17 July 2024
As you plan for your retirement, it’s a good idea to understand how different income stream accounts could help you achieve the retirement lifestyle you desire. While you keep working towards your retirement, a transition to retirement (TTR) strategy may help you to reduce your work hours or grow your super balance.
What’s a TTR strategy and the benefits
A TTR strategy lets you access some of your super while you keep working towards your retirement1. This means you could:
- work less and top up your income with your super savings, or
- add more of your salary to your super to potentially save more and pay less tax.
You’ll need to open a TTR Income account alongside your regular super account. To do this, you’ll need to still be working and between the ages of 60 and 64.
How a TTR Income account can help you work less or save more
Work less:
- Transfer some of your super to your TTR Income account. If you want to work less, you can top up your take-home payments with super from your TTR Income account.
Save more:
- Add more to your super through salary sacrifice contributions.
- This could help you pay less tax while boosting your super.
When receiving income payments from your TTR Income account to top up your salary, there can be some additional tax benefits too:
- After age 60, you won’t pay tax on TTR income payments.
Use super to cut down your hours but not your pay
A sudden shift to retirement may not be right for everyone. A TTR Income account can help you gradually reduce the amount you work, without reducing your take-home pay. This allows you to maintain a similar income while you ease out of the workforce.
Save more on tax and grow your super
Using a TTR Income account to top up your salary can offer tax benefits once you turn 60.
If you’re aged 60 or over and still working, you can use a TTR Income account to grow your super while potentially saving on tax. You can do this by paying more of your salary directly into your super account (also known as salary sacrifice) on top of your employer contributions, where it’s generally taxed at a lower rate.2
You can use money from your TTR Income to offset the amount you have salary sacrificed. This helps keep your take-home pay similar to what you’re used to while boosting your super.
TTR Income account eligibility requirements
- To open a TTR Income account, you need to move a minimum of $25,000 from your super account into the TTR Income account, while a remaining amount ($6,000 or more) needs to stay in your super account.
- If you want to keep your insurance cover, your remaining super account balance needs to be enough to cover the cost of insurance.
- Consider combining any super you have with other funds into your AustralianSuper super account before setting up a TTR Income account.3
- Contribution limits may apply, so check with your employer that salary sacrificing into super won’t affect your employee entitlements.
Make sure a TTR Income account is right for you
A TTR strategy can help you make the transition into retirement. But it can be complex and isn’t suited to everyone, so it’s important to get advice to see if this strategy is right for you.
As a member, you can access general information or simple, personal advice on TTR by calling us on 1300 300 273. For more comprehensive personal advice, a financial adviser can help make sure it’s the right solution for you.4
References:
- Government prescribed minimums and maximums apply. For details view the TTR Income Product Disclosure Statement at https://www.australiansuper.com/retirement/our-ttr-income-account
- Salary sacrifice may affect some Government benefits and employee benefits. Consider getting financial advice before deciding if a salary sacrifice arrangement is right for you. Before adding to your super, consider your financial circumstances, contribution caps that may apply, and tax issues.
- Before making a decision to combine your super, consider any fees and charges that may apply, and the effect a transfer may have on benefits in your other fund such as such as insurance cover. We recommend you consider seeking financial advice.
- Personal financial product advice is provided under the Australian Financial Services Licence held by a third party and not by AustralianSuper Pty Ltd. Fees may apply.
This may include general financial advice which doesn’t take into account your personal objectives, financial situation or needs. Before making a decision consider if the information is right for you and read the relevant Product Disclosure Statement, available at australiansuper.com/PDS or by calling 1300 300 273. A Target Market Determination (TMD) is a document that outlines the target market a product has been designed for. Find the TMDs at australiansuper.com/TMD.