Transition to Retirement (TTR) Calculator
Ease into retirement while boosting your super. See if a Transition to Retirement (TTR) strategy could work for you.
Quick Use Samples
Your Details
Annual Take-Home Pay
Super Balance (End of Year Estimate)
Estimated Net Benefit to Super This Year
-$3,000
Without a TTR strategy, your take-home pay is $75,033 and your super is projected to be $434,800 at year's end. By salary sacrificing and drawing a TTR income stream, your take-home pay becomes $81,933. Even after the withdrawal, your end-of-year super balance is $431,800, resulting in a net benefit to your super of -$3,000 this year due to tax savings.
TTR Income Stream Visualization
Estimated Tax Saved This Year
$6,900
This is the estimated reduction in income tax due to the TTR strategy.
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What Is a Transition to Retirement (TTR) Strategy?
A Transition to Retirement (TTR) strategy is a government provision that allows you to access your superannuation as a regular income stream once you've reached your preservation age, even while you are still working. It can be used to either supplement your income while reducing your work hours, or to boost your super through a tax-effective strategy.
Behind the Formula
The calculator models the 'taxable income reduction' strategy. It shows how you can make additional pre-tax (salary sacrifice) contributions to your super while simultaneously drawing a similar amount from your super via a TTR income stream. Because the super contributions and the income stream are taxed at lower rates than your marginal salary, you can end up with the same net income but with a higher super balance at retirement.
Expert Insights
- The tax benefits of a TTR strategy were reduced in 2017. The investment earnings in a TTR income stream are now taxed at 15%, the same as a regular super account (they used to be tax-free). This has made the strategy less powerful, but it can still be effective for some.
- A TTR is most effective for those aged between their preservation age (around 60) and 65, who are in a higher tax bracket, and have sufficient super to draw an income from.
- A TTR income stream has minimum and maximum withdrawal limits. You must withdraw a certain percentage of your balance each year (e.g., 4% for under 65s), and you cannot withdraw more than 10% of your balance in a financial year.
Actionable Tips
- Use this calculator to see if a TTR strategy could work for you. It is not suitable for everyone, and the net benefit can be small, so it's important to do the numbers.
- Speak to your super fund to see if they offer TTR income stream products and to get the necessary paperwork to set one up.
- Always seek professional financial advice before starting a TTR strategy. An advisor can help you understand the rules, the risks, and whether it's the right move for your personal circumstances.
Real-World Examples
Boosting Super Before Retirement
A 62-year-old on a $100,000 salary salary sacrifices $25,000 into her super. She then draws a $20,000 TTR income stream. The calculator shows her that due to the tax savings, her net income remains almost the same, but her super balance gets a significant boost from the extra contributions.
Reducing Work Hours
A 60-year-old wants to reduce their work to 3 days a week, which cuts their salary by $40,000. They start a TTR pension to draw $30,000 a year from their super to supplement their reduced income, allowing them to ease into retirement.
Strategy Not Being Effective
Someone on a lower income of $60,000 uses the calculator and finds that a TTR strategy provides very little benefit. The tax difference between their marginal rate and the super tax rates is not large enough to generate a significant saving.
Glossary of Terms
Preservation Age
The age at which you can first access your superannuation. It is between 55 and 60, depending on when you were born.
TTR Income Stream
A type of account-based pension that you can start once you reach preservation age, while you are still working.
Salary Sacrifice
An arrangement where an employee agrees to forgo part of their pre-tax salary in return for benefits of a similar value, most commonly additional superannuation contributions.