After a lifetime of hard work, retirement offers an exciting opportunity for individuals to pursue their own interests and passions with their newfound free time.
As everyone has their own unique preferences that will pique their interest, some may choose to travel, while others may focus on hobbies or volunteer work. Some retirees may also try new activities such as learning a new language or taking up a sport.
Ultimately, retirement is an opportunity to do what brings happiness and fulfilment, whether it be spending time with loved ones, pursuing creative or intellectual interests, or simply relaxing and enjoying some much deserved free time.
One element of retirement that is common across the board, however, is accessing superannuation to fund your retirement lifestyle.
In order to access your superannuation, you will need to meet certain conditions of release, as set by the Australian government. These conditions include reaching preservation age, permanent retirement, or severe financial hardship.
The actual process of accessing your super will vary depending on the fund and the condition of release you are claiming under. However, most funds will require you to complete a withdrawal form, provide proof of your identity, and provide evidence of your eligibility for the condition of release.
Accessing your superannuation can be a complex process with various rules and restrictions to navigate, therefore it is important to understand the regulations and requirements for withdrawing your funds, as well as the potential tax implications.
In effort to sift through the red tape and some of the “unknown factors” associated with accessing your superannuation, Starts at 60 spoke with Sydney based Wealth Coach Andrew Woodward from The Investor’s Way and Head of Superannuation & Partnerships at Stockspot, Enid Lal regarding when you can access your superannuation, how to get the process started, and how to make the whole process as simple as possible.
Entering retirement can be an exciting time, as it marks the end of a long career and the beginning of a new chapter in life.
Accessing your superannuation funds can also be a significant event as it can provide you with the financial resources to support your retirement lifestyle.
In Australia, you can generally access your superannuation funds when you reach your preservation age, which is between 55 and 60 years old, depending on your date of birth. However, there are some exceptions, such as if you have retired or become permanently incapacitated. It’s best to check with your specific super fund for their rules and regulations regarding accessing your funds.
As Woodward explains, “when you can access your super is not a simple answer, it does depend on your birth date to some extent.”
Woodward clarifies that there are “three main ways you can access super” which include:
If you’re not ready to step away from employment just yet but still want to enjoy some of the freedom that comes with retirement, a transition to retirement plan may be worth considering once you reach preservation age.
“Your preservation age depends on when you were born,” Woodward explains.
“According to the ATO website, a transition to retirement plan provides the opportunity once you reach preservation age to continue working while reducing your hours and receive an income stream from your superannuation fund.
“You can do this by choosing to start a transition to retirement income stream (TRIS). This will allow you to either:
Woodward warns, however, that “there are restrictions on the amount you can withdraw each financial year”.
“For example, if you are under 65 years old, you can access between 4–10% of the balance of money in your super account each financial year,” he says.
While it’s natural to look forward to accessing your superannuation and enjoying retirement, it’s crucial to understand the process and steps involved in actually accessing it.
Just knowing when you can access your funds is simply not enough.
Fortunately Woodward advises that “once you have reached retirement, whether that is at age 65 or your preservation age, accessing your super is relatively simple, with a couple of caveats.”
“The first decision you need to make is whether you want to receive a super income stream, a super lump sum or a combination of both. Each of these decisions have tax implications, which means you should get advice from your accountant about what is best for you and your circumstances,” he says.
“A super income stream is effectively an annuity or pension where you receive an agreed amount at least annually until the money runs out, you die, or you decide to convert the remaining balance to a lump sum.
“If you choose to take your super as a lump sum, you may be able to receive it in one payment. The implication of this choice is that the money is no longer considered super and therefore any returns you receive on the money will not be taxed as they would if they were super.
“You can also choose to receive some of your super as an income stream and some as a lump sum. Again, it is best to speak with your accountant to determine what is best for your circumstances, as no two people will have the same circumstances.”
When it comes to the actual physical process of accessing your superannuation, Lal sets out some the steps required.
“Generally, you will be required to complete a withdrawal form from your super fund and submit relevant documentation with an Australian bank account number,” Lal explains.
“Early release payments on compassionate grounds applications need to be made directly to the ATO.
“Further details of conditions of release can be found in the disclosure documents of your superannuation fund and the ATO website.”
After a lifetime of hard work, soon to be retirees are more than likely desiring nothing more than to head straight for the beach for some much needed relaxation, take up a new hobby, or spend some quality time with the grandkids.
Whatever your plan may be for your golden years, enjoying your dream retirement lifestyle is largely dependent on accessing your superannuation funds. When it comes time to accessing your superannuation there can be certain requirements and restrictions that need to be considered before your money is available.
In order to make this process as simple and efficient as possible so you can enjoy your retirement sooner, Lal suggests that soon to be retirees “contact your super fund and confirm the process for accessing your super and eligibility criteria.”
“It’s important that you understand the tax consequences of accessing your super. How and when you access your super can impact how your super is taxed. Speak to a financial adviser if you require advice on accessing your super,” Lal advises.
Woodward advises that “as you approach the decision to retire it is important that you understand and consider some important, yet sometimes unknown, factors that will impact your decision.”
“These include your expected living expenses, estimated remaining years (a difficult one to face, I know), and your tax position,” he says.
“Having these factors in mind, and understood in advance will make the decision process of what is right for you a whole lot easier.
“I would also recommend speaking with your accountant in advance so they can advise you what is best for your circumstances. If you have not previously been investing your money, I would also recommend speaking with a Wealth Coach or Financial Advisor to assist with the appropriate use of your money.”
IMPORTANT LEGAL INFO This article is of a general nature and FYI only, because it doesn’t take into account your financial or legal situation, objectives or needs. That means it’s not financial product or legal advice and shouldn’t be relied upon as if it is. Before making a financial or legal decision, you should work out if the info is appropriate for your situation and get independent, licensed financial services or legal advice.