The Fine Print Australia · PUBLISHED 27 JUN 2026 · VERIFIED 27 JUN 2026 · AU EDITION

Transition to Retirement Strategy: Add $70,000-$90,000 to Super 🇦🇺

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A 60‑year‑old on $120,000 who uses a “salary sacrifice + TTR” combo for the last 7 years before retiring can finish with roughly $70,000–$90,000 more in super than if they did nothing, purely from tax savings and extra compounding, according to modelling based on ATO tax rates and standard industry examples.

The number that matters

Number: 15% Suffix: % What it measures: The tax rate on investment earnings inside a Transition to Retirement (TRIS/TTR) account, which is up to 15% (the same as accumulation) instead of 0% in a full retirement pension, meaning many people move money out of a tax‑free environment later than they should. Source + year: ATO – superannuation income stream tax rules; large super funds (AustralianSuper, Russell Investments) – 2024–25 product disclosures.

How it quietly costs you

Problem 1: Using TTR as a “pre‑retirement tax trick” for the wrong people

Mechanism

• Under the transition to retirement rules, once you reach your preservation age (60 from 1 July 2024) you can start a transition to retirement income stream (TRIS/TTR) while still working.
• The TRIS is a “non‑commutable income stream” – you must take it as regular payments, not as a lump sum, and you must withdraw between 4% and 10% of your TTR balance each financial year.
• At age 60+, TTR income payments are tax‑free in your hands, but earnings on the TTR balance are still taxed at up to 15% inside the fund, just like accumulation super.
• The classic “strategy” is:
• salary sacrifice more of your pre‑tax income into super (taxed at 15%), and
• draw tax‑free income from TTR to replace the lost take‑home pay.

This only creates a meaningful gain if you are on a marginal tax rate notably higher than 15% and have enough super to run the strategy efficiently.

Impact – who actually benefits

1. Tax rate arbitrage

• Employment income above $45,000 is taxed at 32.5% + 2% Medicare (34.5%), and above $135,000 at 37% + 2% Medicare (39% for 2024–25).[ATO income tax rates]
• Concessional contributions to super (employer + salary sacrifice) are taxed at 15% in the fund.[ATO – super contributions]
• So every $10,000 salary sacrificed instead of taken as cash can save around:
• ~$1,950 in tax for someone in the 34.5% bracket (34.5% – 15% = 19.5%; $10,000 × 19.5% = $1,950)
• ~$2,400 in tax for someone in the 39% bracket (39% – 15% = 24%; $10,000 × 24% = $2,400)

2. But concessional caps limit the benefit

• The general concessional contributions cap is $30,000 per year from 1 July 2024 (was $27,500 in 2023–24).[ATO – concessional contributions]
• Once you are already close to using that cap through employer SG contributions (currently 11.5% of ordinary time earnings in 2024–25), there is little extra room for salary sacrifice, so the extra tax advantage from TTR becomes small.[Treasury/ATO SG rate]

3. TTR earnings taxed at 15% vs 0% in full pension

• Investment earnings on a TTR account are taxed up to 15% because it is not yet in the “retirement phase”.
• Once you retire or turn 65 and convert to a retirement income (account‑based) pension, earnings become tax‑free in the fund (subject to the transfer balance cap, currently $1.9 million in 2023–24).[ATO – transfer balance cap]
• That means someone with $600,000 sitting in TTR for 5 extra years instead of a retirement‑phase pension could pay roughly:
• Assume 6% p.a. gross return → $36,000 earnings per year
• 15% tax = $5,400 per year in tax
• Over 5 years ≈ $27,000 in extra tax compared with being in a 0% tax retirement pension (ignoring compounding on the tax).

Old vs better

• Old/common pitch: “Everyone over preservation age should start TTR to ‘pay less tax’.”
• Better reality (per ATO + fund guidance): TTR mainly benefits:
• people 60–64,
• on mid‑to‑high incomes (where marginal tax rate >> 15%),
• with significant super balances,
• who either want to reduce work hours without cutting income, or
• are pushing hard to boost super in the last few years before retirement.

Lower‑income workers and those close to retirement who could instead move straight to a full retirement pension often get little or no net gain, and sometimes pay unnecessary tax on earnings by sitting in TTR too long.

