As you approach retirement, it’s important to understand how to access your superannuation.
If you’re looking to retire this year – or are in the planning stages – here’s a list of frequently asked questions.
When can I access my superannuation?
Australian legislation sets out specific conditions – known as conditions of release – that determine when someone’s eligible to legally access their superannuation.
There are several conditions of release, but the most common include:
- Reaching age 60 and you intend to retire
- Reaching age 60 and ceasing an employment arrangement (i.e. left a job or changed employers). Note that for this condition you don’t have to stop working altogether.
- Being 65 or older
- Death
Superannuation has been set up to provide you with an income when you retire, so typically, you’re allowed to access your super when you reach age 60 (the preservation age) and retire.
Retirement:
Since 1 July 2024, the preservation age for retirement is 60 and that applies for everyone.
You’re considered retired if you’ve reached age 60 and you stop working and don’t plan to return to full-time or part-time work (more than 10 hours per week).
Meeting the Retirement conditions allows you to access any amount from your super at that point in time (although future contributions may be preserved if you continue to work, or return to work later).
If I leave my job after reaching 60, and get another one, can I still access my super?
You can access the super benefits you’ve accumulated up to that point in time, but you won’t be able to access the contributions you accumulate with your new employer until you meet another condition of release, like turning 65 or ceasing work with that employer.
That is, if you go back to work after accessing your super, any new contributions and earnings will be preserved until you cease work again or reach age 65, whichever occurs first.
If I have more than one job, do I have to leave them all to meet the retirement conditions of release?
No. You only need to leave one job to meet the retirement conditions of release.
When I retire, do I receive my super benefits as a lump sum and are they taxed?
If you’re 60 or older, you can elect to receive your super benefits as a lump sum, income stream, or combination of both.
Typically, super payments are tax-free (with the exception of certain long running public sector super schemes where there may be some tax payable on withdrawals). If super payments are your only source of income, you’ll generally not have to lodge a tax return. If in doubt, consult your tax professional.
What is the transition-to-retirement condition of release?
If you’ve reached age 60, but don’t meet the retirement condition of release, you’re still eligible for the transition-to-retirement (TTR) condition of release, which allows a maximum withdrawal of 10% of your super balance as an income stream (pension).
When you turn 65, you’ll then have unrestricted access to your entire super balance, even if you’re still working.
How can I access my super early?
Early access to super is restricted but may be granted in special circumstances – for example, on compassionate grounds, due to severe financial hardship, incapacitation, or terminal illness.
These types of early access to super require meeting additional conditions of release and have strict eligibility criteria. (I’ll cover these in a future blog post.)
I retired from work at age 55 and have been living off my investments. Can I access my super?
Not until you reach the preservation age (60). Until then, you can not use your super for living expenses. When you turn 60, you’ll be able to declare that you’re permanently retired and access all your super benefits.
If I’ve never been in the workforce, when can I access my super?
If you haven’t worked, you won’t be able to use the retirement conditions of release to access your super. Unless you meet the special conditions of early release, you may have to wait until you’re 65 to access your superannuation (strange but true).
Is the preservation age the same as the Age Pension eligibility age?
No. The Age Pension eligibility age is 67.
When I reach the preservation age for retirement, does that mean I have to retire?
No. You’re eligible to access retirement benefits when you reach the preservation age (60), but you don’t have to. You can choose to stay gainfully employed and retire later if you choose.
What do you mean by ‘gainfully employed’?
If you’re gainfully employed, it means you’re undertaking any work for gain or reward. That applies whether you’re employed or self-employed, in a business, trade, profession, vocation, calling, occupation or other job.
As it relates to retirement, being gainfully employed is defined as receiving any monetary reward for working 10 or more hours a week.
Where can I get advice on planning for my retirement?
There are plenty of general resources online to help you plan for retirement, but if you need help navigating retirement based on your own needs and goals, it can be helpful to speak with a professional financial adviser.
If you need help navigating your superannuation and retirement plans, we’re here to help. To book an appointment with a professional adviser, call Align Financial on (02) 9913 9995.
