Transition To Retirement Calculator – TTR Explained

Easing gradually out of full-time work is often a good way to start preparing for your retirement years. The good news is, that with the Government’s transition to retirement provisions, you can reduce your work hours as you get closer to retirement age, without reducing your income.

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What is a TTR strategy?

A transition to retirement strategy allows you to start accessing your super as an income stream to make up the difference between your former full-time wage and your new wage as a part time employee.

It means you can work less but enjoy the same standard of living you had when you were working full time.

You can even continue adding to your super by salary sacrificing – which often brings added tax benefits as well.

How transition to retirement works

You roll your superannuation savings into what is called a retirement income stream, while salary sacrificing a portion of your employment income into your super.

You can then draw a transition to retirement income stream from your super savings to make up the difference. In effect, you receive an income from your employer and another income from your super fund.

In fact, the transition to retirement rules actually allow you to continue working full-time and, by salary sacrificing, access your TTR income stream and take advantage of the greater tax benefits.

Salary sacrifice contributions are taxed at 15% instead of your income tax rate. For many people this is a worthwhile retirement strategy, but there are limits to how much of your super you can access, and of course, the earlier you access your super, the less you may have in the long run.

Jeff's transition to retirement

The scenario

Jeff is 60 and works at a local hardware store. He’s been with the company for over 30 years and is valued for his experience. While he’d like to retire in a few years, he isn’t ready to stop working completely.

Jeff earns $75,000 a year and has built up a solid super balance. He isn’t yet eligible for the Age Pension.

The strategy

After speaking with a financial planner, Jeff decides to use a transition to retirement (TTR) strategy. This allows him to:

Keep working while accessing some of his super
Gradually reduce his working hours
Maintain a consistent income as he transitions to retirement

How it works

Year 1: Keep working full-time

Jeff salary sacrifices 10% of his income ($7,500) into super
This reduces his taxable income
He draws $5,100 from his super as a TTR income stream to top up his take-home pay

Year 2: Reduce working hours

Jeff cuts back to three days per week, earning $45,000
He stops salary sacrificing
He increases his TTR payments so his after-tax income stays steady

The outcome

Jeff eases into retirement rather than stopping work suddenly
His income remains stable even as he works fewer hours
He makes the most of his super while still contributing to it early on

Key takeaway

A transition to retirement strategy can help you reduce your working hours without a sudden drop in income, while still building towards full retirement.

Important to know

You generally need to be at least age 60 (your preservation age) to start a TTR strategy
Super income from a TTR pension may be tax-free depending on your age and circumstances
The Age Pension is usually available from age 67

Jeff is not an actual member. His story has been created for illustrative purposes.

See how TTR could work for you
Try our Transition to Retirement calculator

Limits

Minimum/maximum limits

If you are under 65 the minimum TTR income stream is generally set at 4% and the maximum is 10%.

Lump sum withdrawals

In general, you can only take your super savings as a lump sum when you have left the workforce completely. Therefore, you are not able to take a lump sum super payout while you are transitioning to retirement.

Contributions caps

Tax benefits will only apply to contributions within the contributions cap.

Transition to retirement (TTR)

TTR explained