts a TTR pension and withdraws $2,470 per month ($29,640 annually), using this to make additional repayments of $5,800 per month ($69,600 annually).
The result: He pays off the loan in 5 years, saving on interest and retiring debt-free at 65.
Is a TTR pension right for you?
A TTR pension can be a smart strategy to:
- Supplement your income
- Reduce your tax
- Boost your super
- Pay down debt sooner
But it’s not right for everyone. It’s essential to weigh the immediate benefits against the long-term impact on your super balance.
More information
Contact us for TTR pension advice
Before making a move, speak to one of our financial advisers. We can help tailor a plan that suits your personal goals — whether you want to lower your tax, build super, retire sooner, or all of the above.
Based in Noosa, on the Sunshine Coast Queensland, we work with clients throughout Australia.