Your superannuation Transition to Retirement strategy: How to work less, earn smart, and retire your way

“Retirement is not the end of the road. It is the beginning of the open highway.” — Unknown

Many Australians in their late 50s and early 60s dream of freeing up time — more mornings with coffee, more time with family, and fewer emails — while still wanting to maintain financial stability. That’s where the Transition to Retirement (TTR) strategy comes in: a flexible way to start enjoying more of life now, while still working and allowing your super to continue growing.

What is a Transition to Retirement pension or income stream?

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A Transition to Retirement (TTR) strategy lets you access some of your superannuation while you’re still working, once you’ve reached age 60 — the current preservation age for all Australians.

In simple terms:

• Transfer part of your super into a Transition to Retirement income stream (pension)

• Continue working and contributing to super (12%)

• Draw income from super to top up your pay or reduce your hours.

Why people use Transition to Retirement (TTR) strategies

Goal	How Transition to Retirement helps
Work less, maintain income	Replace lost income from reduced hours with TTR pension payments.
Grow your super and save tax	Continue contributing while drawing from your super
Tax-free income (age 60+)	Pension payments from your TTR are tax-free
Smooth lifestyle transition	Move gradually toward retirement instead of stopping abruptly

Linda’s story: Transition to Retirement in action

Linda, aged 60, has been a dedicated teacher for more than three decades. She has accumulated approximately $520,000 in super savings, the result of consistent contributions and careful saving over the years.

While she isn’t ready to stop working altogether, the long hours and constant workload have started to take their toll. She dreams of cutting back to three days a week but worries about whether she can afford to — and how doing so might affect her super balance and tax position.

After discussing her options, we designed a Transition to Retirement (TTR) strategy that allowed Linda to move part of her super into a Transition to Retirement (TTR) income stream while continuing to receive employer contributions (12%) and make small salary-sacrifice top-ups.

Here’s what her numbers looked like before and after her TTR strategy:

Scenario	Annual Income	Super Contribution	Tax Payable	Take-Home Pay	Work Hours
Before	$90,000 salary	Employer 12% ($10,800)	~$20,000	~$70,000	5 days/week
After TTR	$55,000 salary + $25,000 pension	Employer 12% + $10,000 salary sacrifice	~$13,000	~$67,000	3 days/week

Under her TTR setup:

• She transferred $250,000 from her super fund into a TTR pension.

• Her minimum pension payment is 4% ($10,000 per year), and the maximum she can draw is 10% ($25,000 per year).

• Because she’s over 60, her TTR income payments are income tax free.

By adopting a TTR strategy, Linda reduced her hours by 40%, lowered her tax bill by around $7,000, and maintained almost the same level of take-home pay. She now spends her extra days enjoying family time, volunteering, and focusing on her health — all while continuing to grow her super through ongoing contributions.

“Money can’t buy happiness, but it can buy time — and that’s kind of the same thing.”

How Linda is better off with a TTR

• More time and flexibility — She now works three days instead of five, without compromising her income.

• Lower tax and better cash flow — Her TTR payments are tax-free, which saves thousands each year.

• A stronger long-term position — Employer and salary-sacrifice contributions continue to boost her super and retirement savings.

• Better lifestyle balance — She’s achieved greater wellbeing without sacrificing financial security.

In short, the TTR strategy has enabled Linda to enjoy the best of both worlds: the freedom to live more in the present, and the confidence that her financial future remains secure.

Quick rules summary: How transition to retirement works

Rule	Key point	Why it matters
Eligibility age	You must be 60 or older to start TTR income stream payments.	This is the preservation age for all Australians from 1 July 2025.
Still working	You can keep working while drawing TTR income.	It’s designed to ease into retirement, not replace work entirely.
Pension income limits	You can withdraw 4%–10% of your TTR balance per year.	Prevents drawing down too quickly before full retirement.
Tax treatment	For those aged 60+, TTR pension payments are tax-free.	Improves cash flow and reduces your tax bill.
Super contributions	Employer (12%) and salary-sacrifice contributions can continue.	Keeps your super growing while you draw income.
Investment earnings	Earnings on a TTR pension are taxed at 15%.	Important for long-term strategy design.

Ready to plan your transition?

If you’re considering how to reduce your work hours, improve your cash flow, or make the most of your super, a TTR strategy could be the bridge between work and retirement.

We help Australians design financial plans that align with their lifestyle and goals — whether that means more time, more travel, or simply more freedom.

Article by Vikas Modgil – Senior Financial Adviser

Disclaimer:

The information within, including tax, does not consider your personal circumstances and is general advice only. It has been prepared without taking into account any of your individual objectives, financial solutions or needs. Before acting on this information, you should consider its appropriateness regarding your objectives, financial situation and needs. You should read the relevant Product Disclosure Statements and seek personal advice from a qualified financial adviser. The views expressed in this publication are solely those of the author; they are not reflective or indicative of the licensee’s position and are not to be attributed to the licensee. They cannot be reproduced in any form without the author’s express written consent. Elliot Watson Financial Planning Pty Ltd and its advisers are Authorised Representatives of RI Advice Group Pty Ltd, ABN 23 001 774 125 AFSL 238429.