You won't pay tax on your retirement income if you're aged 60 or over.
If you're 60 and over, the income will generally be tax-free. If you're between your preservation age and 59, the components of your super will dictate how it will be taxed.
seniors and pensioners who, at the end of the relevant financial year, are 66 years of age or older (for example, to be eligible for the year ending 30 June 2021, a payee must be born on or before 30 June 1955)
Income tax offsets helps lower income earners who are Australian residents reduce their tax bill. Combined with the tax-free threshold of $18,200, LITO effectively allows you to earn up to $21,884 in the 2022-23 financial year before any income tax is payable.
Lump sum withdrawals
If you're aged 60 or over and withdraw a lump sum: You don't pay any tax when you withdraw from a taxed super fund. You may pay tax if you withdraw from an untaxed super fund, such as a public sector fund.
Can I Get the Pension if I Have Super? Having superannuation savings does not deny you from receiving Age Pension payments. Eligibility for the Age Pension is based on an Assets Test and an Income Test.
If you are at least 65, unmarried, and receive $14,700 or more in non-exempt income in addition to your Social Security benefits, you typically must file a federal income tax return (tax year 2022).
The average retirement age in Australia is 55
However, the average age people aged 45+ said they expected to retire – 65.5 years – was much later than the average retirement age. And on average, Australians can expect to live to 85 for women and 81 for men (ABS, 2021).
Top tax planning strategies
Purchase or transfer assets into family or property trusts, companies and self-managed super funds to reduce your taxable income and capital gains taxes you owe on investments. Salary package your car lease, superannuation, laptop and more to increase your take home pay.
At or after age 75 - there's no longer a need to take the tax free cash before age 75. However, at age 75, any uncrystallised funds are tested against the LTA, but if no benefits are taken, they're referred to as 'unused funds' from age 75 onwards.
Tax-free retirement strategies include contributing to a Roth IRA, using a Health Savings Account (HSA), purchasing municipal bonds, capitalizing on long-term capital gains rates, owning a permanent life insurance policy, using annuities, and considering the tax implications of your Social Security benefits.
If you have a defined contribution pension (the most common kind), you can take 25 per cent of your pension free of income tax. Usually this is done by taking a quarter of the pot in a single lump sum, but it is also possible to take a series of smaller lump sums with 25 per cent of each one being tax-free.
You won't pay tax on your retirement income if you're aged 60 or over. If you're 60 or over, your regular income stream payments or lump-sum payments from your RI Allocated Pension and RI Term Allocated Pension account are completely tax free. You won't need to include these payments in your personal income tax return.
Latest Age Pension rates (from 20 September 2022)
From 20 September 2022 the maximum full Age Pension increases $38.90 per fortnight for a single person, and $58.80 a fortnight for a couple. The tables below provide more detail in terms of the latest increase and how the Age Pension is broken down.
In 2023, this limit on your earnings is $56,520.
If your earnings will be more than the limit for the year and you will receive retirement benefits for part of the year, we have a special rule that applies to earnings for one year.
Under age 65. Single. Don't have any special circumstances that require you to file (like self-employment income) Earn less than $12,950 (which is the 2022 standard deduction for a single taxpayer)
The ASFA Retirement Standard Explainer says a comfortable retirement lifestyle would need $640,000 in super for a couple, or $545,000 for a single person.
In the case of early retirement, a benefit is reduced 5/9 of one percent for each month before normal retirement age, up to 36 months. If the number of months exceeds 36, then the benefit is further reduced 5/12 of one percent per month.
To be eligible for Age Pension you must be Age Pension age and meet some other rules. On 1 July 2021, Age Pension age increased to 66 years and 6 months for people born from 1 July 1955 to 31 December 1956, inclusive. If your birthdate is on or after 1 January 1957, you'll have to wait until you turn 67.
Assets test
For a couple to qualify for the full Age Pension, your combined assets must be below $419,000 if you own your own home, or $643,500 if you don't own your own home.