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Retirement Planning for High-Income Professionals
The five to ten years before retirement are the most strategically valuable years of your financial life. Contribution caps are still available. Income is still flowing. Tax structuring decisions still compound. And the window for correcting gaps in insurance, super, and estate planning is still open.
Build MyWealth works with professionals who are not yet retired but who recognise that the transition from earning to drawing requires coordination across superannuation, tax, insurance, and estate structures. The question at this stage is not “when can I retire?” The question is “have I positioned every structure to work as efficiently as possible before I stop working?”
This page covers the three core pre-retirement strategies for high-income professionals: transition to retirement (TTR), downsizing contributions, and pre-retirement super maximisation. It does not cover post-retirement drawdown, pension phase income streams, or aged care planning. Those are separate conversations that follow once a retirement date is confirmed.
Transition to Retirement: Not What It Was, Still Worth Understanding
Transition to retirement strategies changed materially after 1 July 2017 when the government removed the tax exemption on earnings supporting TTR income streams. Before that date, TTR pensions were a straightforward arbitrage: move super into pension phase, pay zero tax on investment earnings, salary sacrifice pre-tax income back in, and pocket the tax differential. That arbitrage is closed. TTR income streams in the pre-retirement phase are now taxed at up to 15% on earnings, the same rate as accumulation phase.
The strategy still works for specific client profiles, but the threshold is higher. A TTR strategy is generally worth modelling for professionals who are aged 60 or older, are still working (full time or part time), have a marginal tax rate above 30%, and have sufficient superannuation balance to generate meaningful income stream payments within the legislated 4% to 10% annual payment range.
The mechanics: you open a TTR income stream using a portion of your super (minimum balance requirements apply, typically $10,000 to $30,000 depending on the fund). You continue working and receiving employer SG contributions into your accumulation account. The TTR income stream pays you between 4% and 10% of the account balance per year. If you are 60 or older, those payments are tax-free income to you personally. Meanwhile, you salary sacrifice an equivalent amount back into super, which is taxed at 15% (or 30% if Division 293 applies). The net effect is a tax saving equal to the difference between your marginal rate and the contributions tax rate, multiplied by the amount cycled through the strategy.
Illustrative scenario: A senior architect aged 62, earning $320,000, transfers $400,000 from accumulation into a TTR income stream. She draws the maximum 10% ($40,000) as tax-free income. She salary sacrifices $40,000 of her pre-tax salary into her accumulation account. Her take-home pay stays the same. The salary sacrifice is taxed at 15% ($6,000) instead of her marginal rate of 47% ($18,800). The annual tax saving is approximately $12,800 before Division 293 considerations. Over five years to retirement, this compounds to over $64,000 in additional super, even before investment returns on the recycled amounts. This is a general illustration only and does not represent an actual client outcome.
When TTR Does Not Work
A TTR strategy does not work if your marginal tax rate is close to 15%, if your super balance is too low to generate meaningful TTR payments, if you are under 60 (TTR payments are taxable), or if the compliance and administration costs of running the strategy exceed the tax benefit. For professionals earning below $120,000 or with super balances below $200,000, the numbers rarely justify the complexity.
It also does not work if it conflicts with your insurance structure. Moving funds from accumulation to a TTR pension can affect insurance cover held inside super. If your life, TPD, or income protection is funded from your accumulation balance, reducing that balance to fund a TTR stream may leave insufficient funds for premium payments. Review your risk insurance strategy before commencing any TTR arrangement.
Downsizing Contributions: $300,000 Per Person Outside the Caps
The downsizer contribution allows individuals aged 55 or older to contribute up to $300,000 (or $600,000 per couple) from the proceeds of selling their main residence directly into superannuation. This contribution does not count towards concessional or non-concessional caps and is not restricted by total superannuation balance.
For high-income professionals, the downsizer contribution is typically most valuable when combined with other pre-retirement strategies. A professional who has already maximised their concessional and non-concessional contributions can use the downsizer contribution to inject an additional $300,000 into the concessional super environment without any cap impact.
The key eligibility requirements: you must be 55 or older at the time of contribution, the property must have been owned by you or your spouse for at least 10 years, the property must qualify (fully or partially) for the main residence CGT exemption, and the contribution must be made within 90 days of receiving the sale proceeds (usually settlement).
Strategic Considerations for High-Income Professionals
Downsizing contributions increase your total superannuation balance. For professionals with balances approaching $3 million, a downsizer contribution that pushes the balance above the threshold will trigger exposure to Division 296 tax. The tax saving from holding assets inside super must be weighed against the additional Division 296 liability.
Downsizing contributions are assessed under the Age Pension means test for those at or above Age Pension age. While most high-income professionals reading this page will not be relying on the Age Pension, the means test interaction should be modelled for any client where partial pension entitlements are possible.
