A smart transition to retirement
Retirement doesn’t have to be one big switch. A transition to retirement strategy can help you cut back, boost your super and plan your future life.
A little about Joel
Joel is the Director, Retirement Solutions at Russell Investments. A Fellow of the Institute of Actuaries, he helps members and clients navigate complex challenges and has worn many hats across the superannuation and consulting businesses. Joel currently leads a program of work aimed at making continuous improvements to Russell Investments’ offer for members approaching, at, or in retirement.
Organising your finances, including your superannuation, is a big part of retirement planning but there are other practical steps you can take to smooth your shift into life after work.
For instance, you might want to ease into retirement by reducing your work hours. Or you might consider upgrading your car or making home improvements to avoid big expenses when you no longer have employment income to rely on.
You may be surprised to learn that if you’re over 60, you may be able to tap into your superannuation to help make these adjustments even as you continue to work.
How (and why) to tap into super before retirement
Super is generally available to you any time after you’ve reached what is known as your preservation age, which is 60 years. To use your super while still working, you’ll need to start a special superannuation pension called a Transition to Retirement (TTR) strategy.
Using a TTR strategy, you must withdraw between 4 and 10 per cent of your account balance each year. You must take these amounts as regular payments—not a lump sum—although you can choose how often you receive the payments (from fortnightly to annually).
Payments you receive from a TTR product are generally tax free—unlike employment income which is taxed at your marginal tax rate.
The idea behind the TTR strategy is that they allow super fund members to cut back on working hours and replace the salary they’re giving up by working less with an income stream drawn from their TTR account. But there’s no hard and fast rule that says you need to work less to use a TTR product.
A different transition to retirement
We spoke to one fund member, Peter Russell, who is using a TTR strategy to draw from his account. After almost 40 years working in the sugar milling industry, Peter isn’t ready to cut his work hours just yet.
“Some people take days off—Mondays or Fridays—as they get close to retiring, but I want to have enough money just to do a few things around the house before I get towards retirement age, cover a few of those bases,” he says.
Peter started to hear through media reports and from friends about the TTR strategy and contacted us to learn more.
Steps to success
Our Member Service Team gave him general information and put him in touch with Link Advice, which works alongside us to provide personal advice to super fund members, tailored to their individual circumstances.
“Once I contacted Link Advice1, I was set up with a consultant who had a portfolio of questions: What did you expect out of the transition to retirement? How many years did you want to transition into retirement after you turned 60? What sort of lifestyle did you want to live in retirement?” Peter says.
Through the discussion, the consultant outlined Peter’s options, following up after the meeting with an email documenting the alternatives and considerations.
About two weeks later, after Peter had had time to digest the information and make some decisions, Peter met with the consultant again to go through the steps involved in setting up a TTR arrangement via the iQ Retirement product.
Peter decided to use part of his super to start the TTR arrangement, while releasing enough extra cash to make the home improvements he had in mind.
Now his home improvements are complete, Peter is focused on building up his super balance as much as he can ahead of retirement—and he’s using the TTR strategy to help.
By salary sacrificing as much as he can into his fund and drawing a fixed amount out through the TTR strategy, Peter is building up his super balance and gaining the tax advantages of saving through super.
A super balance turbo charge
While you’re working, your employer must make compulsory contributions into your super account. These are set at 12 per cent of your employment income including ordinary pay, shift and casual loadings and various allowances such as overtime payments. Your employer needs to make these payments even if you have a TTR strategy.
You can also add money into your fund through tax deductible contributions such as salary sacrifice, although there are limits to how much you can contribute to super each year. For the 2025-26 financial year, the limit is $30,000 comprising your employer’s contribution plus any other tax-deductible amounts you add. What’s more you may be able to carry forward unused concessional (before-tax) caps from the past five years to increase your limit. This applies if your total super balance was under $500,000 at 30 June of the previous financial year.
Tax deductible contributions to super enjoy a 15 per cent tax rate, which allows you to invest 85 cents in every dollar you contribute.
Investment earnings in super also enjoy a concessional tax rate of 15 per cent, allowing you to retain a large proportion of the money your super investments earn. The more investment earnings you retain, the greater the opportunity these amounts have to compound investment returns—where the earnings on your super generates more earnings, and so on.
In the lead up to retirement, a TTR strategy offers a unique way of accessing your superannuation while you continue to work. It can allow you to boost your super by contributing more of your taxable income from employment and, if you need it, swapping all or part of this income with tax-free super from a super pension.
Whether this strategy suits you will depend on your personal circumstances, such as your income level and age. For more information, read our fact sheet Ease yourself into retirement and our fact sheet on making a salary sacrifice contribution and what this involves.
1 Link Advice is now known as Retire 360.
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Issued by Total Risk Management Pty Limited ABN 62 008 644 353, AFSL 238790 (TRM) as trustee of Russell Investments Master Trust ABN 89 384 753 567. Nationwide Super and Resource Super are Divisions of the Russell Investments Master Trust. The Product Disclosure Statement (‘PDS’), the Target Market Determinations and the Financial Services Guide can be obtained by phoning 1800 555 667 or by visiting russellinvestments.com.au, or for Nationwide Super by phoning 1800 025 241 or visiting nationwidesuper.com.au, or for Resource Super by phoning 1800 824 227 or by visiting resourcesuper.com.au. Any potential investor should consider the latest PDS in deciding whether to acquire, or to continue to hold, an investment in any Russell Investments product. Russell Investments Financial Solutions Pty Ltd ABN 84 010 799 041, AFSL 229850 (RIFS) is the provider of MyTracker and the financial product advice provided by GoalTracker Plus. General financial product advice is provided by RIFS or MUFG Retire360 Pty Limited (Retire360) ABN 36 105 811 836, AFSL 258145. Limited personal financial product advice is provided by Retire360 with the exception of GoalTracker Plus advice, which is provided by RIFS. Russell Investments Employee Benefits Pty Ltd (70 099 865 013) (RIEB) is the provider of the Super Tracker Mobile App.
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