Here is when and how you can access your super to start enjoying your retirement
If you are in retirement planning mode – whether you’re 8 weeks, 8 months, or 8 years away from retirement – you may be thinking to yourself “how do I actually get my super?”.
While it is far more exciting to think about the fun things you have planned for retirement, like travelling or spending more time with your family, it is also important to be keeping a steady eye on your superannuation balance to ensure you are accumulating enough for retirement.
You have worked incredibly hard and spent most of your life building up your super, it may almost seem wrong to start taking money out of your account!
But that is exactly what it is there for: to support you when you stop working.
It can be tricky to know when the right time is to start using your super and even more so, to understand how to even access your money.
Finder data shows that 40% of Australians have little or no understanding of what superannuation is and how it works. Less than one quarter of us say we understand it perfectly. 1
Your superannuation is a critical part of your retirement plan.
Your super nest egg has been a long time in the making, so when you are ready to retire, it should be a smooth transition. It is important to plan out your retirement income and budgeting, but it is also important to know how and when you can access your super.
At what age can I access my super?
When you get to the stage in your life when it is time to start leaning on your super fund, it can be good to know when you can access your savings. According to the ATO, you can withdraw your super2:
- when you turn 65 (even if you haven’t retired),
- when you have reached preservation age and retire (check out the table below to find yours), or
- under the transition to retirement rules, while continuing to work. This means you can continue working while accessing your super for financial support.
Your preservation age is dependent on your date of birth. Use the table below to determine your preservation age3:
|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|
On some occasions, you can be granted early access to your superannuation for several reasons including:
- Under the First Home Super Saver Scheme (FHSSS)
- If you’re in a defined benefit fund (depending on your super fund)
- If you are unable to work or need to work fewer hours due to a medical condition
- Severe financial hardship
- Compassionate grounds (this could include medical expenses, funeral expenses, or modification of your home due to a disability)
- Terminal medical conditions
Once you know how much super you have and when you can access it, the next step in your plan is to determine how you want to start taking your super out.
The method you use to take out your super income may affect the tax you pay, your super balance and your retirement plans.
It is important you take time and get advice when picking the most suitable super method for you.
3 ways to claim your super:
1. Super Income Stream (aka. pensions or annuities)
You receive a super income stream as a series of regular payments from your super fund (paid at least annually).
This method aims to somewhat replicate your salary. This way, you can manage your income and spending to help you avoid running out of retirement money.
Once you start receiving your super income stream, keep in mind that you will not be able to add any more money to your super account. If you do want to add funds to your super, you will need to stop the income stream and commence a new one.
2. Super Lump Sum
You withdraw all your super in a single payment called a ‘lump sum’. Depending on your fund, you may be able to take multiple, smaller lump sums out.
Some people use their super lump sum for:
- Clearing debt (paying off the mortgage)
- Investing in an alternative method for retirement
If you take your money out of your account, it is no longer considered super. If you are planning to invest this money, it does not get taxed like super does either.
Withdrawing your super as a lump sum may have possible positive tax implications. Depending on the amount you take out and when you take your lump sum out, you may pay less or no tax. CCFPG’s financial advisers can help you determine the best method for you to avoid unnecessary tax costs.
3. A combination
You don’t have to take an all or nothing approach when it comes to your superannuation.
You may be able to combine the above two methods to receive your super as both a regular income stream and still take smaller lump sums out throughout your retirement.
You may choose to take a lump sum out to go on a big holiday or pay for an investment, and then also keep your income stream so you have regular income to rely on.
No matter when and how you claim your superannuation, take the time to make sure you will be secure and comfortable throughout your whole retirement.
Retiring is an important stage in anyone’s life: Seek professional financial advice where necessary to be confident you are taking the right steps towards a happy and relaxing retirement.
If you are ready to plan for your perfect retirement, engage with Central Coast Financial Planning Group.
We don’t just care about your retirement income; we care that you get to enjoy a long and happy retirement the way you want.
How do you want to enjoy your retirement?
Plan today with the support of a financial adviser at CCFPG. Book a complimentary initial appointment with one of our Retirement Specialists. We have offices located in Central Coast – Erina (CCFPG), Newcastle – The Junction (NFPG) and Sydney CBD (SWA).
Disclaimer: The views expressed in this publication are solely those of the author; they are not reflective or indicative of RI Advice Group’s position and are not to be attributed to RI Advice Group. They cannot be reproduced in any form without the express written consent of the author. This information (including taxation) is general in nature and does not consider your individual circumstances or needs. Do not act until you seek professional advice. Newcastle Financial Planning Group, Central Coast Financial Planning Group, Sydney Wealth Advisers, Coastal Advice Port Macquarie and Coastal Advice Ballina Byron are subsidiaries of Coastal Advice Group which is a Corporate Authorised Representative of RI Advice Group Pty Ltd, ABN 23 001 774 125 AFSL 238429.