For many Australians approaching retirement, the biggest risk is not market volatility — it is entering retirement without a deliberate strategy.

This is particularly true for households with $1.5M+ in superannuation who are unlikely to qualify for the Age Pension. For this cohort, retirement outcomes are driven far more by tax structure, pension timing, and contribution strategy than by investment returns alone.

Done correctly, pre-retirement planning can materially improve lifetime income, reduce tax, and enhance estate outcomes.

Done poorly, it can lock in unnecessary tax and permanently reduce retirement flexibility.

 

Understand the Transfer Balance Cap (TBC)

As of 1 July 2025, the general Transfer Balance Cap is $2.0 million, having increased from $1.9 million. This cap represents the maximum amount that can be transferred into the tax-free retirement phase.

Why this matters:

• Earnings inside an account-based pension are tax-free
• Funds remaining in accumulation are taxed at up to 15%
• Strategic planning can help maximise the amount moved into the tax-free environment

For couples, this creates a powerful opportunity.

Example:

A couple with $3.6M combined super could potentially structure:

• $2.0M pension (Person A)
• $1.6M pension (Person B)

Result: Nearly the entire balance moves into a 0% tax environment.

Without planning, uneven balances often leave hundreds of thousands trapped in accumulation.

Equalising Super Balances Before Retirement

Balance equalisation is one of the most overlooked strategies among high-net-worth couples.

Common approaches include:

• Spouse contributions
• Contribution splitting
• Withdrawal and recontribution strategies
• Targeted non-concessional contributions

The objective is simple: maximise the amount each spouse can transfer into tax-free retirement phase.

Even modest equalisation can save tens of thousands in lifetime tax.

Use the Final Working Years to Accelerate Contributions

The years between ages 55–65 are often peak earning years — yet many investors underutilise contribution caps.

Concessional Contributions

Current cap: $30,000 per year (including employer contributions).

Additionally, unused cap amounts from the previous five years may be carried forward if your Total Super Balance is below $500,000 at the prior 30 June.

While many affluent investors exceed this threshold, it remains valuable for:

• One spouse with lower balances
• Business owners following a liquidity event
• Late-career professionals who started salary sacrificing later

Non-concessional Contributions

Bring-forward rules allow up to $360,000 in a single year (subject to eligibility thresholds).

Timing these contributions before retirement can dramatically increase the tax-free portion of super.

The Withdrawal and Recontribution Strategy

This strategy is particularly powerful once preservation age is reached.

It involves:

• Withdrawing a lump sum from super
• Re-contributing it as a non-concessional contribution

Why do this? Because it converts taxable components into tax-free components.

If super is eventually left to adult children, taxable components can attract up to 17% tax (including Medicare).

Reducing that exposure is effectively a form of estate planning.

For large balances, this strategy alone can save beneficiaries six-figure sums.

Downsizer Contributions — Not Just for the Cash-Poor

Many people assume downsizer contributions are only useful when selling the family home to fund retirement spending.

In reality, they are often a strategic tax play for affluent retirees.

Current rules allow eligible Australians aged 55 and over to contribute up to $300,000 per person from the proceeds of a primary residence sale.

Key advantages:

• Does not count toward non-concessional caps
• No upper age limit
• No work test
• Can be used even if total super exceeds traditional thresholds

For couples, that is potentially $600,000 added to the concessionally taxed super environment.

Even if the funds ultimately sit in accumulation due to the TBC, the 15% tax rate is typically far lower than personal marginal rates.

Timing the Pension Commencement

Many investors rush to start a pension immediately upon retirement. That is not always optimal.

Strategic delays can be beneficial when:

• One final contribution year is available
• A large capital gain is expected
• Personal taxable income is temporarily elevated
• Balance equalisation is still underway

Remember — once funds enter retirement phase, the Transfer Balance Cap becomes permanent.

This decision deserves modelling, not guesswork.

A Practical Example

Consider a 60-year-old couple:

• Combined super: $3.2M
• Mortgage fully repaid
• Planning retirement at 63

Without strategy:

• Uneven balances leave $500K in accumulation
• Large taxable component remains
• Estate tax exposure persists

With structured pre-retirement advice:

• Balances equalised
• Withdrawal/recontribution executed
• Downsizer contribution planned at 62
• Both maximise TBC usage

Outcome: significantly higher tax-free retirement income and a cleaner estate position.

The difference is not marginal — it is structural.

The Biggest Risk: Doing Nothing

Affluent investors often focus heavily on investment performance.

Yet the most material retirement improvements typically come from:

• Tax structuring
• Contribution sequencing
• Pension design
• Estate planning

These are once-off decisions with lifelong consequences.

Markets fluctuate. Structural tax advantages compound permanently.

When Should You Start Planning?

Ideally: 5–10 years before retirement.

Waiting until the final 12 months dramatically limits available strategies.

The earlier planning begins, the more levers can be pulled.

How EPG Wealth Helps

At EPG Wealth, we specialise in working with successful Australians transitioning into retirement — particularly those who are unlikely to rely on the Age Pension.

Our advice focuses on:

• Maximising tax-free retirement income
• Structuring super efficiently between spouses
• Reducing lifetime and estate tax
• Creating sustainable withdrawal strategies
• Providing clarity around retirement readiness

Retirement is not just about stopping work.

It is about converting decades of wealth creation into a reliable income stream — with confidence.

If you are approaching retirement and want clarity around your position, click here to organise a complimentary 20-minute phone call with an EPG Wealth adviser.

 

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