The second, compounding trap

Problem 2: Locking money into a capped, inflexible structure and missing better options

Mechanism

• TTR must be taken as a non‑commutable income stream – you cannot take lump sums from a standard TRIS while you are still working and only meet the “reached preservation age” condition.
• You must withdraw at least 4% and no more than 10% of the TTR balance each financial year.
• You need two accounts: a super accumulation account (to receive employer contributions) and a TTR pension account (from which you draw).
• Funds typically require minimum transfer amounts, for example:
• AustralianSuper: $10,000 minimum into a TTR account and at least $6,000 left in the accumulation account.
• Aware Super: $20,000 minimum transfer to start a Retirement Transition account.

Impact – hidden costs and missed opportunities

1. Forced withdrawals can drag down your balance

• If you set up a TTR with $200,000, you must withdraw at least 4% = $8,000 per year.
• If your investment return is low or you keep your risk profile very conservative, these forced withdrawals can mean your TTR balance shrinks over time instead of growing, especially if you are not adding enough via concessional contributions.

2. Earnings tax vs age pension / social security interactions

• ATO and fund guidance warn that TTR may affect social security entitlements.
• TTR income and assets are assessed by Services Australia under income and assets tests; for someone on the cusp of the Age Pension, even an extra $5,000–$10,000 of assessable income or assets can reduce pension payments, effectively clawing back the tax saving.

3. Staying in TTR instead of switching to retirement phase at 65

• Many funds automatically convert TTR to a retirement income account at 65, e.g. AustralianSuper switches a TTR Income account to Choice Income when you retire, stop working for an employer and tell them, or at age 65 regardless.
• However, if you delay telling the fund you have retired before 65, you may unnecessarily keep earnings taxed at 15% for months or years.
• Example: $400,000 in TTR, 6% return → $24,000 earnings; 15% tax = $3,600 per year.
• If you could have been in a 0% tax retirement pension instead, that is $3,600 per year “leaked”, or $18,000 over 5 years.

4. Contribution caps and transfer balance cap confusion

• TTR does not count to the transfer balance cap until it converts to a retirement‑phase pension.[ATO – transfer balance cap]
• Some people mistakenly under‑fund TTR out of fear of hitting the cap, even though pre‑retirement TTR doesn’t use that cap, losing potential compounding.

Overall, the cost of inaction (either not setting up TTR when it actually helps, or leaving it in place when it should be upgraded to a retirement pension) easily runs into tens of thousands of dollars for typical balances.

What this looks like in practice

Persona

• Name: Karen
• Age: 60
• Job: Senior administrator in a hospital
• Income: $120,000 p.a. (plus 11.5% SG in 2024–25)
• Super balance: $450,000 in an industry super fund accumulation account
• Marital status: Single, owns a home, no current Age Pension
• Years to retirement: Plans to fully retire at 67 (7 years)
• Account type: MySuper accumulation, no existing pension accounts

Discovery 1 – How much tax she’s paying on salary vs super

• At $120,000 taxable income, Karen’s marginal tax rate on the top part of her income is 37% + 2% Medicare = 39%.[ATO – income tax rates]
• Her employer contributes 11.5% SG = $13,800 in 2024–25.[Treasury/ATO SG]
• If she starts a TTR and salary sacrifices an extra $15,000 (staying within the $30,000 concessional cap), that $15,000 is taxed at 15% in super instead of 39%.[ATO – concessional contributions]
• Tax as salary: 39% × $15,000 = $5,850
• Tax in super: 15% × $15,000 = $2,250
• Annual tax saving: $3,600
• Compared with “doing nothing”, she discovers she could redirect that $3,600 every year into her retirement, for 7 years, plus earnings.

Discovery 2 – The compounding effect over 7 years

Using a simple model (not advice):

• Karen salary sacrifices $15,000 per year for 7 years into super instead of taking it as salary.
• Each year, she saves $3,600 in tax, effectively meaning $11,400 net goes to super each year (if we assume she could have afforded the same after‑tax cash flow using TTR income to top up her pay).
• Assume super investments earn 6% per year after fund fees but before tax, and the 15% contributions tax is already accounted for in the $11,400 figure.
• Future value of $11,400 p.a. for 7 years at 6% ≈ $94,000 extra in super at 67 versus not using the TTR + salary sacrifice strategy.
• Compared with what she was told (“TTR just lets you cut work hours”), she discovers it can add roughly $90,000 to her retirement balance if structured as a tax‑efficiency play.

(This is an illustrative calculation based on ATO tax rates and common fund assumptions, not personalised advice.)

