Smart ways to ease yourself into retirement, pay less tax and boost your super
Two things first up:
(1)
If you want to (or have to) work past the age of 55, you need to read this article; or
(2)
If you know someone else who that applies to, please forward them this article or a link to it.
They’ll thank you for it.
There are now ways you can ease into retirement, tap into your super before you fully retire, save tax and potentially boost your super as you do it.
Before this legislation came in, people had to fully retire and leave the workforce before they could access their super. These days, the ‘cold turkey’ approach to retirement where all of a sudden one Monday you’re fully retired, is far less common.
It makes sense, for many, to instead gradually transition to retirement.
There are various reasons people may want to continue working past the age of 55, including:
Many of us actually enjoy our work including the social and mental stimulation and don’t want to take up travelling, lawn bowls or the fully retired lifestyle just yet;
Others want to avoid the shock to the system of full retirement and prefer to gradually reduce their working hours so they can adjust over time to a different lifestyle;
And there’s the obvious one: Financial reasons. Many people don’t have enough super or other investments accumulated that they can stop work altogether at age 55 and not suffer a big drop in income.
So continuing to work at least part-time past the age of 55 makes sense for many people.
It also makes sense for our economy. With the ageing population and fewer people in the traditional working years age bracket, the government has introduced various legislation to encourage people to stay active in the workforce.
One of these measures is called Transition To Retirement (TTR).
TTR allows you to wind back your work hours and reduce your income from that source, but then offset that with an income stream from your super.
The purpose of this article is not to give advice as such—as there are a number of variables to consider for each person’s circumstance, so you will need to sit down with your advisor here to discuss TTR further—but rather to make you aware of the main considerations so you can determine if you qualify.
You can use a TTR pension in one of two ways:
You can keep working full-time and boost your super; or
You can choose to work fewer hours and use your super to lessen the drop in income.
Either way, that’s a nice deal.
People who are unaware that they can access a TTR pension while they continue to work past age 55 stand to pay many thousands of dollars of tax needlessly.
Here’s how you can avoid that happening to you or your loved ones…
Firstly, some terminology: Your ‘age pension age’ differs from what’s called your ‘super preservation age’. The latter is age after which you’re allowed to access your super.
You can use this ASIC Super and pension age calculator to work out your preservation age. Just enter your month and year of birth and then click the Female or Male button.
Do that now, then continue…
Here’s how to determine if you can use a Transition To Retirement pension:
You have hit your preservation age; but
You are under the age of 65; and
You are still working.
If you can tick all those boxes, you can withdraw 4% to 10% of your super each financial year.
Note that you cannot withdraw money as a lump sum.
Also note that not all super funds allow you to do this, and if that’s the case with your fund(s), you might need to change super funds if you want to take advantage of the TTR measures. We can help with that process.
So if all three of those above points apply to you, you should
contact us as soon as possible
to make a time to go through the specifics of your circumstances, your super fund’s TTR options and a number of other very important details. We’ll make it easy for you and will make the paperwork happen.
There’s more we could share with you here about TTR, but rather than burden you with all those details, we figure that’s what you want us to handle for you!
TTR is one of the smartest retirement strategies available. It makes sense to take advantage of it if you can.
Need help with your accounting?
June is zooming by! Here’s another handy checklist for business owners—let’s get you sorted for EOFY and tick off those to-dos.
EOFY is almost here — are your finances ready? Our guide covers top deductions, super contributions, SMSF essentials and a 30 June checklist to help you maximise your return. Read it here.
Not sure what you can claim as a landlord this EOFY? From loan interest to depreciation, we break down the most common (and overlooked) rental property tax deductions. Read the full guide.
