Commonwealth provisions generally require part of your superannuation benefit to be preserved until you either: cease employment from age 60. retire from the workforce permanently at or after your preservation age (between 55 and 60).
It is currently 66 years and 6 months, but this is increasing to 67 from 1 July 2023. The preservation age for all Australians is therefore much lower than the Age Pension eligibility age.
If you've reached your preservation age you can set up a Pre-retirement Super Pension (using a Transition to Retirement strategy) and keep working while drawing down a maximum of 10% of the balance you have in your Pre-retirement Super Pension.
Your preservation age is the first time you can withdraw your super in some form or another. The table below details your superannuation preservation age. As you can see, being born in 1968 means your preservation age is 60.
You can get your super when you retire and reach your 'preservation age' — between 55 and 60, depending on when you were born. There are special circumstances where you can access your super early.
Preservation rules at different ages
If you have reached your preservation age but are under 60 years of age, retirement means you have ceased work permanently. After you reach 60 years of age, you can access your preserved benefit whenever you cease your employment.
If you want full access to your super balance when you reach 60, you will need to fulfill one more condition; an employment arrangement coming to an end. You can then access the money as an account-based pension income stream, a lump sum withdrawal, or a combination of both.
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.
This obviously depends on what annual income you want to fund but if you want to be able to afford a comfortable retirement—which is an income of just over $48,000 a year for a single according to the ASFA Retirement Standard—then you need a balance of at least $500,000.
Yes, provided you have reached the Age Pension age, you may be eligible for the Age Pension even if you have super savings.
You typically pay 15% tax on your super contributions, and your withdrawals are tax-free if you're 60 or older. The investment earnings on your super are also only taxed at 15%. Key points: Money going into your super is generally taxed at a lower rate than your regular income.
How much super you'll need in retirement depends on the lifestyle you want. According to the government's MoneySmart website, if you own your home, the rule of thumb is that you'll need two-thirds (67%) of your current income each year to maintain the same standard of living.
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.
You can access your super as long as you've permanently retired. If you end an employment arrangement on or after age 60, you can also access the super you've earned up until then. If you're not ready to retire, you could use some of your super while you're still working, with a Transition to Retirement Income account.
Maintaining the increase to the super guarantee
The Federal Budget in May 2023 maintained the Super Guarantee's legislated increase to 12%. From 1 July 2023, the Super Guarantee will increase to 11%. It will continue to increase by 0.5% on 1 July each year until it reaches 12% in 2025.
You can make a total of $300,000 over a three-year period as your non-concessional contributions if the bring-forward rule is triggered after 1 July 2017. You can make a total of $330,000 over a three-year period as your non-concessional contributions if the bring-forward rule is triggered after 1 July 2021.
The reality is most Australians retire with far less in super. Indeed, the average super balance for Australians aged 60-64 is just over $300,000. That may be enough.
If you want to retire at 60, a common approximation used to calculate the amount you will need to retire is to multiply your after-tax retirement expenses by 15. So, if you estimate you will need $50,000 annually in retirement income, you will need income-generating assets of $750,000 to create this income stream.
The quick answer is “yes”! With some planning, you can retire at 60 with $500k. Remember, however, that your lifestyle will significantly affect how long your savings will last.
Assume, for example, you will need 65 per cent of your pre-retirement income, so if you earn $50,000 now, you might need $32,500 in retirement.
Adding to super before tax
You can contribute up to $27,500 each year. These are contributions you have not paid any personal income tax on. They are called 'concessional contributions' because the concessional rate of tax paid on super is 15%.
Can I access super at 65 and keep working? Yes. You can access your super when you turn 65 regardless of whether you're still working.
You may be able to take your superannuation as a lump sum payment when you retire. This is usually tax-free from age 60.
If you are aged between 60 and 64 your Super Benefit is preserved until your "Retirement". There are absolutely no restrictions to accessing your Super Benefit when aged between 60 and 64 after you are "Retired". In this case your Super Benefit can be accessed as either a Pension or Lump Sum withdrawal.
If you're between 65 and 74 and still working, the rules around employer-paid super contributions don't change. Generally speaking, from 1 July 2022, you're eligible to receive super from your employer if you are aged over 18. It doesn't matter if your job is permanent, or casual.