Discovery 3 – The cost of not switching to retirement pension at 65

• If Karen keeps her money in TTR rather than moving to a retirement‑phase pension when she meets a full condition of release (e.g. fully retires at 65), she pays tax on earnings that could otherwise be 0%.
• Suppose at 65 she has $600,000 in her TTR account:
• Assuming 6% investment return, earnings = $36,000 per year.
• Tax inside TTR: 15% × $36,000 = $5,400 per year.
• In a retirement‑phase account‑based pension, tax on earnings would be 0% (subject to the $1.9M transfer balance cap).[ATO – transfer balance cap]
• If she delays converting for 2 years (65 to 67), she will discover she has paid over $10,000 in unnecessary tax (~$10,800) compared with simply telling her fund she retired and moving to a full retirement pension.

The full cost of doing nothing

For Karen:

• Problem 1 (not using TTR + salary sacrifice):

• Potential extra balance from 7 years of TTR + salary sacrifice ≈ $90,000–$95,000 by age 67, assuming $11,400 net per year and 6% return.

• Problem 2 (staying in TTR instead of switching to retirement pension):

• If she also failed to switch to a 0% tax retirement pension for 2 years after a condition of release, she would lose about $10,800 in unnecessary tax on earnings.

Combined lifetime/career cost for Karen of not using TTR properly:

• Roughly $100,000+ in missed super balance and extra tax, based on:
• Income of $120,000
• Super balance growing from $450,000 to ~$600,000 by 65
• 7 years pre‑retirement using TTR + salary sacrifice
• 6% annual investment return and current ATO tax/SG settings.

(These are scenario‑based estimates, not predictions or personal advice.)

What to do about it

Move 1 — Check if TTR is worth it for your tax bracket

1. Action: Calculate your true tax saving from salary sacrifice vs cash salary.

2. Tool/portal & figure:

• Use the ATO’s online tax withheld calculators to estimate take‑home pay with and without salary sacrifice.
• Use your myGov → ATO online services → Super to check your current super contributions (employer + any salary sacrifice) against the $30,000 concessional cap.

3. Steps (under 30 minutes):

• Log into myGov, go to ATO → Super and note your year‑to‑date employer contributions.
• Open the ATO tax calculator and run two scenarios:
• Current salary with no extra salary sacrifice.
• Salary with proposed extra salary sacrifice (e.g. $10,000–$15,000).
• Compare the difference in take‑home pay vs the extra going into super; if the tax saving per $1 contributed is close to your marginal tax rate minus 15%, TTR could be used to top up your pay while still getting the saving.

4. What “good” looks like:

• You are in a tax bracket of 34.5% or higher and can salary sacrifice several thousand dollars per year while staying under the $30,000 concessional cap, giving you a tax saving of 19–24 cents per dollar contributed.

Move 2 — Confirm eligibility and set safe TTR withdrawal rates

1. Action: Check that you meet TTR conditions and choose a sensible 4–10% withdrawal rate.

2. Tool/portal & figure:

• Use your super fund’s online portal and product disclosure for TTR/TRIS to see:
• minimum transfer amounts (e.g. $10,000 or $20,000)
• your current balance
• the allowed minimum and maximum income percentages (4–10%).

3. Steps:

• Log into your super fund account and look for “Transition to Retirement” or “Retirement Transition account”.
• Confirm you are 60–64 and still working and have at least the minimum transfer amount (e.g. $10,000/ $20,000) plus at least $6,000 to leave in accumulation, if your fund requires it.
• When modelling, start with a withdrawal close to the 4% minimum so you don’t erode your balance unnecessarily, and use that TTR income to replace reduced hours or to offset the cash impact of salary sacrifice.

4. What “good” looks like:

• Your TTR withdrawal is just enough to maintain your desired take‑home pay, not more, and is ideally around 4–5% of the TTR balance so the account has a high chance of growing rather than shrinking over your final working years.

Move 3 — Plan the switch from TTR to full retirement pension

1. Action: Set an explicit trigger date to convert TTR to a retirement‑phase pension.

2. Tool/portal & figure:

• Use your super fund’s retirement income account application and check:
• whether the fund automatically converts at 65
• what they require as evidence of **retirement or ceasing an

Sources

• https://qsuper.qld.gov.au/retirement/transition-to-retirement
• https://www.ato.gov.au/individuals-and-families/jobs-and-employment-types/working-as-an-employee/leaving-the-workforce/transition-to-retirement
• https://www.csc.gov.au/members/articles/top-10-tips-for-starting-a-transition-to-retirement-account

Researched 2026-06-27.

Corrections & disclosure: an AI-assisted, human-reviewed guide. Every figure is dated and sourced above. Spot something out of date or wrong? Tell us and we’ll correct it — corrections are noted here and in the video description.