Thinking about winding down at work but worried about the pay cut? A Transition to Retirement (TTR) superannuation strategy could be the answer. It’s a clever way for Australians to tap into their super before they fully retire, creating an income stream while they're still on the payroll.

Essentially, a TTR acts as a financial bridge. It lets you ease back on your work hours without taking a big hit to your bank account, or you can use it to give your super a serious, tax-savvy boost just before you call it a day.

What Is a Transition to Retirement Strategy?

Senior woman on a bridge, holding a briefcase and money jar, looks towards a city skyline.

Imagine being able to design your own glide path into retirement. That’s what a TTR strategy offers. It allows you to convert a chunk of your superannuation savings into a regular pension, giving you a steady income to supplement your salary.

This isn't about quitting work cold turkey. It's a financial tool built specifically for pre-retirees who want more control and flexibility as they approach their next chapter. This measured, controlled approach is exactly what we champion at Wealth Collective—helping you build a successful financial life on your own terms.

So, how does it work? You simply move a portion of your super from your standard 'accumulation' account into a special 'TTR income stream' account. You can then draw regular payments from this new account, whether you’re working full-time, part-time, or just a few days a week. For a refresher on the basics, have a look at our guide on what is superannuation in Australia.

Here's a quick summary to see how the pieces fit together.

TTR Strategy At a Glance

Component	Description
Purpose	To supplement income or boost super savings in the years leading up to retirement.
Eligibility	You must have reached your preservation age but are still working.
Mechanism	You transfer super from an accumulation account to a TTR income stream account.
Access	You can draw between 4% and 10% of the account balance each financial year.
Primary Goal	Provides financial flexibility to either reduce work hours or increase super contributions.

This strategy offers a powerful way to reshape your final years in the workforce.

Who Is Eligible for a TTR Strategy?

The main rule is simple: you have to have reached your preservation age. This is the specific age set by the government when you can legally access your super. It’s not the same for everyone; it depends on the year you were born.

Here’s the breakdown:

Date of Birth	Preservation Age
Before 1 July 1960	55
1 July 1960 – 30 June 1961	56
1 July 1961 – 30 June 1962	57
1 July 1962 – 30 June 1963	58
1 July 1963 – 30 June 1964	59
From 1 July 1964	60

Crucially, you don't need to be retired. In fact, the TTR strategy is designed exclusively for people who are still part of the workforce.

Why This Strategy Matters Now

For most of us, the last decade before retirement is the home stretch for building wealth. The problem is, there's often a significant gap between what we have saved and what we'll actually need.

The average super balance for an Australian aged 55 is well below the $600,000+ that experts suggest a couple needs for a comfortable retirement at 65. This highlights a critical reality: those final 10 years of compounding growth can completely change your financial outcome if you get it right.

This statistic really hits home for pre-retirees. We see so many people who are surprised to find their super isn’t going to automatically deliver the future they'd hoped for.

A TTR strategy can be one of the most effective ways to close that gap. As official reports from regulators like APRA show, making smart moves with your super in these final years is more important than ever.

At Wealth Collective, our Retirement Roadmap service is designed to tackle these exact situations. We help you figure out if a TTR fits your personal goals and ensure it’s structured to get you the best possible result. To see if this is right for you, book a complimentary initial call with one of our advisers today.

How Does a TTR Strategy Actually Work?

It's one thing to understand the theory of a Transition to Retirement (TTR) strategy, but seeing it in action is where you can really grasp its potential. Think of it as opening up a two-way street for your super once you hit your preservation age. The big idea is to draw an income from your super while you’re still working and contributing to it, creating a powerful loop of cash flow and savings.

The process kicks off when you move a portion of your super from your regular ‘accumulation account’ over to a new ‘TTR income stream account’. You're not actually taking the money out of the super system; you’re just changing its label, which flicks a switch and allows you to start receiving regular payments from it, a bit like a pension.

Of course, there are rules. You can't just drain the account overnight. The government has put clear guardrails in place to ensure the strategy is used for its intended purpose—a gradual transition, not a backdoor to early retirement.

The Annual Withdrawal Rules

To keep everything fair and sustainable, there are strict limits on how much you can pull from your TTR income stream account each financial year. These rules are designed to give you a handy income boost without letting you torpedo your nest egg before you actually retire.

