Australians usually only access their superannuation savings when they retire on, or after reaching the preservation age or at age 65. For people born after 1 July 1964, the magic number is 60, but for those born before this date it can be earlier.
|Your Birthday||Your super preservation age|
|Earlier than 1 July 1960||55|
|1 July 1960 to 30 June 1961||56|
|1 July 1961 to 30 June 1962||57|
|1 July 1962 to 30 June 1963||58|
|1 July 1963 to 30 June 1964||59|
|After 30 June 1964||60|
There are other circumstances such as a financial hardship or the Government’s ‘Transition to Retirement’ rules (available to everyone over preservation age) which may mean you can access your super before you retire.
Transition to Retirement
Transition to Retirement may be a tax effective strategy that could benefit you if you are of preservation age or higher (refer to above table) and still working. The strategy is a Government initiative which may give workers 55 years of age or over access to their preserved super money as an income stream.
A Transition to Retirement strategy could help you with one of the following:
- Ease into retirement by reducing your working hours but still maintain your take home income
- Boost your savings and maintain your income
- Boost your take home income
By structuring your income differently, for example putting more of your pre-tax salary into super, and supplementing your income with a Transition to Retirement pension, it may result in your paying less tax.
There are even more benefits. When your super money is being paid to you as pension, investment earnings are generally exempt from tax within the super fund – meaning your investment earnings won’t attract 15% tax within the fund. To access these benefits your Transition to Retirement strategy needs to be appropriately structured to meet certain criteria. Your Partners in Wealth Financial Planner can provide you with further information.