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Transition to Anything - Big Sky Financial Solutions

Transition to Anything



We’ve talked about the benefits of a strategy called ‘Transition to Retirement’ or TTR, for some time now and more and more people are paying attention for a variety of compelling reasons. Some people still haven’t caught on, but we think we know why.

It’s probably because of the name - especially the last part, that ‘R’ word.

Anyone who’s in their 40’s for example, would hear ‘retirement’ and think, “Too early for me, thanks” and switch off. Even people who are in their 60’s might be less interested in what sounds like the end of their working life.

We should be calling the strategy ‘Transition of Retirement’ because the definition of retirement has changed in the past 20 years. The world of work has transformed dramatically, much of it due to the unstoppable march of technology. It means many more people can work from home or anywhere else for that matter. It also means they can choose to work hours outside the traditional ‘9 to 5’ and employers can offer more part-time or casual opportunities.

In addition to this shift, people are generally living longer, healthier lives than the pre-boomer generation and the idea of dropping out of work completely is unthinkable. They may not need the financial benefits to the same degree as when they were younger, but other factors like the social interaction and mental stimulation remain important to them. For some, there is a financial imperative to continuing to work, even up to age 70 or beyond.

Transition to Anything



Given these changes and in recognition of the flexibility and choices people now have in their working lives, the strategy should probably be renamed TTA – Transition to Anything. Like anything financial, it comes down to individual situations – individual wealth, individual goals and individual choices.

Whatever we choose to call it, this strategy should be of interest to a broad range of age groups, for the reasons that follow.

If you’re now aged 55 or over and still working, you must speak to an adviser as soon as you can. People above 60 and working have possibly the most to gain from the Transition to Retirement strategy.

Where are you at?



If you’re 45+ and potentially at your peak earning capacity, it's a good time to look at how much - and how - you’re contributing to your super. You can’t directly take advantage of the TTR strategy yet, because you haven’t reached what’s called your ‘preservation age’.

However, you should be aiming to have a healthy balance by the time you reach this age, so planning ahead now is a smart move.

If you’re 50+ there’s still time to give your super a boost in the lead up to your preservation age – which is 55. This might mean selling an asset and contributing proceeds to your super, for example. You could also consider salary sacrificing to improve your super balance.

There are things to watch out for, like concessional and non-concessional limits on any super contributions you make, but you should act now and talk to us soon.

If you’re 55+ the TTR strategy is already open to you. This means you can now access your super and receive a regular income without having to ‘retire’ - or reduce the number of hours you work.

There are significant financial benefits and greater flexibility because you can:


  • Boost your income - by receiving a retirement income stream from an allocated pension, as well as your normal salary
  • Boost your super - by continuing to work and sacrificing some of your salary to super
  • Reduce your hours, or change job responsibilities - without reducing your income

Or you can use a combination of these options. And, if your situation changes and provided you are still working, you can roll funds from your allocated pension fund back into super too.

You should talk to an adviser about your current situation and your goals for your working and broader life.

If you’re 60+ you get the best piece of news. There’s now no tax payable when you draw a pension from your super fund, even if you’re still working.

A TTR strategy can mean you’re able to retire earlier than you expected, if that’s what you want, or potentially retire with more super than you thought possible. This is because you can continue to contribute to your super at the concessional tax rate of 15% (concessional and non-concessional limits apply), while you withdraw a tax-free pension income from your super fund.

Talk to your adviser soon about how this can apply to your situation.


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