Timing matters. If you sell your property near the end of a financial year, you may choose to delay the downsizer contribution into the next financial year (within the 90-day window). This keeps your 30 June total superannuation balance lower, which can preserve eligibility for carry-forward concessional contributions and non-concessional contribution thresholds in the following year.
Illustrative scenario: A GP couple, both aged 63, sell the family home for $2.4 million and purchase a smaller property for $1.5 million. They each contribute $300,000 to their respective SMSFs as downsizer contributions, adding $600,000 to their combined super. The husband’s balance increases from $2.6 million to $2.9 million, remaining below the $3 million Division 296 threshold. The wife’s balance increases from $1.8 million to $2.1 million, reaching the general transfer balance cap but remaining below the Division 296 threshold. The tax-free component of their super increases by $600,000, reducing potential death benefit tax if benefits are eventually paid to adult non-dependant children. This is a general illustration only and does not represent an actual client outcome.
Pre-Retirement Super Maximisation: The Final Contribution Window
The years immediately before retirement represent the last opportunity to use concessional and non-concessional contribution caps. Once employment income stops, the practical ability to use concessional caps often reduces, and personal deductible contributions depend on having sufficient assessable income and completing the notice of intent process. Non-concessional contributions are restricted by age and total superannuation balance.
For professionals aged 60 to 67, the following strategies should be reviewed in the final three to five years before intended retirement:
Carry-forward concessional contributions: If your total superannuation balance was below $500,000 on 30 June of the prior year, unused concessional cap amounts from the previous five financial years can be used. This can allow a single-year concessional contribution of $65,000 or more, depending on the accumulation of unused caps. See our EOFY super contribution strategy for detailed cap tables and worked examples.
Bring-forward non-concessional contributions: Bring-forward eligibility depends on your total superannuation balance at 30 June of the prior year. If eligible for the full three-year bring-forward in 2025-26, you may contribute up to $360,000 in a single year (increasing to $390,000 from 1 July 2026, pending ATO confirmation). This is often used to inject after-tax savings, inheritance proceeds, or investment asset sales into super before the retirement trigger.
Personal deductible contributions: For business owners and partners, personal deductible contributions offer the same tax benefit as salary sacrifice. You contribute from personal funds and claim a deduction by lodging a valid notice of intent with your fund before lodging your tax return. This is particularly relevant in the final year of work when employment income may be partial but assessable income from business distributions may be high.
Spouse contribution equalisation: Where one spouse has a materially lower super balance, equalising balances before retirement can maximise the use of two transfer balance caps (general cap $2.1 million from 1 July 2026, personal cap varies) rather than concentrating wealth in a single fund. Spouse contributions, contribution splitting, and the recontribution strategy are all mechanisms for achieving this.
Illustrative scenario: A law firm partner aged 64 plans to retire at 67. Her current super balance is $1.2 million. Over the next three years, she maximises concessional contributions (using carry-forward), triggers the bring-forward rule for a $360,000 non-concessional contribution from the sale of an investment property, and her employer continues SG at 12%. By retirement, her projected balance is $1.95 million, close to the general transfer balance cap of $2.1 million (from 1 July 2026), allowing her to transition almost the entire balance into a tax-free retirement income stream. This is a general illustration only and does not represent an actual client outcome.
Division 296 and Pre-Retirement Decisions
For professionals with superannuation balances approaching $3 million, every pre-retirement contribution decision must be evaluated against the Division 296 framework. The additional 15% tax on earnings attributable to the balance above $3 million means that the marginal benefit of contributing more to super diminishes as the balance climbs above the threshold.
This does not mean contributions should stop. It means the modelling must include the Division 296 effective tax rate alongside the accumulation benefit. In many cases, superannuation remains the most tax-efficient structure even with Division 296 applied, because the combined rate (15% contributions tax plus the proportional Division 296 tax) is still below the top marginal rate outside super.
However, for professionals with balances well above $3 million, the calculus shifts. Structures outside superannuation, including investment bonds, discretionary trusts, and direct holdings, may offer a more efficient marginal outcome on additional savings. This is a whole-of-wealth modelling exercise, not a single-variable decision.
See our Division 296 tax strategy for a detailed explanation of how the legislation works and what to consider before 1 July 2026.
The Build MyWealth Pre-Retirement Coordination Review
Every pre-retirement engagement begins with a structured review of the decisions that must be made before the retirement trigger is pulled. This is not a product recommendation exercise. It is a coordination exercise across five domains:
1. Contribution Maximisation
Mapping all available contribution pathways (concessional, carry-forward, non-concessional, bring-forward, downsizer, spouse) and confirming which can be executed before the intended retirement date without breaching caps or triggering unintended consequences.
2. Insurance Transition
Reviewing all insurance held inside and outside superannuation to confirm cover is appropriate for the transition period and that moving funds between accumulation and pension accounts does not disrupt premium funding. Income protection ceases to be relevant once employment income stops, but life and TPD cover may need to continue.
