Does My Super Retire With Me?

For some, knowing that one day we get to retire and never work again keeps us going. Knowing that we’ll one day have all the time in the world to do what we want, when we want. But what will actually happen to our money in retirement? How does it all work?

What happens to your super when you retire?
A vital element of retirement involves choosing how to use your super savings. To set yourself up for retirement and providing your future income, you will need to make decisions regarding how you are going to invest your funds, when it will begin, how much you wish to receive and how often you will need to receive payments.

When can you access your super?
While Preservation rules may allow you to access a portion of funds early, to access your superannuation benefits for retirement you need to meet a condition of release which includes:

• Reach Preservation Age which is anywhere from 55 to 60 depending on your date of birth.
• If aged 60 to 65, you must have ceased employment and if you are under age 60 there is a further requirement that you never intend to be gainfully employed for 10 or more hours a week.
• If you hit age 65, there are no restriction and you have full access to your funds.

What retirement options are available to you?
Retirement shouldn’t mean – Now I can access my funds so give me my lump sum. There are many options available that need consideration to ensure that your entire retirement life is taken care of.

• An Account–based pension (previously known as an Allocated Pension) allows you to invest your funds the same as you would under a super plan, however pays a regular pension payment from your balance. Any funds remaining after your passing forms part of your estate.
• An Annuity is an investment that is commenced with a lump sum and provides the investor with a guaranteed income for specific term but you have no say in the investment of funds and you may forfeit any balance upon your death after a qualifying period.
• Lump Sum Withdrawal to live off the balance of funds.
• Leave it in Super. You can now leave your benefits in superannuation (accumulation phase) indefinitely and there is no requirement for withdrawals to be made.

What about tax?
Tax should be a big consideration in retirement. It seems to be a common belief that once you retire, you don’t pay tax but that’s not necessarily the truth.

Tax laws still apply to everyone regardless of your age. If your 100 and have taxable income, then you should be lodging a tax return. But the way you structure your funds in retirement could dramatically reduce your tax bill.

For each of your retirement options there are tax consequences which are explained in further detail in the full article.

So with all these options and considerations, what should you do with your super at retirement? You should seek the advice of a good financial planner as you could be considerably worse off by not knowing what you can do and what it will mean for you and the future generation. Retirement should be about enjoyment and family not worry about whether your funds will last and pension payments.

Let JBS do the worrying for you.
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