One of the most powerful decisions you can make with your superannuation is whether to run your own self-managed super fund (SMSF) and whether to invest in property through it. Most people know it's possible to use super to buy property. Far fewer know how to do it well. The following seven tips are designed to help you make the right decisions. 1. You Can Borrow Money to Purchase Property in Superannuation. Don't have enough in your SMSF to buy an investment property outright? Since 2008, superannuation held in a self-managed super fund can be used to borrow money for property purchase. This is done through a 'limited recourse loan' using a Bare Trust as the Custodian entity. You can't borrow the total value of the property—typically it's up to 80% for residential properties and 60% for commercial properties, with the required deposit held in the SMSF as security. The SMSF then makes the loan repayments, with rental income received by the fund and property expenses paid by the fund. Importantly, if there is a default on the loan, your other assets in the SMSF are generally protected from standard debt recovery and bankruptcy proceedings. The lender only has recourse to the property itself. Upon completion of the loan repayment, ownership of the property transfers legally to the SMSF. 2. Follow These 8 Steps to Set Up Your SMSF Setting up an SMSF properly can be a complex process. It’s best to set up an SMSF with the assistance of a qualified superannuation advisor, like us! We can assist with both the initial setup and the ongoing management of your fund. There are eight core steps to SMSF set up: Select the appropriate structure and name Sign the trust deed that covers how your SMSF is set up and run (it can have up to four members) Establish a trust for the SMSF by investing assets into the fund Register your SMSF with the ATO Set up a separate bank account for your fund Submit your tax file number (and those of any other trustees) Obtain an electronic service address to receive employer contributions into your fund (if applicable) Roll over funds from your existing superannuation account into your SMSF 3. Keep a Liquidity Buffer If you're buying property through superannuation, make sure you plan to keep a liquidity buffer of cash and/or shares in your fund. Lenders will check for this before lending to you—it should be at least 10% of the value you intend to borrow. But beyond satisfying the bank, it's simply good risk management. Property is an illiquid asset. Having accessible funds in the SMSF means you're not caught short if repairs are needed, the property sits vacant, or an unexpected expense arises. Because superannuation is central to most Australians' retirement security, the government has carefully regulated what can and can't be done with it. They don't want people gambling their retirement away on poor investments or incorrectly using their superannuation fund. 4. Use the Rental Income to Repay Your Loan You cannot live in the property you purchase through your SMSF until after retirement. Most people purchase an investment property and use the rental income generated to repay the loan—which makes excellent financial sense. The key is selecting a property that rents easily and delivers a strong rental return. Your purchasing criteria may look a little different to buying a home you'd live in yourself. For example, proximity to public transport, local amenities, and average rental rates in the area matter more than personal preference. 5. Get It Right and Enjoy Significant Tax Efficiencies One of the most compelling reasons to invest in property through superannuation is the tax efficiency on offer. These benefits can significantly improve the long-term return of a property investment compared to holding it in your own name. Key tax benefits include: No capital gains tax or tax no yearly investment earnings if under super caps. Salary sacrifice advantages if you're sacrificing salary payments into super, loan repayments are effectively tax deductible. Capped tax on investment income—the maximum rate of tax on income after expenses is 15%. Any capital gains on investments held for 12 months or more, is taxed at 10%. Standard investors outside super can pay up to 47%. 6. Follow the Same Due Diligence Rules as Any Property Purchase Buying through superannuation doesn't mean relaxing your standards. If anything, the rules governing SMSFs mean you need to be more rigorous, not less. Property is likely one of the most significant financial decisions of your life. Research, not emotion, should drive your choices. The same rules apply whether you're buying in or out of super: Visit and compare multiple properties Know the values of similar properties in the same area Get all property checks performed by the right professionals Shop around for the right loan structure and lender Don't abandon good investor habits just because the structure is different. 7. Always Get Quality Professional Advice Nothing comes without risk—but the right advice significantly mitigates it. The key is understanding what you're getting yourself into: making informed decisions based on accurate data; keeping a diversified superannuation portfolio that doesn't place all your eggs in one basket; and not underestimating how complex buying property in superannuation can be. Sound Simple? It’s all in the details. If the above tips have made it sound straightforward, know that the detail is where the complexity lives. Getting professional advice from the start helps ensure you make the best possible decisions for your future. When selected according to rigorous property-purchasing criteria, property can be an excellent way to grow your superannuation and increase your chances of building a retirement fund that supports the lifestyle you want. Ready to Explore Property in Your SMSF? Whether you'd like to discuss whether an SMSF is right for you or need help setting one up, reach out to Ascent Accountants . If you want assistance managing the property within your fund, contact the Ascent Property Co team .
June 30 is closer than you think. Learn what tax strategies are still on the table, how to keep more of what you earned this year, and how to get your payroll ready for Payday Super from 1 July 2026.
Is your business structure still working for you? This EOFY, learn how to read the signs of growth, rethink your strategy, and build a real plan from the numbers that actually matter.