3. Division 296 Modelling
For balances approaching or above $3 million: modelling the effective tax rate under Division 296, assessing whether the cost base reset opt-in benefits the fund, and evaluating whether any pre-retirement withdrawals are warranted to manage the threshold.
4. Estate Plan Alignment
Confirming that binding death benefit nominations are current, insurance ownership is aligned with the estate plan, and the transition from accumulation to pension phase does not create unintended consequences for nominated beneficiaries or the transfer balance cap. See our estate planning strategy for the full coordination framework.
5. Structure Sequencing
Determining the order in which structures should be activated: which super goes to pension first, when TTR should commence or cease, when to trigger the retirement condition of release, and how to sequence withdrawals and recontributions to optimise the tax-free component across both spouses.
As published in: Australian Financial Review | Money and Life | Professional Planner
Frequently Asked Questions
For professionals aged 60 or older with a marginal tax rate above 30% and sufficient super balance to generate meaningful TTR payments, the strategy still produces a net tax benefit. The benefit is smaller than it was before July 2017 because earnings on TTR pensions are now taxed at up to 15%, but the salary sacrifice recycling component remains effective. The strategy requires modelling specific to your income, balance, and contribution position.
Up to $300,000 per person ($600,000 per couple) from the proceeds of selling your main residence. The property must have been owned for at least 10 years and you must be aged 55 or older. The contribution must be made within 90 days of receiving the sale proceeds. Downsizer contributions do not count towards concessional or non-concessional caps, but they do increase your total superannuation balance, which may affect Division 296 exposure and other contribution eligibility thresholds.
Unused contribution capacity that expires at 30 June each year. The concessional cap resets annually, and carry-forward amounts expire after five years. A professional who misses three years of maximum contributions has permanently lost up to $90,000 of pre-tax contribution capacity (at $30,000 per year). Combined with the non-concessional opportunity cost, the cumulative loss over a decade can exceed $500,000 in foregone super accumulation.
The transfer balance cap (general cap $2.1 million from 1 July 2026, personal cap varies) limits how much superannuation you can move into the tax-free pension phase. Any super above the cap must remain in accumulation (where earnings are taxed at 15%) or be withdrawn. Pre-retirement planning should target a balance close to the cap at retirement to maximise the amount that can enter pension phase. For couples, equalising balances before retirement allows both transfer balance caps to be used, doubling the tax-free pension capacity.
This depends on modelling specific to your balance, your contribution history, and your estate plan. Withdrawing super before retirement triggers a condition of release and may attract capital gains tax inside the fund. The money withdrawn loses the concessional super tax environment permanently. For some professionals, the Division 296 tax on marginal earnings above $3 million is still lower than the tax they would pay on the same earnings outside super. For others, particularly those with balances well above $3 million, the net benefit of reducing the balance may outweigh the cost. This is a whole-of-wealth modelling decision.
Pre-retirement planning intersects with tax structuring, estate planning, and business succession. Sangram Rana is a Registered Tax Agent and works alongside your existing accountant on contribution strategy, personal deductible contribution claims, and the tax treatment of TTR income. Where estate planning documentation needs updating before retirement, we coordinate with your estate planning lawyer to ensure the financial structures and legal documents are aligned.
Five to seven years before your intended retirement date. This allows enough time to maximise carry-forward concessional contributions (which accumulate over five years), execute a staged non-concessional strategy, review and restructure insurance, and coordinate estate planning updates. Starting two years before retirement leaves many of these opportunities expired or compressed into a timeframe that creates unnecessary complexity.
Sangram Rana is an IFA Excellence Awards finalist: Risk Adviser of the Year 2022, 2023, and 2025, SMSF Adviser of the Year 2022 and 2023, and Client Outcome of the Year 2022. Published in the Australian Financial Review, Money and Life, SmartCompany, Inside Small Business, Professional Planner, Life Insurance Guide, CommBank Brighter Magazine, and Benefolk. Corporate Authorised Representative, Lifespan Financial Planning AFSL 229892.
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Build MyWealth is a trading name of Accounting Cloud Pty Ltd. Sangram Rana is a Corporate Authorised Representative (ASIC No. 1306106) of Lifespan Financial Planning Pty Ltd (AFSL 229892). Suite 17, Level 3, 55 Collins Street, Melbourne VIC 3000. Phone: 03 7034 4888. This page contains general information only and does not constitute personal financial advice. Financial Services Guide (Lifespan): Refer to lifespanfp.com.au. Privacy Policy: buildmywealth.com.au/privacy-policy
This content reflects legislation and ATO rates as at March 2026. The 2026-27 contribution caps referenced are based on AWOTE indexation data published by the ABS, pending formal ATO confirmation. Division 296 received Royal Assent on 13 March 2026. Subject to change pending further legislative or regulatory development. Further ATO guidance and regulations may clarify administrative details.