The floor: You must withdraw a minimum of 4% of your TTR account balance each year. This ensures the account is being used as a genuine source of income.
The ceiling: You can take out no more than 10% of your TTR account balance annually. This cap is there to stop you from depleting your retirement savings too quickly.

Your account balance on 1 July each year (or on the day you start the TTR) sets the dollar value for these limits for the rest of that financial year. It's a straightforward and structured system.

The Two Main Ways to Use a TTR Strategy

So, how do people put this to work? While everyone’s situation is unique, most TTR strategies boil down to one of two key approaches, each with a very different goal in mind.

A Transition to Retirement strategy gives you the control to either ease back on work without a financial hit, or to accelerate your savings in the final sprint to retirement. It’s about making your money work smarter during a crucial stage of life.

Let's unpack these two powerful plays.

Strategy 1: Top Up a Reduced Income

This is the classic TTR scenario, perfect for anyone looking to scale back their work hours without tightening their belt.

Imagine you decide to cut back to working three days a week, which naturally means a smaller pay cheque. Instead of compromising your lifestyle, you could start a TTR income stream. The regular payments from your super would top up your reduced salary, effectively replacing that lost income. This allows you to enjoy a better work-life balance right now, instead of waiting until you stop working completely.

Strategy 2: Supercharge Your Super and Slash Your Tax Bill

This is the flip side of the coin, built for those who aren't ready to slow down but want to get the absolute most into their retirement savings.

Think of a professional who plans to work full-time for another five years. By starting a TTR, they can pull off a clever tax-saving move.

Here's the play-by-play:

They start drawing a TTR income stream to supplement their take-home pay.
At the same time, they arrange with their employer to salary sacrifice more of their pre-tax pay directly into their super accumulation account.
The pension payments from the TTR account replace the income they just sacrificed, so their net pay in their bank account feels pretty much the same.

So what’s the point? They're funnelling more money into super from their pre-tax salary, where it’s only taxed at 15%. This is almost always a much better deal than paying tax on that income at their higher personal marginal rate. Over a few years, this tax difference can seriously boost their final retirement balance.

This growing reliance on super is a massive trend. Today, superannuation is the main source of income for 28% of retirees, a huge jump from just 20% a decade ago. As more Australians count on their super balance to fund their future, strategies like the TTR are becoming absolutely essential. You can dig into more of these retirement trends and statistics from the ABS if you're interested.

At Wealth Collective, our Guided Growth service is built to put these exact kinds of strategies into motion. We get to know your specific financial situation to figure out which approach is the right fit for your goals, making sure your TTR plan is structured to deliver the biggest possible benefit.

The Pros and Cons of a TTR Strategy

Every financial strategy comes with a set of trade-offs, and a Transition to Retirement (TTR) plan is no exception. It offers some fantastic advantages for those nearing retirement, but it’s not without potential downsides that you need to weigh up carefully. A smart decision always comes from looking at both sides of the coin.

This balanced view is exactly how we approach things at Wealth Collective. We believe in laying everything out on the table—the good and the bad—so you can feel genuinely confident in the path you choose. Getting your head around these pros and cons is the first step in figuring out if a TTR is the right move for you.

This flowchart gives you a simple visual of how the money moves in a TTR strategy. It flows from your main super fund into a special TTR account, which then pays you a regular income stream.

Flowchart illustrating the TTR (Transition to Retirement) strategy process from Super Fund to TTR Account to Income.

As you can see, the strategy essentially unlocks a portion of your super, turning it into a practical cash flow while you're still working.

To make it even clearer, let's break down the advantages and the potential pitfalls you need to be aware of.

Comparing the Pros and Cons of a TTR Strategy

Advantages	Downsides
Boost your super balance by salary sacrificing more into the low-tax super environment.	Your nest egg could shrink if withdrawals outpace investment returns, especially in a down market.
Enjoy tax-free income from your TTR pension once you turn 60.	Investment earnings within the TTR account are taxed at up to 15%, unlike a full retirement pension.
Reduce your work hours without a big hit to your take-home pay.	Market volatility is a real risk; drawing an income during a downturn can lock in losses.
Potentially lower your overall income tax bill by using a salary sacrifice strategy.	Added complexity and potential costs for setup and ongoing management.

Ultimately, the goal is to make sure the advantages firmly outweigh the downsides for your specific situation. This isn't a one-size-fits-all solution, and that's where careful planning becomes so important.

