There are two ways that you can access your superannuation at age 60 and still work.
One such way involves limited access to your superannuation and the other provides full access to your superannuation.
You can, in fact, access your superannuation as soon as you reach your Preservation Age, even if you are still working. Click here if you are below age 60 to see how you can access your super.
Reaching age 60, however, does provide a little more leniency in the criteria you need to meet for full access to your superannuation benefits.
There is also favourable tax treatment of withdrawals from superannuation for people aged 60 or over, compared to individuals accessing their superannuation under age 60.
Let’s cover off on the two options you have to access your super at 60 and still continue to work.
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OPTION 1: ACCESSING SUPER AT 60 AND STILL WORKING
As age 60 guarantees that you have met your superannuation Preservation Age, you are able to commence a Transition to Retirement (TTR) Pension income stream with some or all of your superannuation accumulation balance while you are still working.
A TTR Pension Income Stream provides you with the ability to withdraw between 4% and 10% of the TTR pension balance each financial year, based on the value of the pension on 1 July of each year.
If you commence the TTR Pension part way through a financial year, the 4% threshold is pro-rata and the 10% threshold stands.
The formula for calculating the pro-rata amount for superannuation income streams is:
Minimum annual amount ($) x (Days in Payment Period/Days in Financial Year)
Therefore, you can use TTR Pension income to supplement your work-related income to assist in covering living expenses as you transition to retirement, or you can contribute part of your work income to super as a Concessional Contribution, so as to reduce income tax and then replace the sacrificed income with tax free pension payments from your TTR Pension income stream.
Read this article for the difference between Concessional and Non-Concessional contributions.
TTR Pensions do not count towards the Transfer Balance Cap.
All investment earnings within a TTR Pension are taxed at up to 15% (same as accumulation phase). So, on a balance of $500,000 and an assumed income earnings rate of 4% p.a., this would mean earnings tax of $3,000 p.a.
This earnings tax is deducted from your super balance, so you might not even notice.
If eligible, Option 2 is a more tax-effective means of accessing your super.
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OPTION 2: ACCESSING SUPER AT 60 AND STILL WORKING
The second way to access superannuation at age 60 and still work is to meet one of the definitions of ‘retirement‘ for superannuation condition of release purposes. The one definition that is relevant in this instance is:
In the case of a person who has attained the age of 60 – an arrangement under which the member was gainfully employed has come to an end and the person attained that age on or before the ending of the employment.
This means that, if you cease an employment arrangement (any employment arrangement) on or after the age of 60, you will have full access to your total superannuation savings that have been accumulated up until the point that you ceased the employment arrangement. These superannuation savings can be taken as an account based pension income stream (subject to the Transfer Balance Cap), a lump sum withdrawal from super, or a combination of both.
All investment earnings within an account based income stream are taxed at 0%. So, on a balance of $500,000 and an assumed income earnings rate of 4% p.a., this would mean earnings tax of $0 p.a.
Although the employment arrangement had ceased, commencing a new employment arrangement and returning to work the very next day (i.e. changing jobs) would not invalidate your ability to have full access to your super. However, any subsequent contributions made to superannuation after the date that you met the condition of release by ceasing an employment arrangement after age 60, would not be accessible. You would need to meet another condition of release to access subsequent contributions.
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To have access to lump sum withdrawals from super over age 60, you would need to have met the conditions under Option 2, above. Or, meet one of the other two definitions of retirement – permanent retirement with no intention of returning to full-time or part-time work OR attaining age 65.
Watch my video below – When Can I Access My Super Tax Free?
Assuming you have met a superannuation condition of release – giving you access to all of your superannuation savings – the tax on the superannuation withdrawal will depend on the tax components that make up your superannuation balance. You can find out the tax components of your balance by getting in touch with your superannuation provider.
The two tax components that make up a superannuation account balance are the ‘Tax-Free‘ component and the ‘Taxable‘ component. The ‘Taxable’ component can either be Taxable (taxed) or Taxable (untaxed).
All lump sum withdrawals must be made proportionately from each component.
