Transition to retirement

Keep your take-home, bank the tax

From age 60 you can salary-sacrifice into super and draw a tax-free TTR pension to replace the pay you gave up — pocketing the gap between your marginal rate and super's 15% every year, with no drop in take-home.

Transition to retirement (TTR)

From age 60 you can salary-sacrifice into super and draw a tax-free TTR pension to replace the take-home you give up — quietly banking the gap between your marginal rate and super's 15% each year.

Salary (before tax)

Salary sacrifice / yr

Current super balance

Age (optional)

By salary-sacrificing $15,000 and drawing a tax-free TTR pension of $10,200, you keep the same take-home and add to super each year

$2,550

extra into super a year in tax saved — your take-home holds at $67,280.

Marginal rate

30%

Super tax on sacrifice

15%

Tax-free pension

$10,200

Net into super

$2,550

For people aged 60+. The sacrifice is taxed at 15% going into super instead of your 30% marginal rate; the TTR pension is tax-free from age 60, so it restores the take-home you gave up. Open the panel for the full mechanics. A guide, not financial advice.

How the $2,550 a year appears

Salary sacrificed into super: $15,000
Contributions tax (15%): − $2,250
Net landing in super: $12,750
Income tax + Medicare saved (at 30%): + $4,800
Take-home you'd otherwise lose: $10,200
Tax-free TTR pension drawn to restore it: − $10,200
Take-home pay — unchanged: $67,280
Net added to super (after the pension): $2,550

The net addition to super ($2,550) equals the tax you saved ($2,550) — you pocketed the gap between your 30%marginal rate and super's 15% on every dollar sacrificed, with no drop in take-home.

The sacrifice ladder — benefit by amount

Net tax banked each year at each sacrifice level (same model, re-run). The dashed line is the $32,500 concessional cap less your 12% employer super ($10,200), leaving $22,300 of room to sacrifice. Beyond it (amber) the extra is taxed at your marginal rate again, so the benefit stops growing. Your $15,000 is highlighted.

The 4%–10% pension band

Min (4%)

$14,000

Pension needed

$10,200

Max (10%)

$35,000

The $10,200 pension needed to restore your take-home falls below the allowed 4%–10% band on a $350,000 balance ($14,000–$35,000). A larger sacrifice (or smaller balance) would bring the pension into the band.

The yearly benefit, compounded to 65

Super return (real)

Banking $2,550 a year from 60 to 65, at 5.0% p.a., grows to

$14,091

Age	Benefit banked	Growth	Running total
61	$2,550	—	$2,550
62	$2,550	+$128	$5,228
63	$2,550	+$261	$8,039
64	$2,550	+$402	$10,991
65	$2,550	+$550	$14,091

Just the tax saved, reinvested — on top of the sacrifice itself and any employer super. Return is in today's (real) dollars, default 5.0% (balanced/growth fund), editable above.

ATO — Transition to retirement income streams. Resident tax rates, 2026-27, including the 2% Medicare levy. TTR income streams are available from your preservation age (60) and pension payments are tax-free from age 60. Concessional contributions above $32,500 a year (employer + sacrifice) lose the concession. Excludes other offsets, insurance in super and fund rules. Estimates only — not financial advice.

A transition-to-retirement (TTR) income stream lets you draw from super while you are still working. As a tax strategy, the point is not to spend the pension: you sacrifice an equivalent slice of salary into super, taxed at 15% rather than your marginal rate, then draw the tax-free pension to plug the hole in your pay. Your bank balance ends the year unchanged; your super ends it larger by the tax you did not pay.

It sizes the three moving parts — the sacrifice, the pension that holds your take-home steady, and what lands in super after both — then checks the pension fits the 4%–10% a TTR income stream must pay each year.

How this is calculated

1
Tax your salary twice
Income tax and the Medicare levy are worked out on your full salary, then again on the salary less your sacrifice, on 2026-27 resident rates. The difference is the tax avoided, and the net pay you must now replace.
2
Charge super's 15% on the way in
Sacrificed contributions are taxed at 15% inside the fund. The annual benefit is the income tax and levy saved less that contributions tax: the gap between the two rates on every dollar sacrificed, floored at zero.
3
Size the pension to the shortfall
The pension is set to exactly the fall in your net pay, not to a percentage you pick. TTR payments are tax-free from age 60, so a dollar of pension replaces a dollar of lost take-home.
4
Net it out against super
What lands in super is the sacrifice after contributions tax, less the pension drawn back out. That comes out identical to the tax saved, which is why it is better read as banking a tax gap than as extra contributions.
5
Test the band and the cap
Your balance sets the 4%–10% band the pension must sit inside, measured at 1 July. The advanced panel re-runs the model across sacrifice levels, marks the room left inside the $32,500 concessional cap after your employer's 12% Super Guarantee, and compounds the yearly benefit to 65.

What it assumes

Your salary is treated as your whole taxable income. Investment income, deductions, offsets, the Medicare levy surcharge and study-loan repayments are not modelled.
Pension payments are treated as fully tax-free, which holds from age 60 in a taxed fund. Untaxed schemes, including some public sector funds, work differently.
The concessional cap is not enforced. The ladder chart marks the room left inside the $32,500 cap after your employer's 12% Super Guarantee, but a larger sacrifice is still priced.
Your balance is used only to set the drawdown band — earnings, fees and insurance premiums inside super are not projected.
The headline figure is one year at your current salary. The compounding table assumes the same benefit each year to 65 at the real return you set, defaulting to 5% p.a. after inflation.

Common questions

Where does the benefit show up?

Not in your pay: the strategy is built so your take-home does not move. It shows up as a larger super balance: the sacrifice goes in taxed at 15%, the pension comes back to cover the shortfall, and what stays behind is the tax you would have paid at your marginal rate.

Does this still work on a lower income?

Much less well. The benefit is the gap between your marginal rate and super's 15% contributions tax. In 2026-27 the first taxed bracket is 15% itself, so there only the 2% Medicare levy is left to save; below the tax-free threshold there is nothing to save at all.

How much should I sacrifice?

The benefit grows with the amount sacrificed until two ceilings bite. Contributions above the concessional cap — $32,500 in 2026-27, part of it already used by your employer's 12% Super Guarantee — lose the concession, which is where the ladder chart turns amber. The pension must also stay inside the 4%–10% band.

What happens at 65?

A TTR income stream converts to a retirement-phase pension at 65 or once you meet a condition of release, and the 10% maximum falls away — which is why the projection stops there. Until then it pays regular income rather than lump sums, and your fund's rules and fees sit outside this model.

Sources: ATO — Transition to retirement income streams · ATO — Individual income tax rates (residents) · All data sources

General information only, not financial advice. Figures are estimates based on the inputs and assumptions above and don't account for your personal circumstances. Confirm anything important with the relevant authority or a licensed adviser.

How this is calculated

Tax your salary twice

Charge super's 15% on the way in

Size the pension to the shortfall

Net it out against super