The Key Advantages of a TTR Strategy

When it’s set up properly, a TTR can give your finances a serious boost in the years leading up to retirement. The benefits really boil down to two key areas: tax efficiency and lifestyle flexibility.

Here's what makes it so appealing:

Significant Tax Savings: This is often the biggest drawcard. By funnelling more of your pre-tax salary into your super (where it’s only taxed at 15%) and then drawing a TTR income to live on, you can slash your personal income tax bill. For higher-income earners, this can make a huge difference.
A Tax-Effective Income Stream: Once you hit 60, the game changes. Any income you draw from your TTR pension is completely tax-free. It’s a powerful way to access your own money without handing more over to the ATO.
The Freedom to Ease into Retirement: Ready to cut back at work but not ready to stop completely? A TTR can be the perfect solution. It allows you to reduce your hours without seeing a massive drop in your bank account, as the TTR income stream tops up your pay packet.
Turbo-Charge Your Super: If you're happy working full-time right up until you retire, a TTR can still be used to accelerate your savings. The tax savings from salary sacrificing mean more of your hard-earned money stays in your super fund, compounding for your future.

The Potential Downsides and Risks

While the benefits are compelling, a TTR strategy isn't a magic wand. It's crucial to go in with your eyes wide open to the risks involved.

A TTR strategy can be a powerful tool, but it's not a set-and-forget solution. Without careful management, you risk eroding the very savings you're trying to grow, especially in a volatile market.

Here are the potential catches to consider:

Risk of Depleting Your Savings: This is the big one. If your investment returns aren't strong enough to cover your income payments, you'll be eating into your capital. Drawing down on your super too quickly can have a serious, long-term impact on what you ultimately retire with.
Investment Earnings are Taxed: This is a key difference between a TTR and a full-blown retirement pension. Inside a TTR account, the investment earnings are still taxed at up to 15%. This can create a slight drag on your growth compared to the tax-free environment of a full retirement pension.
The Impact of Market Volatility: Pulling out money during a share market dip means you are effectively selling your investments when they are down, which crystallises your losses. Your investment strategy needs to be robust enough to handle these bumps in the road while you’re making withdrawals.
Complexity and Costs: A TTR isn't as simple as your standard super account. There can be extra administrative or advice fees involved, and it adds another layer to your finances that needs regular monitoring to make sure it's still working for you.

This is where getting the right advice can make all the difference. Our Retirement Roadmap service at Wealth Collective is specifically designed to weigh these pros and cons in the context of your life. We help you figure out if a TTR aligns with your goals and, if it does, how to structure it to get the most out of it while keeping the risks in check.

To see whether this strategy could work for you, book a complimentary initial call with one of our advisers today.

Real-World Examples of TTR Strategies

Two seniors, a woman and a man, happily saving money in a jar and a piggy bank, symbolizing retirement.

Theory is one thing, but seeing how a transition to retirement superannuation strategy actually works for real people is where it all clicks. The best way to understand its power is to see how it might apply to a situation like your own.

Let's walk through two detailed, hypothetical case studies. These examples are based on the kinds of people we help every day here at Wealth Collective, and they show just how a well-designed TTR plan can tackle very different goals.

Case Study 1: Easing into Retirement

Meet Sarah, a 60-year-old nurse. She still loves her work but is finding five shifts a week more physically demanding. Her goal is simple: cut back to three days a week to spend more time with the grandkids without taking a major hit to her income.

Sarah has a healthy $400,000 in her super fund. After talking through her options, we map out a plan.

Step 1: Sarah kicks off a TTR income stream by moving $300,000 from her super into a TTR pension account.
Step 2: Her reduced hours mean her take-home pay drops by $25,000 a year.
Step 3: To plug that gap, she starts drawing an annual income from her TTR account. Because she's 60, these payments are completely tax-free.
Step 4: She sets her annual withdrawal at $25,000, which is well within the 4% to 10% withdrawal limits, and it perfectly replaces her lost salary.

The result is a perfect fit for Sarah. She gets to keep her lifestyle and net income while gaining two precious days off each week. Her remaining super balance keeps growing, and she’s still getting compulsory super contributions from her employer on her part-time wage. It's a textbook example of using a TTR to bridge the gap to full retirement.