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Tax on lump sum withdrawals from super for individuals over age 60 is as follows:
| Tax Component | Amount | Tax |
|---|---|---|
| Tax-Free | Total Amount | 0% Not Assessed |
| Taxable (taxed) | Total Amount | 0% Not Assessed |
| Taxable (untaxed) | First $1.565M Lifetime Indexed | 15% |
| Taxable (untaxed) | Balance over $1.565M Lifetime Indexed | 45% |
Tax on Superannuation Pension Income Over 60
Whether you draw an income from a TTR Pension or an ordinary Account Based Pension, the income received is taxed identically. The only difference between the two income streams is that a TTR Pension limits the maximum income you can draw each year to 10% and does not allow commutations.
Again, the superannuation tax components that make up your pension income stream balance will determine the tax payable.
Tax on super pension income streams for individuals over age 60 is as follows:
| Tax Component | Amount | Tax |
|---|---|---|
| Tax-Free | Total Amount | 0% Not Assessed |
| Taxable (taxed) | Total Amount | 0% Not Assessed |
| Taxable (untaxed) | Total Amount | MTR minus a 10% Offset |
I hope this answers all of your questions on how you can access your super at 60 and still work and when you are able to access your super tax free.
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We need to do renovations on our house and we are both over 60 is it possible to use some of our super fund to do this rather than topping up the mortgage?
To have full access to superannuation, a person over age 60 needs to have had an employment arrangement come to an end after age 60, or be permanently retired with no intention of returning to work. Alternatively, for people still working, a transition to retirement pension can be started using some or all of an accumulation balance. A transition to retirement income stream allows up to 10% of the balance to be drawn in pension payments each year. It’s best to contact your financial planner or superannuation provider to discuss your options.
I am just about to turn 60.i am currently working 5 hours per week but am self employed.can I create a pension from my super and continue doing a few hours work per week,cheers
Hi Peter, one definition of retirement that gives you full, unrestricted access to your super is: being over your superannuation preservation age and retired, with no intention of returning to full-time or part-time work ever again. Part-time is defined as 10-30 hrs per week.
If you meet this condition, you would notify your super fund as such and would then have the option of accessing your super as a lump sum, income stream, or combination of the two.
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I need to find then access some of my super to be able to find accommodation. Through unforseen events I have had to vacate which has now left me black listed. I would like to clear this up so that I can find a place to live, now that I am settled. I intend to work as long as I can so will seek a small place to buy. Can you assist me.
Kindest regards Rose
Hi Rose, Follow this link to assist you in finding lost super https://www.moneysmart.gov.au/superannuation-and-retirement/keeping-track-and-lost-super. Once found, you can contact your superannuation provider to determine your withdrawal options. All the best, hope things work out for you.
Chris
Hi
I am 61 and my husband is on Job Keeper due to Covid. We have our Caravan and Car loans on hold but the 6 months period is about to expire. Can I draw on my super if I am still full time employed. Other alternative is I resign from my current position and take 4 weeks off then see if f they will re-employee me but in a different role. Do you think that I would then be able to access it without being penalised
Hi Dianne,
Thank you for your question. As you are over age 60, you should be able to access your super via a TTR pension even if you are still working. This can give you access to up to 10% of your account balance each year.
In order to have full access to your super, you would need to meet a full condition of release, which includes: having an employment arrangement come to an end after reaching age 60. I’m not sure your proposal would signify an employment arrangement coming to an end, as it appears there would be an arrangement to re employ you, albeit in a different role. It all depends on how you interpret this rule and your specific circumstances.
Regards,
Chris
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I am 61 and am leaving my current job in late Jan 2018….and hoping to start another new job in Mid Feb 2018
I want to help my daughter purchase a property which would then be an investment for us both….can I withdraw my Super in full in this short period of time?
G’day Glen
Generally, when an employment arrangement comes to an end after you have reached age 60, you will have full unrestricted access to your superannuation savings. Any subsequent contributions to superannuation (e.g. as a result of your new job) will be inaccessible until you meet another superannuation ‘condition of release’.
Note, there is no requirement for you to withdrawal all of the funds prior to commencing your new job. Your current balance can remain in your account and be withdrawn at will at any stage now or in the future (after you cease work of course).
