A retirement plan in Australia involves knowing when you wish, or may need to, retire, how much you’ll need and how super and government benefits work together.

Preparing for retirement can be complex but also rewarding. One option available is the Transition to Retirement (TTR) strategy. It's a way to ease into retirement gradually while you keep working, maintain financial stability, and potentially optimise your super. In this blog, we’ll explore the steps to set up a Transition to Retirement pension with Australian Ethical and offer insights and guidance to help you make the most of this flexible retirement approach.

Planning for retirement is a key part of building a strong retirement plan in Australia, but the answer depends on things like your financial situation, personal circumstances like health and caring responsibilities and the rules around accessing super.

In Australia, the age when you may be able to apply for an Age Pension is not always the same as your preservation age, which is the earliest age you can generally access your super. For anyone born after 30 June 1964, their preservation age is 60 years of age while the Age Pension² age is currently 67 for most Australians. Understanding these milestones is an important first step in superannuation retirement planning.

The amount of super that will best support you in retirement varies depending on your lifestyle expectations, health, housing situation and whether you may receive government support. Some people plan for modest retirement spending, while others want more flexibility for travel or higher living costs.

A transition to retirement strategy may allow you to access part of your super by starting a TTR pension once you reach preservation age, while continuing to work. This can help you reduce work hours gradually, supplement your income, or continue growing your super balance through ongoing contributions.

You can start a TTR once you’ve reached preservation age and are eligible. If you qualify, here are two ways to use TTR:

• Keep working whilst boosting your super: If you’re not quite ready to retire, you can use a transition to retirement strategy to maintain your current level of work, access a retirement income through a TTR pension and increase your super contributions. In some cases, this may not affect your take-home pay
  
  
• Slowly transition into full retirement: If you’d like to start slowing down, you can use TTR to reduce your work hours, while using your super to supplement your income

• You’ll have two accounts – your existing super account and your new ‘pension’ account. You’ll need an active Australian Ethical super account to receive any contributions from your employer, as well as any voluntary contributions you make.
  
  
• You can only access your super as a regular pension income stream, not a lump sum.
  
  
• There are limits to what you can contribute to your superannuation, known as contribution caps.
  
  
• You need a minimum of $30,000 to start your TTR pension.
  
  
• There is a transfer balance cap of $2 million (FY25-26).
  
  
• When you retire, you can consolidate your accounts by transferring your TTR pension into your super account then creating a new pension account using your TTR pension and money from your super account.
  
  
• There are annual minimum and maximum pension payment limits, which are calculated based on your pension balance when you start your TTR pension. These are recalculated annually at the start of each financial year.

Ready now? Start a TTR pension application.

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Before starting a TTR pension, you need to ensure you meet the eligibility criteria. You must have reached your preservation age, which is age 60.

A transition to retirement strategy works best when it’s built around your personal circumstances, so it’s worth considering a few key factors before setting up your plan.

Determine your retirement goals

Clearly define your retirement goals. What do you want to achieve with your TTR plan? Do you seek to reduce working hours gradually, increase your retirement savings, or achieve a better work-life balance? Your goals will shape the structure of your TTR strategy.

Choose an investment strategy

Your TTR plan should include an investment strategy tailored to your goals and risk tolerance. We have different ethical pension investment options ready-made for you to pick from. Each invests in different types and combinations of assets, and carry different levels of risk, allowing you to choose what is right for you.

Calculate your income needs

Determine the amount of income you'll need to cover your expenses during your transition to retirement. This calculation should consider your living costs, potential part-time work income, and any other sources of revenue you may have.

Assess the tax implications of your TTR plan

Understand the tax implications of your TTR strategy. Find out more at the ATO website.

Review entitlements and insurance

Once you've set up your Transition to Retirement (TTR) strategy and feel confident in your approach, you’re ready to put it into action.

Before you begin, remember that you need to have two accounts to run a TTR strategy, as outlined in our Product Disclosure Statement (PDS) (link):

• A pension account (your TTR Pension)
  
  
• An accumulation account, where your employer and salary‑sacrifice contributions continue to be paid, and from which any insurance premiums can be deducted

If you don’t already have an accumulation account with Australian Ethical, you’ll need to join and set one up first.

Steps to start your TTR Pension

1. Set up (or confirm you have) an accumulation account
   1. Hit the ‘Join’ button at the top right‑hand side of the Australian Ethical website
   2. Select ‘Super’ to create your accumulation account (if you don’t already have one)
      
      
2. Open your TTR Pension account
   1. Select ‘Pension’
   2. Choose Transition to Retirement (Taxed) income stream
      
      
3. Enter your personal details
   
   
4. Select your pension options & payment instructions
   
   
5. Confirm your identity
   
   
6. Review and submit your application
   

Want to start now? Complete a TTR Pension Application.

Give our team a call on 1800 021 227 if you run into any issues. We're here to help.

The way superannuation is taxed can change once you enter the retirement phase. Depending on your age and how you withdraw income, different tax rules may apply.

Some retirees may qualify for the Age Pension depending on income, assets and residency requirements. Government support can form part of your broader retirement income plan, and eligibility should be reviewed as your circumstances change.

Even later in life, there may be ways to strengthen your retirement position. Options may include voluntary contributions, spouse contributions or downsizer contributions when selling an eligible home. 

Superannuation retirement planning often involves balancing super, government support and personal savings outside super. Australian Ethical offers ethical pension options and resources to help you understand your choices and take the next step when you’re ready.