Case Study 2: Supercharging Super Savings

Now, let's look at David, a 58-year-old executive. He has no intention of slowing down and plans to work full-time for at least another seven years. His main focus is to aggressively boost his super balance before he retires to fund a very comfortable future.

David is a high-income earner with $650,000 in super. For him, the strategy is all about tax efficiency.

Step 1: David starts a TTR income stream and begins to draw the maximum 10% of his account balance each year, giving him an income of $65,000.
Step 2: At the same time, he arranges with his employer to salary sacrifice the maximum concessional amount ($27,500 per year) from his pre-tax income straight into his super fund.
Step 3: The TTR income he draws from his super effectively replaces the cash flow he’s giving up through salary sacrificing, keeping his net income stable.

The benefit here is purely tax-driven. The money David salary sacrifices is taxed at just 15% inside super, a huge saving compared to his marginal tax rate of 47% (including the Medicare levy). This single move saves him thousands in tax every year, and those savings stay invested in his super to compound and grow. David isn't using the transition to retirement rules to slow down—he's using them to accelerate his wealth creation.

These stories show that a TTR strategy is not a one-size-fits-all product. It's a flexible tool that must be carefully shaped to fit your unique financial circumstances and life goals, which is the foundation of our Retirement Roadmap service at Wealth Collective.

Getting this right is becoming more important as Australians take greater control of their retirement. Recent research shows a welcome jump in optimism, with confidence in retiring on time rising from 23% to 32% in just two years. Despite this, 65% of people still worry about whether they have saved enough. With total super assets now at a staggering $4.3 trillion and 2.5 million Australians set to retire in the next decade, making smart moves in this pre-retirement phase is absolutely critical. You can explore more of these findings on Australian retirement confidence from this SSGA report.

Whether you’re a ‘Sarah’ or a ‘David’, the key is to build a plan that truly works for you. To see how a TTR strategy could be designed for your specific situation, book a complimentary initial call with our team.

Is a TTR Strategy Right for You?

A Transition to Retirement strategy can be a fantastic tool, like a custom-built bridge between your full-time working life and the retirement you've been looking forward to. But it's certainly not a one-size-fits-all solution, so taking an honest look at your circumstances is the first critical step.

Start by asking yourself a few straightforward questions. Have you hit your preservation age? Do you actually need to top up your income, and is your super balance healthy enough to support it? It's also worth thinking about your comfort level with market volatility.

Preservation Age: First things first, you must have reached the age the government allows for accessing your super.
Income Needs: Work out exactly how much extra cash you need to bridge the gap each year.
Super Balance: Is there enough in your super account to make withdrawals sustainable without running the well dry?
Risk Tolerance: How would you feel if the market took a dive? Be honest about your reaction to potential short-term losses.

Who Should Consider a TTR?

A TTR strategy is often a perfect fit for pre-retirees who want to wind back their work hours without a painful cut to their take-home pay. It can also be a savvy move for high-income earners looking to maximise their super contributions through salary sacrificing, unlocking significant tax savings along the way.

However, this approach isn't for everyone. If you have a low super balance, you risk eroding your retirement nest egg far too quickly. Likewise, if you're very close to full retirement, you’ll want to tread carefully.

When to Be Cautious

Generally, if your super balance is under $100,000, starting a TTR income stream may not be worthwhile. The combination of account fees and the minimum required withdrawals can quickly erode a smaller balance, leaving you with less to live on later.

"A Transition to Retirement stream can be a brilliant way to support a more flexible work life, but it has to be built on a solid foundation of savings that can withstand market swings." – Wealth Collective Adviser

Additionally, if you plan to stop working completely in the near future, you might be better off looking straight at a standard retirement phase pension. When you're dealing with a low balance or a short timeframe, simpler strategies are often the most effective.

You can learn more about what you might be entitled to with our Age Pension calculator: Check out our age pension eligibility calculator.

Get Professional Guidance

Figuring out if a TTR strategy truly fits into your financial roadmap can get complicated. With over 50+ years of combined experience, the team at Wealth Collective can help you cut through the noise. We take the time to weigh up your personal goals, your investment profile, and your tax situation before recommending whether a TTR or another strategy is right for you.

If you're feeling unsure, the best next step is to book a complimentary introductory call with us. It’s a chance to chat about how a TTR might fit into your broader Retirement Roadmap and get clear answers to your questions.