This is general information only. I am not a financial planner. You should seek personal advice in relation to this. You should also contact your superannuation provider to determine the course of action to be taken to convert your funds to ‘unrestricted non-preserved’ once you leave your current job.
Hi Chris
The gfc devastated us and my wife was then made redundant in 2014 at age 55 and we used her payout to reduce debt and then needed (twice) over ensuing years to withdraw super from her account to help get back into our own property. We also have a family debt to repay. She will turn 61 in December and has approx 100k left in super. She has been working sporadically, self employed since 2015. She has had the one client since 2016 which she invoices for 20 hrs per week but there is no formal arrangement in place. She has done tax returns to 2018. She also has an incurable form of cancer which will most likely take her life one day. How would withdrawing her super effect her from a tax perspective?
Thanks a lot
Paul
Hi Paul, I am sorry to hear about your wife’s ill health. Generally super withdrawals over age 60 are received tax free (unless they include a taxable (untaxed) component. Having reached her super preservation age, she is able to commence a TTR Pension, which provides limited access to her savings. Alternatively, she will need to ensure she meets a full super condition of release to gain full unrestricted access.
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I withdrew my super at age 58 and left Australia to live in Ireland. I am now 62 and wish to return and work in Australia . I am a New Zealand citizen and wish to retire in Australia at age 67. Do I need special paperwork to permit me to work. I remember having to sign something to state that I was no longer going to work as I was retiring.
Hi Rob, to access your superannuation at 58, you may have met a superannuation condition of release by signing to say that you were ‘retired with no intention of returning to work’. Provided your intention at that time was genuine, there should not be an issue with once again returning to work.
My husband has just been laid off on another casual job. He is on newstart allowance but is seriously thinking it’s time to retire .can he get a super payment and still claim centerlink .he is 62 in may
Hi Susan, one form of having unlimited access to superannuation is to meet the condition of ‘an employment arrangement coming to an end after age 60’. If this is what has occurred, then unrestricted access to superannuation savings should be available – either as a lump sum or income stream (or combination of both). However, it is very important to discuss with Centrelink how payments from superannuation may impact on Newstart payments. You can find more information here https://www.humanservices.gov.au/individuals/services/centrelink/newstart-allowance
Hi Chris,
I am self employed ( Uber driver ) and over 60 – how does this effect conditions of release if I stop driving for Uber, and then decide to start again. My wife will still be working full time in a permanent role at a private company.
Hi Lance, the ATO may not consider this as ‘an employment arrangement coming to an end’. They have said before that reducing working hours with the same employer (as opposed to resigning or retiring) is not sufficient in meeting this condition. You may have an argument if you stopped driving completely, closed down your UBER account and then re-applied with UBER sometime later to be a driver again. But just be careful, as the regulator does not look fondly on people using tactics to circumvent superannuation rules, particularly in relation to accessing superannuation. It might be an idea to seek professional advice.
Hi Chris i Just to know if i can access any of my supper to pay for My daughter wedding i turn 60 in January this year i don’t want touch my mortgage if I don’t need to thanks Warren
Hi Warren,
If you are still working, you can generally have limited access to your super via a TTR Pension. If you have retired permanently there should be no restriction on accessing your super.
I suggest contacting your super fund and explain your situation to them, or contact your financial planner.
Regards,
Chris
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I need to have a operation not life threatening and do not have private health cover but want the op performed in a private hospital I’m 63 and would like to access a small lump sum from my super to pay for the op I’m still working full-time what are my chances
Hi Vicki,
One option may be commencing a TTR Pension, which would allow you to draw up to 10% of your account balance each year while you are still working.
Otherwise, to have full unrestricted access, you would need to meet a retirement condition of release.
Hi Chris, I’ve been offered a voluntary redundancy from my current employment however this has occurred just 8 weeks prior to me turning 60. If I can negotiate a separation date from my current employment on or after my 60th birthday, could I then access a part lump sum from my super fund and use it to discharge my mortgage? This would leave a balance in the super account. I do not wish to retire at this time and will be actively seeking new full time employment opportunities
Hi Jo,
Having an employment arrangement come to an end after reaching age 60 fits within the definition of retirement for superannuation purposes and will provide you with unrestricted access to the super you have accumulated up until that point. Be mindful that you also need to be over age 60 for super withdrawals to be received tax free (assuming your balance does not include taxable (untaxed) components).
