Transition to Retirement - is this what you've been looking for?

I used to think you had to stop work completely before you could touch your super.

That's not quite right.

If you've reached your 'preservation age' — somewhere between 55 and 60, depending on when you were born — there's an option most women I talk to have never heard of. It's called a Transition to Retirement income stream, or TTR. It lets you draw a regular income from your super while you're still working.

How it works

Once you hit preservation age, you can reduce your working hours without reducing your income, by starting a transition to retirement income stream — basically you reduce your hours and your pay, and top up your part-time income with a regular draw from your super.

Your remaining super stays invested. The fund keeps managing it. You just start drawing an income from it alongside whatever you're still earning.

There are rules around the maximum and minimum amounts you can draw.

At age 60, for example, the minimum sits around 4% and the maximum around 10% of the account balance, and those figures move with your age and your balance. (You'd need to check the current numbers with your fund, because they're reviewed and can change.)

There's a tax side to understand as well. Earnings inside a TTR account are generally taxed, at up to 15% — different to a standard retirement pension, where earnings are usually tax-free. That's one of the calculations a licensed adviser will run properly before you commit to anything.

It's not the same for everyone

The Transition to Retirement option above generally applies to standard accumulation funds, including PSSap. If you're in CSS or PSS — the older defined benefit schemes for Commonwealth employees — those schemes work differently: your benefit is calculated by a formula, not a balance you draw a percentage from.

That doesn't mean it's not possible, just different. CSS and PSS members have other options for reducing hours while staying connected to their benefit, but they depend on your specific scheme, your years of service, and what your employer agrees to.

It's not all or nothing for anyone. It's just not the same mechanism for everyone — which is exactly why this is a conversation for an adviser who knows your scheme, not a guess based on someone else's.

Where this helps after separation

If your super came out of a settlement smaller than you'd hoped, a transition to retirement mechanism is one of the tools that can help you rebuild that super while you're still earning — not instead of working, but alongside it.

I think this a great option, especially if you're ready to reduce your hours but still need to build your super balance.

It's not something to set up on your own. The rules around contribution caps, tax, and your specific numbers need someone qualified to run them properly.

Next step

If you'd like to talk this through with someone who knows the detail, I can personally introduce you via email to a vetted, trusted financial adviser in my network. Your first conversation (complimentary) will be with someone who already understands the kind of situation you're in.

If you're not ready for that advice yet, look through our other helpful information, resources and tools to help you plan your retirement.

This article is for general information only. It isn't personal financial or tax advice. Everyone's super, tax position, and circumstances are different — check the current rules with your fund and speak with a licensed financial adviser before acting on any of this.

Sources: Australian Taxation Office — Transition to retirement; Transition to retirement income streams (TRIS); Income stream (pension) rules and payments.