Many of us don’t start to seriously plan for retirement until it’s on our doorstep, but that doesn’t have to mean it’s too late.
These strategies can help with your sprint to the finish line, even if your current balance makes you want to shut your eyes and hide under the covers.
Don’t have spare cash you could save or outside investments you can add to super? There’s something here for you too.
Transition to retirement
If you’re 60 or older and still in the workforce, combining a transition-to-retirement (TTR) pension with salary-sacrifice or tax-deductible super contributions can give your super a welcome boost. What’s more, it doesn’t have to hit your hip pocket.
Once you turn 65, you can use the same strategy with a standard super pension, rather than a TTR.
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This strategy works because the income you draw from super is tax free while the contributions you make are taxed at the low rate of 15%. An additional 15% tax applies if your income plus concessional super contributions exceeds $250,000 for the year.
The effect is that you can maintain the same take-home pay but have more going into super than you are withdrawing, thanks to the tax concessions.
Note
If you’re a member of an untaxed (constitutionally protected) fund such as SuperSA, West State Super or Gold State Super, any untaxed super you transfer to a TTR pension will have 15% tax deducted from it before the pension starts. You may also have the option to salary sacrifice into your untaxed fund with no contribution tax.
Example: Jenny
Jenny is 60, earns $60,000 per year and has a super balance of $120,000. She doesn’t think a transition-to-retirement strategy can benefit her because of her relatively low balance and income.
However, Jenny has the option to leave her fund’s minimum balance of $10,000 in her current account and transfer $110,000 to a transition-to-retirement pension. Then, she can withdraw $11,000 tax free this year from a TTR pension and salary sacrifice $16,500 to super to maintain approximately the same take-home pay.
The net amount added to her super is $14,025 after deduction of 15% contribution tax.
By using a transition-to-retirement strategy, Jenny has an extra $3,025 added to her super this year ($14,025 net contribution – $11,000 pension payment) while maintaining the same amount of income to live on.
Based on 2025–26 tax rates
The maximum that can be withdrawn from a transition-to-retirement pension is 10% of its balance each year. When using this strategy, you can top up your pension account annually with the savings that have been accumulating from your contributions to maximise the amount available to withdraw (if required).
This involves a bit of admin because you can’t add directly to a pension account, so you need to transfer the balance of the existing pension back into the account holding your contributions and use the combined balance to start a new pension. Some providers have a single form that covers the whole process.
You can open an account-based pension for retirement when you turn 65, even if you’re still working. If you already have a TTR pension, it will generally be converted into an account-based pension for retirement on your 65th birthday.
These simple account-based pensions have no maximum annual withdrawal and generate tax-free investment earnings, compared with up to 15% tax on earnings for a TTR or accumulation account. They do, however, have a minimum annual withdrawal amount, depending on your age.
Combining tax-free payments from a retirement pension with concessional contributions can significantly boost your balance because you can make the maximum concessional contribution that is tax effective for you and withdraw as much as you need to replace that income from the pension. Tax-free investment earnings also give you an extra push.
It is also important to be mindful of the concessional contribution cap, as salary-sacrifice and personal tax-deductible contributions as well as your employer’s Super Guarantee payments all count towards your annual cap amount.
Example – account-based pension and concessional contributions after 65
Ahmet has just turned 65. He is earning $100,000 a year from his current job and his super balance is $350,000.
Ahmet has unused concessional cap space of $75,000 accumulated from the previous five financial years. Since his total super balance was below $500,000 last 30 June, Ahmet’s previously unused cap space allows him to contribute more than the usual annual concessional cap without penalty.
Ahmet plans to retire in two years. During that time, he will contribute $55,000 per year by salary sacrifice to his super, reducing his taxable income to $45,000 where the lowest marginal tax rate (16% + 2% Medicare levy in 2025–26) applies.
Combined with his employer contributions, Ahmet’s total concessional contributions will be $67,000 per year. In 2025–26, the first $30,000 will be accommodated under the annual contribution cap and the remaining $37,000 will draw from his previously unused cap space.
After salary sacrifice, Ahmet’s take home pay is $37,075 lower for the year. He will draw $37,075 tax-free from his account-based pension to replace this and maintain the income level he is used to. This is more than the maximum that would apply for a TTR pension based on his balance, but since Ahmet is 65 and has a standard account-based pension rather than a TTR, no maximum withdrawal applies to him.
Ahmet will have net salary sacrifice of $46,750 ($55,000 – 15% contribution tax) for the year and withdrawals of $37,075 to maintain his take-home pay. The difference between his contributions and withdrawals is a boost to his super balance of $9,675 for the year.
Ahmet’s pension account will generate tax-free investment earnings. When compared with a super account in the accumulation phase or a TTR pension, this adds around 0.7% in additional investment return during an average year because tax is not deducted before the return is credited to the account. Ahmet plans to use $340,000 to start his pension, so the additional return could be around $2,380 for the year ($340,000 x 0.7%).
If you haven’t been contributing up to the concessional contribution cap (currently $30,000) in recent years, you may have unused concessional cap space you can carry forward. The unused space, which can be drawn from the past five years, allows you to contribute more than the standard cap without incurring additional tax.
