Build your financial security with OBT Financial Group – Lockyer Valley Business of the Year recipients and specialist financial advisers to individuals, business owners and farming families on accounting, tax, business advice and wealth planning for over 40 years.How does a transition to retirement strategy work?
As you approach retirement age, you may be thinking about how to transition from full-time work to retirement.
One option you may want to consider is a transition to retirement (TTR) strategy.
A TTR strategy involves using your superannuation savings to supplement your income as you gradually reduce your working hours.
Here’s how it typically works:
- You must be at least 55 years old
- You need to have reached ‘preservation age’
- You can choose to reduce your working hours or change to a less demanding job
- A TTR pension can be started using superannuation savings
- Income from your TTR pension can be used to supplement your reduced income from work
- You can continue to contribute to superannuation while you are receiving a TTR pension (there are extra considerations if doing this)
- At age 65, you can convert your TTR pension to a full retirement pension or withdraw your super savings as a lump sum.
How does transition to retirement work?
You must be at least 55 years old and have reached your preservation age (which is currently between 56 and 60, depending on your date of birth). You can choose to reduce your working hours or change to a less demanding job, which will result in a reduction in your income.
To make up for the reduction in your income, you can start a TTR pension with your superannuation savings. This pension will provide you with regular income payments, which can be used to supplement your reduced income from work. This can allow you to maintain your lifestyle and save more money for your retirement.
You can continue to contribute to your superannuation fund while you are receiving a TTR pension, although there are limits on how much you can contribute each year. Once you reach age 65, you can convert your TTR pension to a full retirement pension or withdraw your superannuation savings as a lump sum.
There are several benefits to a TTR strategy.
It can help you to gradually transition from full-time work to retirement, giving you more time to adjust and plan for your future. It can also provide you with additional income, allowing you to maintain your lifestyle and save more money for your retirement.
A transition to retirement strategy can be a useful way to gradually reduce your working hours and supplement your income as you approach retirement age. It can help you to maintain your lifestyle and save more money for your retirement.
However, it is important to note that a TTR strategy may not be suitable for everyone. Before making any decisions, seek professional financial advice to determine if a TTR strategy is right for you. OBT’s Private Wealth Advisors can help you to assess your financial situation, set retirement goals and develop a plan to achieve them. Contact our Financial Planning team in Gatton or Esk on 07 5462 2277.
Private Wealth Advisers Bruno Tjelder and Damon Zischke and OBT Financial Planning Pty Ltd are Authorised Representatives of OBT Wealth Services Pty Ltd ABN 13 661 409 838 | AFSL 543251.
The information provided is general in nature. It has been prepared without taking into account any of your individual objectives, financial situation or needs. Before acting on this advice you should consider the appropriateness of the advice, having regard to your own objectives, financial situation and needs. This Financial Planning website page(s) is intended for Australian Residents only. The views expressed in this publication are solely those of the author; they are not reflective or indicative of the position and are not to be attributed to the Advice Licensee. They cannot be reproduced in any form without the express written consent of the author.
