Transition to retirement

A transition to retirement strategy can help you either ease into retirement gradually or up-size your super savings to fund the retirement of your dreams.

We’ll help you put a transition to retirement strategy in place so you can live the lifestyle you want to – now and in the future.

Why set up a transition to retirement strategy?

A transition to retirement strategy could help you in a number of ways.

You may be able to:

  • reduce your work hours and top up your reduced salary with payments from your super
  • boost your super savings without cutting back on your lifestyle
  • access your super.

Who can use a transition to retirement strategy?

A transition to retirement strategy may work for you if you:

How a transition to retirement strategy works

The transition to retirement rules let you access your super while you’re still working.

Basically, you move some or all of your super into a new account.

You can withdraw money from this account to top up your salary or wages.

If you’re looking to reduce your working hours without changing your income, that’s all there is to it. If you want to boost your super, you need to take one extra step. Once you have more money coming in from your pension account, you need to ask your employer to pay some of your before-tax salary or wages into your original super account. This is called 'salary sacrificing'.

Because salary sacrifice uses before-tax dollars, you can actually contribute more to super than you withdraw, without missing much income.

The key idea is that you generally pay less tax on money your employer pays into super on your behalf than you do on money you take home in your pay packet.

There are many rules with a transition to retirement strategy, so it's best to talk to a Tasplan financial expert to make sure it's the right option for you.

Example of salary sacrificing

Lucy earns $90,000 before tax, excluding her employer's super contribution.

If Lucy decides to redirect $10,000 of her pay into salary sacrifice super contributions, she will save $2,400 in tax. The money goes into her super fund instead of her wallet. With the magic of compound interest, she will be well on the way to a comfortable retirement.

 If Lucy does nothingIf Lucy salary sacrifices $10,000
Take-home pay $66,953 $60,853
Tax $23,047 $20,647
Extra money into super $0 $8,500
Net benefit $66,953 $69,353 ($2,400 better off)

(The figures we’ve used in this table are estimates based on 2014–15 income tax rates and a Medicare Levy of 2%. It does not include any personal tax offsets.) 

Next steps

Chat to one of our financial experts to see if a transition to retirement strategy is right for you.

Contact us