Making the transition to retirement. Transition to Retirement (TTR) strategies were designed to assist Australians move into retirement, without fully retiring from the workforce. Helping Australians remain in the workforce for longer, it enables an eligible person to begin drawing a pension from their superannuation assets. This can enable a reduction in work hours, such as dropping back to 2 days per week, while supplementing the reduced income received through employment with a superannuation pension.
An eligible person is someone whom has reached their preservation age (the age at which you can legally begin drawing money from super when certain conditions are met. There is no requirement to reduce your work hours in commence this strategy, however, the preservation age ranges from 55 to 60 depending on your year of birth.
This can enable you to start accessing your superannuation assets and reduce debt, supplement cash flow, make contributions to superannuation with tax free monies (a separate strategy in itself), or reduce your tax liability through combining a TTR pension with increased salary sacrifice to superannuation.
The TTR pension has requirements as to the level of pension that you can take, with both a minimum and a maximum annual amount able to be received. The maximum is 10% of the account balance as at 1 July each year. The minimum is generally 4% of the account balance, however this is also dependent on your age.
So if you wish to reduce your tax liability, reduce your work hours, increase your cash flow, or pay off mortgages prior to retirement, a Tran