Transitioning to retirement strategies for 55-65 year old Australians

For many Australians aged 55–65, retirement looks quite different to how it did for their parents. Reaching a cut-off age, downing tools for good, packing the caravan and venturing off into the world, for many, for the very first time, is no longer the conventional way.

Longer file expectancy, work-life balance and the advances in travel capabilities and working environments have significantly changed generational thinking about retirement.

Over the past decade, we’ve seen a shift in people’s attitudes to retirement, and many individuals reaching this phase of their life are not quite ready to fully retire. Whether for financial reasons or because they still enjoy the structure, purpose and contribution that work provides, more are choosing a transition-to-retirement strategy rather than the traditional end-of-work method.

A Transition to Retirement (TTR) strategy allows you to access part of your superannuation while you continue working. This typically involves:

• Reducing your working hours (e.g. moving from full-time to part-time)
• Supplementing your income with a TTR pension from your super
• Potentially salary sacrificing back into super to maintain or grow your balance

It’s about creating financial and personal flexibility, and its increasing popularity is being experienced across nearly every sector of the economy.

Retirement today looks very different from that of previous generations. Many people
want to stay mentally and socially engaged. Only a few generations ago, 55-60 seemed very old, whereas in modern societies, this age bracket can be seen as a peak. Experience, emotional maturity and a desire to leave a lasting impression and legacy are strong drivers for people at this stage of their working life. They value the routine and the sense of purpose work provides, and with higher living costs, many are not yet financially ready to stop working entirely.

For working Australians in this position, they don’t have to view the next 5 or 10 years as their last if they don’t want to. A structured transition allows you to ease into retirement on your terms, reducing pressure while maintaining control over your income and lifestyle.

One of the key benefits of a TTR strategy is how it interacts with your super. Depending on your situation, you may be able to:

• Access tax-effective income from your super
• Continue contributing via salary sacrifice
• Reduce overall tax while maintaining a similar level of income

This can help extend the longevity of your retirement savings while still giving you the lifestyle flexibility you’re looking for. Like any strategy, it needs to be tailored. The right structure depends on your income, super balance, tax position and long-term goals.

For those approaching Age Pension eligibility, working part-time can also play an important role. Income from part-time work and super withdrawals can affect:

• Your eligibility for the Age Pension
• The amount you receive under the income and assets tests

However, this isn’t necessarily a negative. In many cases, a well-structured transition strategy can:

• Reduce reliance on government support
• Provide greater financial independence
• Allow you to build or preserve assets for longer

It’s about understanding the trade-offs and designing a plan that aligns with your goals, not just chasing eligibility. While the financial benefits are significant, the lifestyle advantages are often what make this strategy valuable. Transitioning gradually can:

• Reduce stress and burnout
• Provide more time for family, travel or personal interests
• Maintain a sense of contribution and identity

For many people, this phase becomes less about “retirement” and more about redesigning life on their own terms.

Without the right guidance, it’s easy to miss opportunities or create unintended consequences. Some common pitfalls include:

• Withdrawing super too early without a long-term plan
• Not optimising tax outcomes
• Overlooking the impact on Centrelink entitlements
• Failing to align the strategy with retirement goals

This is where professional advice becomes critical. At AFGP, our focus is not just on numbers; we work with you to create a strategy that moves with you, at your pace and for what you need.

While transitioning to retirement is not for everybody, those who like the idea need to understand that it is not a one-size-fits-all formula. Some people will choose to fully retire at 60. Others may continue working into their late 60s or beyond. Neither is right nor wrong. What matters is having a plan.

A well-designed Transition to Retirement strategy can help you:

• Maintain income while reducing work hours
• Optimise your superannuation
• Stay engaged and fulfilled
• Move into retirement with confidence

The earlier you start planning that transition, the more options you’ll have.

AFPG has the expertise to guide you in a Transition to Retirement strategy. We’ve helped hundreds of Australians, singles, couples and families make informed decisions that enable them to live a lifestyle of their choosing.

Contact us today for experienced, compassionate, and professional financial advice.