Retirement and Transition to Retirement Planning
The years immediately before retirement are the most strategically significant of your SMSF's life. The decisions you make about when to access your super, how to structure your income, and how to transition from accumulation to retirement phase determine the tax efficiency, the income sustainability, and the long-term security of your retirement. We plan every step of that transition with precision.
The Transition to Retirement Phase Is Where Most SMSF Strategies Either Deliver or Fall Short.
Most SMSF trustees spend years accumulating wealth inside their fund with a general sense that retirement is coming and their super will be there when they need it. What many do not appreciate until they are close to retirement is that the transition from accumulation to retirement phase is not a single event. It is a series of interconnected strategic decisions that need to be made in the right order, at the right time, and in coordination with the rest of your financial position.
Transition to Retirement strategies allow members who have reached their preservation age to access a portion of their superannuation as an income stream while they are still working. Used correctly, a TTR strategy can reduce the tax on your employment or business income, increase your superannuation contributions, and accelerate your wealth accumulation in the years immediately before full retirement, all without reducing your take-home income.
Full retirement planning involves a different but equally consequential set of decisions. When do you stop working? How much income do you need your SMSF to generate? How do you structure your pension to maximise the tax exemption within your transfer balance cap? How do you coordinate your super income with any other income sources including business income, investment property, or a part-time work arrangement?
These are not questions that answer themselves. They require a specialist adviser who understands SMSF strategy, superannuation law, and the tax consequences of each decision, working in coordination with your accountant and legal adviser to ensure every piece of the plan connects.
At New Wave SMSF, we plan your transition to retirement and your retirement income strategy with the specialist knowledge, the integrated advisory model, and the long-term perspective that this phase of your financial life demands.
This information is general in nature and does not constitute personal financial advice. Before acting on any information on this page, please seek advice from a qualified financial adviser.
What Our Transition to Retirement and Retirement Planning Service Covers
We manage every aspect of your transition to retirement and retirement income strategy, from initial planning through to full retirement phase management.
Transition to Retirement Strategy
We assess your eligibility for a transition to retirement income stream, model the tax and cash flow outcomes of implementing a TTR strategy, and advise on whether it is the right approach for your circumstances. Where a TTR strategy is appropriate, we implement it correctly and manage it throughout the period leading up to full retirement.
Retirement Income Modelling
We model your projected retirement income across multiple scenarios, including different retirement ages, different pension draw-down rates, and different investment return assumptions. Retirement income modelling gives you a clear picture of what your fund needs to generate, how long it needs to last, and what decisions you need to make now to achieve the outcome you want.
Retirement Timing Strategy
We advise on the optimal timing of your full retirement from a superannuation, tax, and financial planning perspective. For business owners, retirement timing intersects with your business exit strategy, your CGT small business concessions eligibility, and the timing of asset disposals inside and outside your SMSF. Getting the timing right across all of these moving parts requires coordinated specialist advice.
Pension Commencement Planning
We plan the commencement of your retirement phase pension in coordination with your transfer balance cap position, your total superannuation balance, and your retirement income needs. Pension commencement is one of the most consequential decisions your SMSF will make and we treat it with the strategic depth it deserves.
Tax Optimisation in Retirement
We structure your retirement income to minimise the tax payable on your super income, your investment income outside super, and any other income sources you have in retirement. For retirees with assets both inside and outside super, the coordination of tax positions across both environments can produce significant tax savings over the course of a long retirement.
Couples Retirement Planning
Where both members of an SMSF are approaching retirement, we plan the transition for both members in coordination, optimising the timing of pension commencements, the allocation of assets between members, and the combined household tax position in retirement. Couples planning produces significantly better outcomes than planning for each member in isolation.
How a Transition to Retirement Strategy Actually Works
A transition to retirement income stream is a specific type of superannuation income stream available to members who have reached their preservation age, which is currently 60 for most people, but are still working. It allows you to draw a pension income from your SMSF while continuing to work and make contributions to your fund.
The strategic value of a TTR strategy comes from the combination of two effects working simultaneously.
- The Tax Reduction Effect
By drawing a TTR pension from your SMSF and reducing your salary or business drawings accordingly, you can shift income from your marginal tax rate to the concessional fund rate of 15 percent, or in some cases to zero percent if you are over 60 and receiving a tax-free pension. The reduction in your taxable income can be substantial, particularly for business owners and high income earners.
- The Contribution Acceleration Effect
The tax saving generated by the TTR strategy can be recycled into the fund as additional concessional contributions, accelerating your superannuation balance in the years leading up to full retirement. The net effect is a higher superannuation balance at retirement with no reduction in your take-home income.