By meeting the condition of ceasing an employment arrangement over age 60, you will still be permitted to obtain new full-time employment and will still have unrestricted access to your balance at the point of meeting the condition. However, any subsequent contributions (e.g. SG contributions from your new employer) will not be accessible.
It is important to notify your super fund once you cease your current employment, so that they know you have met the condition of release. This will require you to submit a declaration to them.
I don’t see an issue with your negotiation intentions.
Hope this helps,
Chris
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Hi I am 61 in December and I have been only working casually since my triple bypass 3 years ago my wife also works par time 20 hours a week can I give up work now and collect my super
Regards Duncan Davies
Hi Duncan, one definition of retirement is ‘having an employment arrangement come to an end after age 60’. Meeting this superannuation condition of release should provide you with full unrestricted access to your total superannuation balance (benefits accumulated up until the point you make this declaration to your super fund). If you do cease work, you should contact you super fund and ask for the process required. Your wife’s employment situation is irrelevant in determining whether or not you can access super.
What an eye opener! Thanks for this info. I’m 61 and have a little over $100,000.00 in Super. I own no real estate and am renting. I have often thought about resigning my job, using my super to buy something super modest in a small town then getting a job until I reach pension age. I actually have options now. I’d never be able to live off any income stream my Super might generate while still renting. At least if I own something outright and can find work (it’s possible), I at least have the possibility of living a basic existence in a place of my own.
Glad to be of help Dave!
Hello Chris, My husband will be made redundant again from his job at the end of JUne, this will be his 4th in 7 years. He has just reached 60. Can he access his super and pay off the balance of the house so we don’t have to worry. He still wants to work part time if he finds another job.
Hi McKenzie, one type of superannuation condition of release is ‘retirement’. Retirement, for superannuation purposes, can be defined in a couple of different ways. Click here to read more about the definition of retirement. One such definition includes ‘having an employment arrangement come to an end after turning age 60’. Being made redundant after age 60 would generally satisfy the defintiion of retirement and provide full unrestricted access to super. However, another condition of release would need to be met to access future contributions, such as contributions made after finding another job.
Furthermore, being over age 60, all withdrawals (excluding any taxable (untaxed) components) can be received tax free.
You can find out your ability to access your super savings by contacting your superannuation fund and explaining the situation.
I turned 61 in early 2018. The business I worked payg for went into liquidation in early June 2018 and I am struggling to find a new job. If I access my super as a lump sum (just over $60k) will I pay any tax on this? I was of the belief that super was tax free after 60.
Hi Cathy, yes generally all withdrawals for people over age 60 are received tax free, unless your balance includes a ‘taxable (untaxed)’ component. You should contact your superannuation provider to see if your balance includes a ‘taxable untaxed’ component.
My age in feb will be 60, I have less than $50000 in super,Is it better to pension my super or put all the money in a fixed term deposit. also I wish to gift some of the money to my daughter how is that done.
Hi Marcus,
If you are still working and plan on continuing to work you are not able to have full access to your super.
However, you are able to commence a transition to retirement (TTR) pension if you wish, allowing you to draw up to 10% of your balance each financial year. A TTR pension also requires you to draw a minimum income of 4% of your balance each year. Be careful though, because there may be tax on TTR pension income while under age 60.
I am unable to provide personal advice and can therefore not tell you what is best for you.
i am 63 working full time, if i go say 3 days aweek ,can i withdraw from my super, and how much can i take and will it be monthly or annually
Hi Lenny, as you have met your superannuation preservation age, you have the ability to commence a transition to retirement (TTR) pension, which allows you to access up to 10% of your pension account balance each financial year.
If, as a result of reducing to 3-days per week, you satisfy the condition of ‘having an employment arrangement come to an end’, you may be able to commence an ordinary account based pension, which allows you to withdraw as much as you like from your pension each year (only limited by your account balance).
Being over age 60, all pension income should be received tax free (assuming your balance does not include a taxable (untaxed) component.
