Back to Retirement

See how a Transition to Retirement account can work for you

Back to Retirement

Want more out of life? You could boost your super or reduce your work hours without affecting your take home pay.

1. Use it to boost your super

If you’re at preservation age (see below) or over and still working, a Rest Pension Transition to Retirement (TTR) account may be one way to boost your super while maintaining similar take home pay. With a TTR account you could:

 

· Pay less tax on your super contributions - Employer contributions and salary sacrifice contributions are generally taxed at a rate of 15%, which may be lower than the tax rate applied to your personal income.

· Pay less tax on your income - If you’re 60 or over, your pension payments will be tax free.

2. Reduce work hours and maintain income using a TTR account

A TTR account can be used to supplement your salary income if you reduce your work hours. This can also be set up so that you have the same take home pay as you did before you reduced your work hours.
Advice

Need Advice?

Rest Advice is here to help you make the most of your retirement. Find out if a TTR account is right for you. Call us on 1300 183 361.

Find out more

View the case studies below to see how a TTR strategy can be used to:

Boost your super

Case Study 1: Jerry increases his super savings with a TTR

Jerry (age 60) has $175,000 in super and is looking to boost his super before retirement at age 65.

Jerry would like to maintain his existing net income so he can enjoy the same lifestyle and pay his bills. Jerry arranges through his employer to salary sacrifice $20,405 per annum into his super, and starts a Rest Pension TTR account using $170,000 of his super, drawing $13,600 from his Rest TTR Pension account per annum.

How Jerry’s cashflow might look

  Existing With a Rest Pension TTR account
Salary $60,000 $60,000
Less Salary Sacrifice - $20,405
TTR Income - $13,600
Taxable Income $60,000 $39,595
Tax $9,967 $4,065
Medicare Levy $1,200 $792
Tax Offsets* $100 $595
Total Tax $11,067 $4,262
Net income Received $48,933 $48,933
* Low Income Tax Offset (LITO)

 

How Jerry’s super might look after one year

  Existing With a Rest Pension TTR account
Super    
Super starting balance $175,000 $5,000
Super Guarantee $6,600 $6,600
Salary Sacrifice - $20,405
Earnings $8,525 $741
Less Contributions and Earnings tax $1,672 $4,110
TTR    
TTR Start Balance - $170,000
Income Draw Down - $13,600
Earnings from TTR (net of tax) - $7,237
Total End Balance (Super + TTR) $188,453 $192,273

Jerry reduces his annual personal tax bill by $6,805 and increases his total superannuation (including accumulation and TTR) by $3,820 after one year.

Case Study Assumptions:
  • Inflation or CPI (Consumer Price Index) - 2%
  • Salary is indexed to AWOTE (Average weekly ordinary time earnings) - 3.2%
  • Super Guarantee contributions - 11%
  • Tax rates (2023-24) are not indexed
  • Assumed net return for super and TTR accounts - 4.81%, Tax on earnings - 8%
  • Fees are not taken into account in this case study.
*All case studies are illustrative only and are not an estimate of amounts you'll receive or fees and costs you'll incur. The information contained in the case studies is current as at 1 August 2023.
Reduce your work hours whilst maintaining income

Case study 2: Elaine cuts work hours and maintains her income with a TTR

Elaine (age 60) works full time, and is looking to cut down her work hours to four days a week. She would like to consider starting a Rest Pension TTR account to maintain her existing salary. Her current super balance is $160,000.
 
Proposed Financial Position (2023-24)
 
  Option 1 - Current situation Option 2 - Cut back hours to four days Option 3 - Cut back hours to four days and start Rest Pension TTR account with $150,000
Salary $50,000 $40,000 $40,000
TTR payment - - $6,900
Total Income $50,000 $40,000 $46,900
Taxable Income $50,000 $40,000 $40,000
Less Tax (total tax liability)* $7,467 $4,367 $4,367
Net Income $42,533 $35,633 $42,533
Super & TTR Balance after 5 years $227,643 $221,835 $183,392
​* Income tax plus Medicare levy, less Low Income Tax Offset (LITO)

Under option 3, Elaine can maintain her current net income, however she may need to think about how a TTR strategy will impact her super savings at retirement.
 
Case Study Assumptions:
  • Inflation or CPI (Consumer Price Index) - 2%
  • Salary is indexed to AWOTE (Average weekly ordinary time earnings) - 3.2%
  • Super Guarantee contributions - 11% (2023-24), includes legislated increases to SG
  • Tax rates (2023-24) are not indexed
  • Assumed net return for super and TTR accounts - 4.81%, Tax on earnings - 8%
  • Fees are not taken into account in this case study.
*All case studies are illustrative only and are not an estimate of amounts you'll receive or fees and costs you'll incur. The information contained in the case studies is current as at 1 August 2023
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See how a Transition to Retirement strategy can help you make the most of your super in the lead up to retirement.

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Who does a Transition to Retirement strategy generally suit?

A Rest Pension TTR account may be suitable if you have reached your preservation age and you:

 Are still in the workforce
 Have existing super benefits
 Want to boost your super by making additional contributions
 Are transitioning to retirement.

 

Your preservation age is the age in which you may access your super, and depends on the year you were born.

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  

For more information about TTR accounts, please see our Super facts & figures

What are the key things to know?

Contributions 2

Taking out super

You can only withdraw your super from a TTR account as income payments.

Pig

Payment limits

You can receive between a minimum of 4% and a maximum of 10% pa of your TTR account balance (2023-24 financial year).

Income protection

Keep your account open

Still working and want to remain insured? Keep your super account open to continue to make and receive contributions to super and maintain your insurance cover.

Cap new

Contribution caps

If you have a TTR account and decide to make salary sacrifice contributions to your super account, be mindful of contribution caps. For further information on contribution caps, please see our Super facts & figures.