To be eligible, you must have had a total super balance below $500,000 on 30 June of the financial year prior to the year you’re using carry-forward contributions. You also need to have unused cap space from at least one of the five prior financial years.
Using the carry-forward rule to make additional contributions could save you tax and maximise your super in the run up to retirement.
Example: Using carry-forward contributions to move other assets into super tax effectively
Shimita plans to retire in five years and has not been focused on her super. She only recently learned that super generates tax-free investment returns and income after retirement and is now keen to maximise the amount she has in this environment.
After logging in to myGov, she finds that she has $85,000 in unused cap space that has accumulated over the past five years. Her current salary is $90,000 per year.
Shimita decides to sell some investments and contribute those savings to super instead. She receives $200,000 from the sale including a capital gain of $50,000. After the 50% discount for capital gains on assets held longer than 12 months, she must declare $25,000 of this as income.
Before super contributions, Shimita’s total taxable income is $115,000 ($90,000 salary + $25,000 capital gain). Her employer’s super contribution is $10,800 for the year. Shimita makes a tax-deductible personal contribution to super of $90,000, reducing her taxable income to $25,000.
Shimita’s total concessional super contribution is $100,800 but she will not exceed the contribution cap thanks to the carry-forward rule. The first $30,000 of her contribution (including her employer’s $10,800 Super Guarantee payment) will use the cap for 2025–26 and the remaining $70,800 will be drawn from her $85,000 of available carry forward, leaving a remainder of $14,200 she can carry forward into future years.
By trading income tax for 15% super contribution tax, Shimita saves almost $14,000.
She still has $110,000 left over from the sale of her investment. This can be used to fund more tax-deductible contributions over the coming five years before retirement.
Carry forward can be useful for anyone eligible who can afford to contribute more than the annual concessional cap in one year, not only those who have investments that can be sold.
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Not to be confused with the carry-forward of concessional contributions, the bring-forward rule allows contributions above the standard annual non-concessional contributions cap to be made.
Non-concessional contributions are personal contributions you don’t claim as a tax deduction. They don’t immediately reduce your tax bill, but can help you get other savings into the tax-advantaged super environment where your future investment earnings will be tax free in retirement phase.
The annual cap for non-concessional contributions is $120,000 in 2025–26, but the bring-forward rule allows you to contribute up to three times that ($360,000) in one year. The system works by giving you access to three years’ caps to use at any time in a three-year ‘bring-forward period’. Contributing more than the standard cap in one year automatically triggers the rule.
For example, if you are not already using the rule and contribute $200,000 in 2025–26, your bring-forward period will run from 1 July 2025 to 30 June 2028. During this period, you can contribute up to $360,000 in non-concessional amounts without exceeding the cap. As you have already contributed $200,000, you have $160,000 remaining that can be used during the time up to 30 June 2028.
Anyone under age 75 with a total super balance (TSB) below $1.76 million on 30 June 2025 has access to the three-year rule in 2025–26. The rules are modified if your balance is higher but below the $2 million cut off for making non-concessional contributions.
Example: Alan
Alan is 74 and plans to retire next year. He has significant savings outside super and he would like to get as much into the system as possible.
Alan makes a $120,000 non-concessional contribution in the current financial year, not yet triggering the bring-forward rule.
He will make a further contribution of three times the non-concessional cap next financial year, before he turns 75 and is prohibited from making further super contributions. By this time the cap may also have been increased with indexation, allowing him to contribute a larger amount.
This way he has used four years’ worth of cap in the short period just before retirement.
That Alan will be over 75 for much of his bring-forward period does not prevent him from using the rule, but he must ensure that all contributions are received by his super fund before he turns 75, or within 28 days after the end of the month he turns 75.
When you sell a property you have owned for 10 years or more that is fully or partially exempt from capital gains tax (CGT) under the main residence exemption and you’re 55 or older, you have an opportunity to make a downsizer contribution of up to $300,000 to super.
To receive the CGT main residence exemption, the property must have been your home for at least part of the time you owned it.
This special contribution does not count towards either contribution cap and can be made even if you are older than 75 or have more than the transfer balance cap (currently $2 million) in super.
If you and your spouse lived in the home together, you’re both eligible to contribute.
The downsizer contribution can be used only once (that is, you can’t contribute again if you sell another property later) and the total contributions from the sale of one property can’t exceed its sale price.
Despite the name, you don’t need to be downsizing or even purchasing a new home at all. It is the sale of your current or previous home owned longer than 10 years, that triggers eligibility.
Example: Chun and Mei
Chun and Mei are 58 and have just sold their home of 20 years for $800,000. They both have very low super balances as they have often worked in their own business and neglected to contribute, but they have significant assets outside super.
Chun and Mei contribute $300,000 each to super as downsizer contributions. This leaves their full concessional and non-concessional caps untouched and permits them to contribute other assets to super using those caps – including the bring-forward and concessional carry-forward options.
The couple purchase a new home to retire to for $1 million using their remaining sale proceeds and other savings.
Although they did not downsize their home, Chun and Mei were able to take advantage of the downsizer contribution.
Kate has worked in the superannuation sector since 2003. Her experience ranges from customer service to financial advice, member education, complaints management, trustee services, and learning and development. She currently develops content and facilitates learning sessions for super professionals with the Association of Superannuation Funds (ASFA) as well as writing for SuperGuide.
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