Transition to Retirement

Work and dollars

Transition to retirement is really a double-pronged process.
As we have explained on our “Timing your retirement” page, there are many emotional issues associated with a major life stage such as retirment. It’s not a simple as flicking a switch and getting on with an entirely new life. It does require some planning and this is best done in conjunction with your nearest and dearest. Often someone who has married you for life – but not lunch.

The other part of transitioning is the financial aspect which allows you early access to super savings. This is explained in more detail below.

Transition to retirement

Transition to retirement is also a specific financial option to start to access your superannuation savings BEFORE you reach the official retirement age.

Want to reduce your working hours but not your income?
Those who have reached a certain age (called preservation age) can do this, topping up part-time income with income from superannuation.
It’s called transition to retirement (TTR). But how does it work?

The following text is a brief summary of information provided by the Australian Government on the Australian Tax Office website.
Under the transition to retirement rules, if you have reached your preservation age, you may be able to reduce your working hours without reducing your income. You can do this by topping up your part-time income with a regular ‘income stream’ from your super savings.
Until recently, you could only access your super once you turned 65 or retired. This meant it was difficult to reduce your work hours and still maintain your standard of living. With the new rules, you can withdraw some, or all, of your super over into a retirement income stream. Then you can top up your reduced income by drawing on your super.
However, you need to be aware of the impact this can have on you and your circumstances. Some parts of TTP are complex (to understand), set up and maintain. We recommend you see a financial adviser, accountant or your tax agent to help you decide if this option is right for you.
Under the transition to retirement rules you can only access your super benefits as a ‘non-commutable’ income stream. This generally means you cannot take your benefits as a lump-sum cash payment while you are still working. You must take your super benefits as regular payments.

Not every fund offers a non-commutable income stream which lets you take up the transition to retirement option (it’s not compulsory), so you may need to consider moving your savings to a new super fund.