Approaching retirement

Boost your retirement savings without reducing your net income

If you are aged 55 and over, a transition to retirement strategy can make a real difference to your retirement savings.

Transitioning to retirement strategies (TTR) – can be a very powerful way for many people approaching retirement to give their retirement savings a boost or alternatively ease into a new routine where less working hours are the norm. Clients can retain flexibility around their income and boost their super balance through making increased tax effective contributions.

How it works

With a transition to retirement strategy, you could roll all or part of your existing superannuation benefits into a transition to retirement pension (TTR). Alongside receiving a regular income from the drawing down of up to 10% per annum of your TTR pension, you would continue to make additional contributions into your super account in an effort to boost your overall retirement savings balance.

Through this strategy you would still be receiving about the same take home salary, but pay less tax on your regular salary as a result of salary sacrificing additional amounts into your super than you would normally if you took it as regular take home salary.  In this way you would be giving your super contributions and balance an additional boost before you retire.

Case study

At age 56,  Jonathan understands he needs more super than the $250,000 he has currently saved in super, and he has the goal to retire at 65.

Jonathan would like to put more into his super but has still has financial responsibilities including the remainder of his mortgage and current living expenses.

His gross salary is $75,000 per annum and he requires about $57,500 net per annum to meet his regular expenditure. His employer currently contributes 9.5% super guarantee (($7,125) per annum to his super fund on his behalf.

After consulting his financial adviser he decides to arrange with his employer to salary sacrifice $27,812 of his annual pre-tax income to super. To supplement a reduced take home income he commences a transition to retirement pension using $226,300 of his super and takes a pension payment of $22,630 in the first year (10% of his transition to retirement pension balance).

Jonathan is able to maintain his current level of take-home pay with the additional income from his transition to retirement pension, while boosting his super by $3,529 after just one year.

If Jonathan maintains a similar strategy in subsequent years, by age 65 his retirement savings could be boosted by $76,794 without having impacted his current lifestyle or other financial commitments.

Personal Income

Current approach $

With a TTR strategy $

Salary Package (incl. Super Guarantee (SG)) 82,125 82,125
Super Guarantee (SG) (7,125) (7,125)
Salary Sacrifice (SS) 0 (27,812)
Gross Salary (after SG & SS) 75,000 47,188
Transition to retirement (TTR) pension income 0 22,630
Taxable Income 75,000 69,818
Gross income tax (15,922) (14,238)
Low Income Tax Offset 0 0
Income Tax Rebate – 15% 3,394
Medicare Levy (1,500) (1,396)
After-tax income 57,578 57,578

Superannuation & Pension

Superannuation & Pension Balance 250,000 250,000
Super Guarantee (SG) 7,125 7,125
Salary sacrifice 0 27,812
Less contribution tax (1,069) (5,240)
Less pension income 0 (22,630)
Net super contribution 6,056 7,067
Retirement saving projected balance Year 1 268,732 272,261
Retirement saving projected balance at age 60 355,515 384,150
Retirement saving projected balance at age 65 501,849 578,643

Potential Gains from the new Strategy

Retirement saving projected boost Year 1 + 3,529 
Retirement saving projected boost at age 60 + 28,635 
Retirement saving boost at age 65 + 76,794 

Taxation – Year 1

Personal – Income Tax (15,922) (14,238)
Personal – Medicare Levy (1,500) (1,396)
Personal – Income Tax Rebate 0 3,394
Superannuation – Income tax on contribution (1,069) (5,240)
Total income tax and Medicare levy payable (18,491) (17,480)
Client born 01/07/1958 – 56 years old
Salary increases at 2.50% pa
5% net return in the accumulation phase
6% net return in the pension phase
Pension refresh strategy applied


Lifespan can assist you in assessing the merits of this strategy and show you how to use a salary sacrifice strategy to improve your super savings and how you can withdraw up to 10% a year of your existing super savings to replace the income you sacrifice.