Step 1: Schedule your free 10-minute call.
Step 2: We’ll talk about your preservation age and what you want to achieve.
Step 3: You'll walk away with clarity on potential strategies.

By taking this practical approach, you can decide with real confidence whether a transition to retirement superannuation strategy makes sense for your situation. Book your initial call now, and let us help you weigh the pros and cons before you make any big decisions.

How to Start Your Transition to Retirement Plan

Smiling man and older woman collaborating on a laptop, with watercolor splashes.

Understanding the theory behind a transition to retirement strategy is one thing, but putting it into practice is another. It’s easy to feel overwhelmed by the rules and options. This is where getting the right advice can make a world of difference.

You don’t have to figure this out alone. At Wealth Collective, our advisers specialise in helping people just like you build, protect, and enjoy the wealth they’ve worked so hard for.

The Wealth Collective Process

We've found the best way forward is to keep things simple. Our process is designed to give you clarity and confidence, starting with a friendly, no-obligation chat.

Free 10-Minute Introductory Call: This is a quick, relaxed chat to see if we’re a good fit. We’ll talk about where you are now and what you’re hoping to achieve. No pressure, no jargon.
Discovery Session: If you feel comfortable moving forward, this is where we get into the details. We'll listen to your goals, lifestyle aspirations, and any worries you might have about retirement. It’s all about understanding what matters to you.
Tailored Financial Plan: Using everything we've learned, we’ll build a personalised plan. This might be our Guided Growth service if you're still focused on building wealth, or a detailed Retirement Roadmap to guide you through your next chapter.

The most effective financial plans aren't just about numbers; they're about people. A successful transition to retirement superannuation strategy is one that aligns perfectly with your personal vision for the future, giving you both financial security and peace of mind.

Getting your superannuation structure right is a huge piece of the puzzle. If you want to dig a bit deeper, have a look at our guide on the best superannuation funds in Australia.

Let us help you make sense of it all. The retirement you’ve been dreaming of is within reach, and we have the experience to help you get there.

Your TTR Questions, Answered

As you start thinking about a transition to retirement superannuation strategy, you're bound to have a few questions. It's a smart financial move, but the details matter. Let's walk through some of the most common queries we get from our clients.

Think of this as a quick chat to clear up the finer points and help you see how a TTR could fit into your life.

What Happens to My TTR When I Actually Retire?

This is a great question. Once you officially hang up your boots for good (by meeting a condition of release, like retiring after age 60 or simply turning 65), your TTR doesn't just disappear. It smoothly converts into a standard retirement phase pension.

The biggest perk? Investment earnings inside this new pension account become completely tax-free. That 10% annual withdrawal cap also vanishes, giving you total freedom over how much income you take. It's a simple switch, but you do need to let your super fund know you've retired so they can make the change and unlock these fantastic tax benefits for you.

Can I Keep Putting Money Into Super While Running a TTR?

Yes, absolutely. In fact, this is where a TTR strategy really shines and becomes a powerful tool for growing your nest egg.

Even while you're drawing a pension from your TTR, your employer's contributions will keep rolling in. More importantly, you can continue making your own contributions, including using salary sacrifice. This lets you channel pre-tax income straight into your super, which can lower your taxable income and top up the very super balance you're drawing from. It’s a brilliant loop.

A TTR isn’t just about accessing an income stream. It’s about creating a dynamic financial cycle where you strategically contribute and withdraw funds to build your retirement savings and cut your tax bill at the same time.

How Much Super Do I Need to Start a TTR?

While there's no official legal minimum, your starting balance needs to be big enough to make the whole exercise worthwhile. This is a practical consideration, not a legal one.

If your super balance is too low, the pension payments you draw might drain your savings faster than your investments can grow, putting your long-term retirement security at risk. This is the exact opposite of what we're trying to achieve. A Wealth Collective adviser can run the numbers based on your specific situation—your balance, income needs, and goals—to see if a TTR is the right move for you right now, or if another strategy might be better suited to get you there first.

Figuring out the ins and outs of a transition to retirement superannuation strategy is a crucial step in building the future you want. The choices you make in the years leading up to retirement can make all the difference. At Wealth Collective, our advisers are here to offer clear, personalised guidance to help you make those decisions confidently.

Ready to see what's possible? Book your complimentary 10-minute introductory call today, and let's start planning your successful financial life together.

A Guide to Transition to Retirement Superannuation