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What should I do with my super at retirement?

Education HUB article

8 minute read

What should I do with my super at retirement?

 

Retirement means different things to different people. So how you decide to use the retirement savings you’ve worked so hard for, comes down to your personal preference and circumstances.

When can you access your super?

You can generally access your super when you:

  • Turn 65, even if you haven’t retired;
  • Reach preservation age and retire;
  • Reach preservation age and begin a transition to retirement income stream.

Preservation age

Your preservation age is the age you can access your super if you have retired or started a transition to retirement income stream. It also varies depending on your date of birth:

Date of birth

Preservation age

Prior to 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

How can I access my super?

When deciding how you want to access your super savings, you have the option to:

  • Start a Transition to Retirement pension. This may be a good option if you want to ease into retirement by reducing your work hours and enjoy potential tax advantages leading into retirement.
  • Start an account-based pension. This option allows you to use your super savings to receive a regular income once you have permanently retired.
  • Make a partial or full withdrawal from your super account. This may be a good option if you want to clear any debts, treat yourself to something special, or take a well-deserved holiday.

Deciding which option to go with can be hard to make, especially if you are unlikely to re-enter the workforce. You may even wish to consider a combination of all of the above.  Speaking to a financial adviser or wealth specialist can also help you decide the best way for you to get your super.

Transition to Retirement (TTR) pension

If you’ve reached your preservation age but are still working, you can use some of your super to supplement your income if you reduce your working hours and ease into retirement. Or perhaps it can be used with salary sacrifice to boost your super in the latter years of your working life.

The benefits

  • If you’re over age 60, your income payments from your TTR account are tax free;
  • If you’re aged between 55 to 59, your income payments from your TTR account will be taxed at your marginal tax rate, minus a 15% tax offset;
  • Your current income and lifestyle don’t have to change;
  • You can give your retirement savings a boost and potentially enjoy tax saving when you also salary sacrifice into your superfund;
  • Use your TTR income payments to top up your take-home pay, so you can work less.

The rules

If you decide to start a transition to retirement pension, there are rules around the minimum and maximum amounts of income payments you can receive each financial year.

The minimum annual payment depends on your age on the 1st of July each year.

The maximum annual income payment is 10% of your account balance in any given financial year.

Both the minimum and maximums amounts are based on your account balance on the 1st of July each year. If you start a TTR pension part way through a year, the minimum amount is calculated on a pro-rata basis, however the maximum amount will remain 10% of your super account balance.

Account based pension

An account-based pension can be an easy to manage, tax effective way of generating a regular income throughout retirement. It allows you to draw a regular income from your retirement savings, with the added flexibility to draw lump sums, if and when required.

The benefits

  • All pension earnings generated from an account-based pension are tax free
  • If you are over the age of 60, all income paid from an account-based pension will be tax free and may be used in combination with the age pension, should you qualify.

The rules

If you decide to start an account-based pension, there are rules around the minimum amount of income payments you must withdraw each financial year. This depends on your age and account balance on the 1st of July each year.

If you start your pension after the 1st of July, the minimum payment amount for the first year is calculated on a pro rata basis depending on the number of days remaining in the financial year.

If you start your pension on or after the 1st of June, no minimum payment is required to be made for that financial year.

There are no maximum limits to how much you can draw from your account-based pension.

Partial or full withdrawal

Depending on your super fund, you’re able to withdraw your superannuation as a lump sum payment when you retire. If you withdraw your super after you turn 60, it is generally tax free.

If you don’t want to withdraw your entire balance in one go, you also have the option make a partial withdrawal. This may be a good option if you have any debts to pay off, treat yourself to something special, or take a well-deserved holiday.

If you would like to discuss your retirement plans, you can request a call back from one of our wealth specialists.

For more handy articles, visit our Education HUB.

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Things you should know

Bendigo Superannuation Pty Ltd ABN 23 644 620 128 AFSL 534006 (Bendigo Super) is the trustee and issuer of Bendigo SmartStart Super and Bendigo SmartStart Pension (products). Bendigo Super is a wholly owned subsidiary of Bendigo and Adelaide Bank Limited ABN 11 068 049 178 AFSL 237879 (Bank). Each of these companies receives remuneration on the issue of the products or services they provide, full details of which are contained in the relevant Product Disclosure Statement (PDS). Bendigo Super, the Bank and its related entities do not guarantee the repayment of capital invested, the payment of income or products’ investment performance. An investment in these products does not represent a deposit with, or liability of Bendigo Super, the Bank or its related entities. The Bank does not stand behind or guarantee the performance of Bendigo Super in its capacity as trustee and issuer of the products. Bendigo Super is not an authorised deposit-taking institution within the meaning of the Banking Act 1959.

Information on the website is subject to change without notice. Any advice in relation to superannuation is provided by Bendigo Super. The information contains general advice only and does not take into account your personal objectives, situation or needs. Before making an investment decision in relation to these products you should consider your situation and read the relevant PDS accessible through this site.

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Bendigo and Adelaide Bank Limited, ABN 11 068 049 178 AFSL / Australian Credit Licence 237879. Any advice provided on this website is of a general nature only and does not take into account your personal needs, objectives and financial circumstances. You should consider whether it is appropriate for your situation. Please read the applicable Disclosure Documents before acquiring any product described on this website. Please also review our Financial Services Guide (FSG) before accessing information on this website. Information on this page can change without notice to you.

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