TTR is a retirement strategy that can be used in different ways as you gradually move into retirement. You can use it to top up your income as you ease back on the hours you work. You can also use it to give your super a boost before you retire. The TTR calculator covers all of this.
The TTR calculator
When transitioning to retirement, it is possible to reduce the hours you work without reducing your income, by tapping into part of your super. The calculator below is a useful and straightforward tool to help you work out how you could transition to retirement by looking at your current and future retirement goals.
It’s also a good idea to do a quick review every year in case your goals have changed.
Your Industry SuperFund can help you set up a TTR strategy for when you have reached the age at which you can access your super.
To work out how much you will need in retirement, use the retirement calculator.
The purpose of this calculator is to provide you with an initial indication of what you might be able to achieve using a few basic strategies. Transition to Retirement plans can be complex. We recommend you speak to your Industry SuperFund before making a decision.
Transition to Retirement Calculator
How we came up with the numbers
Here’s how we worked out the initial numbers you saw when you reached this screen
Because you're 57, you can contribute up to $27,500 to your super before tax each year via salary sacrifice. It is called a concessional contribution, because you're getting a tax concession. These contributions are taxed at a flat rate of 15%, instead of your usual income and Medicare tax rate of 50%.
Your concessional contributions are made up of all your employer contributions, including Super Guarantee contributions which is usually an additional 10.5% of your salary. Based on the information you provided it looks like your employer is already paying $6,350, so you have an extra $28,650 you can contribute before reaching the limit.
Because you've turned 57, you are also eligible to withdraw from your superannuation account.
So... by salary sacrificing $28,650 and withdrawing only $20,000 each year, your take home pay doesn't really change, and you will have $5,730 high in your super account at retirement.
That sounds a lot like free money doesn't it? Well essentially it is, because this is a benefit from the Australian Government to assist people approaching their retirement age to prepare for retirement. That's why we call it "transition to retirement".
As your situation changes each year, you need to revisit your TTR settings regularly, and you'll need a financial planner to help you set this up. Speak to your Industry SuperFund about getting financial advice to get you started with TTR.
For transition to retirement to work for you, you would need a higher starting income. This is because your current income tax rate is below or equal to the Transition to Retirement contribution rate.
You could take a look at making after tax contribution to your super instead.
The "Transition to Retirement" outcome uses an actuary projection and the following assumptions, some of which you can change:
The outcome relies on the following fixed assumptions and settings which cannot be changed:
- Superannuation Guarantee Contribution is currently 10.5% of ordinary time earnings and then increases to 12% as per current legislation
- In estimating your retirement balance, we have adjusted for an assumed annual inflation rate of 2%. In addition, a further annual increase of 1% is included to take into account the cost of meeting increases in community living standards. This means a total assumed inflation rate of 3% is allowed for between now and your retirement. You can adjust that rate.
- The LISTO applies from 1 July 2017
- Contribution tax of 15% is assumed
- No tax is payable on fees
- No contribution fee payable
- The user is assumed to be in an accumulation fund, not a defined benefit fund
- The user is assumed to be an Australian resident
- Regular Medicare levy is used with no reduction or surcharge
- The maximum super contribution base of $60,220 per quarter is applied. This is the sum, set by the Federal Government each year, which is the maximum income on which employers must pay the Super Guarantee. In 2022/23 it is $60,220 per quarter ($240,880 per year).
- It is assumed the user will not take a break from the workforce
- The estimates are displayed in "today's dollars"
This calculator generates information illustrating the impact of making salary sacrifice contributions and effecting a Transition to Retirement Income Stream, based on certain assumptions. Some factors that may affect your retirement outcomes may not have been taken into account.
The tool is not intended to be relied upon for the purposes of making a financial decision. Consider a fund’s PDS and your objectives, financial situation and needs, which are not accounted for in this information before making an investment decision. You are responsible for your own investment decisions and should obtain individual tailored financial advice whenever necessary.
The assumptions used in this calculator are, in our opinion, reasonable for the purposes of working out the estimates. The assumptions are based on objective evidence on long-term net returns, fees, relevant economic forecasts and analysis on wages, prices and productivity.
With the exception of fixed statutory assumptions, you can alter default assumptions to the extent that they can be reasonably expected to change. It should be noted that any change to the assumptions will apply for the whole of the calculation period. Any changes made to the default assumptions is likely to impact the final results. Over time small changes can have a significant impact on final results.
While we have made every effort to ensure these assumptions are reasonable, you should review them to match their own expectations/circumstances and not take them as the most appropriate assumption in all cases.