At some point you may find yourself thinking, “How much money do I need to retire? Can I work part-time and access super before 65?”
Retirement preparation is more than having a super lump sum saved
Many Australians are growing their super balances but are still feeling unprepared – probably because retirement preparation is about far more than having a super lump sum. Many of us will need help working out how to invest the money intelligently and how to spend it wisely to make it last.
What circumstances allow me to access my Superannuation?
There are some circumstance that allow you to do so. As set out by the Tax Office, you may have access to your superannuation for the following reasons:
- When you turn 65 (regardless of whether you have retired), or
- When you reach preservation age and retire, or
- Under the transition to retirement rules while continuing to work.
What does my Preservation age determine?
One thing to note is that your preservation age is not the same as your pension age. Your preservation age determines access to your super if you have retired (or if you have started a transition to a retirement income stream).
Preservation age is determined by the time you were born. The table below will help you understand where you fit.
|Date of Birth||Preservation Age|
|Before 1 July 1960||55|
|1 July 1960 – 30 june 1961||56|
|1 July 1961 – 30 June 1962||57|
|1 July 1962 – 30 June 1963||58|
|1 July 1963 – 30 June 1964||59|
|From 1 July 1964||60|
Transition to retirement (TTR)
Once you reach your preservation age you have the option to start receiving income from your superannuation through the transition to retirement income stream.
This will allow you to receive regular payments from your super while you are working. There are rules and restrictions in relation to this income stream, professional advice is the best place to start in figuring out if you can benefit.
A Transition to Retirement income stream is best coupled with Salary Sacrifice if you are looking to grow your assets in preparation for retirement.
Transition to Retirement Income Stream
This type of income stream from your super must be an account based income stream that cannot be changed into a lump sum. This is referred to as a ‘non-commutable’ super income stream.
Your employer doesn’t need to know that you’re receiving a transition to retirement income stream, and you don’t need to advise your super fund that you’re receiving employment income.
You will need to decide which payer to claim the tax free threshold from. If you claim tax free threshold with both your employer and your super fund, you may find yourself with a tax liability at the end of the income year. A wealth adviser can help you make these decisions.
Once you have retired, or turned 65 years old, you can halt the transition to retirement income stream and access your super through a different income stream or lump sum.
Seanne Baker – Wealth Adviser
Seanne Baker, Wealth Adviser at Investment & Planning Services and a member of the National Australia group of companies.