However, a TTR strategy is not appropriate for everyone and the benefits depend heavily on individual circumstances including age, income level, superannuation balance, and the fund’s tax position. Since 1 July 2017, assets supporting a TTR pension are no longer exempt from earnings tax inside the fund, which affects the overall value of the strategy for some members. A thorough modelling exercise is required before implementing a TTR strategy to ensure the tax saving exceeds the implementation cost.
At New Wave SMSF, we model every TTR scenario in detail before recommending it. If the numbers support the strategy, we implement it correctly and manage it throughout the transition period. If they do not, we tell you clearly and explain the alternatives.
Common Retirement Planning Mistakes That Affect Long-Term Outcomes
These are the retirement planning errors we most commonly identify in SMSFs approaching or entering retirement without specialist advice.
- TTR Strategy Implemented Without Modelling
A transition to retirement strategy that has not been properly modelled may produce little or no tax benefit, particularly for members whose income is below the threshold where the tax arbitrage is meaningful. Implementing a TTR strategy without rigorous modelling is a compliance risk as well as a financial one, as the strategy must be based on a formal Statement of Advice.
- Pension Commenced Without Transfer Balance Cap Planning
Commencing a retirement phase pension without a clear understanding of the transfer balance cap and its implications can result in an excess transfer balance that cannot be reversed. For members with balances approaching $1.9 million, the pension commencement strategy requires careful planning before any documentation is prepared.
- Retirement Timing Not Coordinated With Business Exit
Business owners who plan their retirement without coordinating it with their business exit strategy often miss the CGT small business concessions that can allow significant proceeds from a business sale to be contributed to superannuation at concessional tax rates. The interaction between the small business CGT concessions and the superannuation contribution rules is one of the most valuable planning opportunities available to retiring business owners.
- Income Sustainability Not Modelled
Commencing a pension without modelling the long-term sustainability of the income draw-down rate against the fund’s projected investment returns creates a risk of outliving the fund’s assets. Retirement income modelling is not optional for a fund that is expected to support a member’s income for 20 to 30 years or more.
Who This Service Is For
Business Owners Planning Their Exit and Retirement
You are planning to exit your business in the next five to ten years and you want your SMSF retirement strategy coordinated with your business exit plan. You want to understand the CGT small business concession opportunities, the contribution strategies available around a business sale, and how to structure your retirement income from the proceeds.
Members Approaching Preservation Age
You have reached or are approaching your preservation age and you want to understand whether a transition to retirement strategy is appropriate for your circumstances. You want a thorough modelling exercise and a clear recommendation before you make any decisions.
Trustees Planning Full Retirement
You are planning to retire in the next one to three years and you want a comprehensive retirement income plan that covers pension structuring, transfer balance cap management, tax optimisation, and long-term income sustainability. You want the plan built by a specialist team with full visibility of your complete financial position.
Retirees Reviewing an Existing Retirement Strategy
You are already in retirement and you want your current pension strategy reviewed. Your circumstances have changed, your fund’s investment mix has evolved, or you are not confident that the strategy in place is delivering the best available outcome. You want a fresh assessment and a clear recommendation.
The New Wave SMSF Difference
- Modelling Before Recommending
We model every transition to retirement and retirement income scenario in detail before making a recommendation. You receive a clear picture of the projected outcomes under different assumptions before you commit to any strategy. Our recommendations are evidence-based, not generic.
- Business Exit and Retirement Coordinated
For business owners, we coordinate your retirement planning with your business exit strategy, your CGT small business concession eligibility, and the contribution opportunities that a business sale creates. This coordination is only possible when your accountant, financial planner, and legal adviser work within the same firm, which is exactly the model New Wave SMSF is built on.
- Long-Term Income Sustainability Built In
Every retirement income strategy we develop is modelled for long-term sustainability. We assess the draw-down rate against projected investment returns, account for inflation, and ensure the strategy is designed to support your income needs for the full duration of your retirement, not just the early years.
Planning Your Transition to Retirement? Start the Conversation Now.
The decisions you make in the years leading up to retirement have a greater impact on your long-term financial security than almost any other financial decisions you will make. Our specialist team is ready to help you plan every step of the transition with confidence.
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Disclaimer
This information is general in nature and does not constitute personal financial advice. New Wave Financial Planning Pty Ltd is an Authorised Representative of NWG Financial Services Pty Ltd, AFS Licence No. 538619. The information on this page does not take into account your personal objectives, financial situation, or needs. Before acting on any information on this page, you should consider its appropriateness to your circumstances and seek advice from a qualified financial adviser.