Transition to Retirement (TTR) Strategy: Is It Right for You?
A transition to retirement strategy can let you reduce working hours without reducing take-home pay, or boost your super balance in the years before you retire. But the 2017 rule changes made it considerably less powerful than it used to be — and it genuinely suits some situations far better than others.
Updated May 2026 · 7 min read · General information only — not financial advice
What is a TTR strategy?
A Transition to Retirement (TTR) strategy — formally a Transition to Retirement Income Stream (TRIS) — lets you access your superannuation as an income stream while you're still working, once you reach your preservation age. Since 1 July 2024, the preservation age is 60 for all Australians (the phase-in for earlier birth cohorts is now complete).
Unlike a standard retirement pension, a TTR comes with two important restrictions:
- Drawdown limits: You must draw between 4% and 10% of your account balance each financial year.
- No lump sums: You cannot access your super as a lump sum while in TTR — only as regular income stream payments.
When you meet a full condition of release — retirement, reaching age 65, or permanent incapacity — the TTR automatically converts to a full retirement-phase pension, the 10% cap is removed, and the fund shifts to tax-free earnings status (subject to the Transfer Balance Cap).
The two uses of TTR
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Reduce working hours without reducing income
Drop to part-time or reduce your salary, and use TTR income stream payments to make up the difference. You maintain the same after-tax income while working less. This is the lifestyle use case — it suits people who are ready to wind down but not yet ready to fully retire.
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Boost super through salary sacrifice arbitrage
Continue working full-time, salary sacrifice a portion of your salary into super (taxed at 15%), and draw from your TTR account to replace that lost take-home pay. If your marginal rate is above 15%, you pay less tax on the salary-sacrificed amount than you would have as income — building super faster than without the strategy.
How the salary sacrifice + TTR combination works
The classic TTR strategy uses salary sacrifice to redirect pre-tax income into super, then draws from the TTR account to restore after-tax cash flow. Here's a simplified example:
Example: Age 62, salary $120,000, super balance $500,000
Without TTR
With TTR strategy
Indicative only. Uses 2025-26 income tax rates excluding Medicare levy. Individual tax offsets not applied. The salary sacrifice reduces gross income, reducing tax — the TTR draw replaces after-tax pay tax-free at age 60+.
In this example, the salary sacrifice saves $6,000 in personal income tax — the 30% marginal rate applied to the $20,000 sacrificed ($120,000 falls in the 30% bracket under 2025-26 rates). Of that saving, $3,000 is returned to the ATO as contributions tax (15% × $20,000), leaving a net tax benefit of $3,000. The TTR draw of $25,000 is tax-free at age 60+. The combined effect is higher take-home pay and $20,000 more per year flowing into super as concessional contributions.
What changed in 2017 — and why TTR is less powerful now
Before 1 July 2017, investment earnings inside a TTR account were tax-free — the same as a pension-phase account. This meant the entire super balance in the TTR earned returns with no tax, regardless of whether you were actually retired.
From 1 July 2017, earnings inside a TTR account are taxed at 15% — the same as an accumulation account. This significantly reduced the benefit of TTR for the "boost your super" strategy, because the tax-free compounding advantage is gone.
The practical impact: If your strategy is purely to shift money from salary into super to earn tax-free returns, there's no longer a tax advantage compared to simply contributing to accumulation. The remaining benefit is the income tax arbitrage on salary sacrifice — real, but more modest.
Who TTR still makes sense for
Age 60–64, still working, on a marginal tax rate of 32.5% or higher — the salary sacrifice saving is meaningful
Want to reduce hours (to 3–4 days/week) but need to maintain income — TTR makes up the shortfall
Planning to retire within 1–5 years — TTR is a useful bridging strategy and lets you test retirement income flows
On low incomes or low marginal rates — the tax saving on salary sacrifice is modest
Need lump-sum access — TTR doesn't allow this
Already fully retired — no reason to use TTR vs a standard ABP
TTR and the concessional contributions cap
Salary sacrifice contributions — one of the key levers in a TTR strategy — count toward the concessional contributions cap, which is $30,000 per year in 2025-26. This cap includes your employer's Superannuation Guarantee (12% from 1 July 2025) and any salary sacrifice or personal deductible contributions.
For someone on a $120,000 salary with employer SG of $14,400, only $15,600 of additional salary sacrifice room remains before hitting the cap. Exceeding the cap triggers excess concessional contributions tax, which can offset much of the benefit.
If you have unused concessional cap space from prior years (and a total super balance below $500,000), carry-forward rules allow you to access those unused amounts — potentially enabling larger salary sacrifice in the years before retirement. The RetireConfident accumulation calculator models carry-forward and the TTR strategy together.
Model your TTR strategy
RetireConfident's Super Accumulation Calculator has a dedicated TTR mode. Model salary sacrifice amounts, TTR drawdown, and see the projected impact on your super balance at retirement.
Toggle "Transition to Retirement" in the accumulation calculator to activate TTR mode.
Frequently asked questions
What is the preservation age for a TTR strategy in 2026?+
The preservation age is 60 for all Australians from 1 July 2024. The phase-in period for older cohorts has concluded. You must be at least 60 to start a TTR income stream.
How much can I draw from a TTR income stream?+
Between 4% and 10% of your super account balance per year. The minimum (4%) must be drawn each financial year or the income stream loses its pension status. You cannot access your super as a lump sum under TTR — only as a regular income stream.
Are TTR income stream payments taxable?+
If you are aged 60 or over and your super is from a taxed fund, TTR income stream payments are tax-free. The fund itself pays 15% tax on investment earnings within the TTR account (unlike a pension-phase account, which pays 0%). This distinction — tax-free to you, but 15% tax in the fund — is what makes TTR less beneficial than it was before the 2017 rule change.
Can I still salary sacrifice into super while drawing a TTR pension?+
Yes. You can make salary sacrifice contributions into your accumulation account while simultaneously drawing income from a separate TTR account. The two accounts operate independently. The concessional contribution cap ($30,000 in 2025-26) applies to all concessional contributions including employer SG and salary sacrifice combined.
When does a TTR income stream convert to a full pension?+
A TTR automatically converts to a retirement-phase pension (with 0% tax on earnings, subject to the Transfer Balance Cap) when you meet a full condition of release — typically retirement, reaching age 65, or permanent incapacity. At that point the 10% drawdown cap is removed and the account shifts to pension phase.
Is a TTR strategy still worth it after the 2017 changes?+
It depends on your situation. The classic TTR strategy — where tax-free earnings in the TTR fund combined with salary sacrifice arbitrage — lost its biggest advantage when the 15% earnings tax was introduced in 2017. For most Australians in lower tax brackets, the benefit is now marginal. But for people aged 60-64 on higher marginal rates who want to reduce hours without reducing income, TTR remains a useful tool. The key question is whether the tax saving on your salary sacrifice exceeds the 15% tax now paid in the fund.