Your superannuation provider will set the frequency of pension income. This may be weekly, fortnightly, monthly, quarterly, half-yearly, or yearly. If you have a SMSF, you can generally take pension payments whenever you like, depending on what is stated in the trust deed.
I’m 64 and want to buy land to build a home or buy a home to live in but I am working full time can I take money out of my super to buy a home or land
Hi Michele,
In order to access your super as a lump sum, you generally need to have met the superannuation definition of retirement, or reached age 65.
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Regards,
Chris
Hi,
My mum would like to get information about accessing her super.
She is currently experiencing a financial difficulty. She is 60 years old, and is employed in a permanent basis. She would like to access her superannuation. She said she would like to cease her current employment arrangement, but would like to work as a casual employee with the same employer. Can she do that?
A full condition of release, allowing unrestricted access to super, includes ceasing an employment arrangement after age 60. Provided that condition is genuinely met, any subsequent employment, even with the same employer, should not affect the ability to access super. Note: any new contributions made after recommencing employment will not be accessible in full until another full condition of release is met.
I am 60 and currently on Newstart. I own my own home and I am single. I have $400,000 in super can I assess thisthrough a Transition to Retirement ? And will a TRIP of say $13,000pa affect my Newstart benefit ?
Hi Tom,
I must admit, I’m no expert on Newstart, but this should give you a guide:
If you are under Age Pension age and you convert your super to an income stream (e.g. TRIP), it goes from being non-assessable for Centrelink (while in an accumulation account) to being assessable.
It is assessed under both the income and assets test.
Here is a link to the income and assets test limits for Newstart. As you can see, the asset test limit for a single homeowner is $258,500.
Do NOT do a transition to Retirement it will slash Newstart.
Do a one off cash withdraw (can be done multiple times)
gday chris , i just turned 60 and have 60 odd grand in a super fund. i have credit card i would like to pay out and close. can i access some of my super to pay it off and then salary sacrifice to replace what i withdraw. i work full time self employed in construction. i am having a bigger year than normal and dont want i big tax problem at years end . the idea is to get rid of card now and reduce tax obligation by paying more in to super. thoughts
Hi Leigh,
As you are still working, presumably in the same job you were in prior to turning 60, the only way you can access your super is via a transition to retirement income stream.
This allows you to draw an income between 4% and 10% of your account balance each year. Based on $60k, an income of between $2,400 and $6,000 could be achieved in the first year.
Being over age 60, the income is generally received tax free – you should confirm this with your super provider.
If you are going to continue receiving contributions, you might consider leaving a small balance in your accumulation account (i.e. not using the total balance to start a TTR income stream).
Contributions cannot be made to an income stream account.
It is particularly important to leave a small balance in accumulation if you have insurance within the accumulation account, so as not to lose it.
Often a tax advantage can be achieved by salary sacrificing salary into super and then withdrawing tax free income from a superannuation income stream for obvious reasons.
It might also be worth asking your employer if your SG payments will reduce if you decide to salary sacrifice, because I believe employers are only legally required to pay SG on wages after salary sacrifice is deducted, but they are allowed to pay an increased amount.
Yours is definitely the easiest to understand website when it comes to the complexities of Super; thanks
Thank you Carol, very kind of you to comment.
Hi Chris. I am 60 years old and work for two agencies, permanent part time for one and on a casual basis for the other. The hours of work for my P/P employer are regular but very limited (my choosing). Therefore if I were to cease work with the PP employer but continue with the other can I access my Superannuation? Also would my casual employer then set up a new fund for me?
Hi Kath,
Having an employment arrangement come to an end satisfies the definition of retirement, providing unrestricted access to super. Ceasing work with one employer should achieve this.
You could ask your employer to set up a super fund for you, or you can generally choose your own fund under the super choice rules and notify your employer of your fund name and account number.
Another option might be to leave a small amount in your existing super account so that it remains open. This is something that should be considered particularly if you have insurance within the account. Because if you close the account, you will effectively be cancelling your insurance also.
Note: Any contributions made to super after ceasing an employment arrangement will be preserved. Another condition of release will need to be met to access them.
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hi Chris, I am in a family partnership and would like to access my super when I reach 60, do I have to come out of the partnership or would it be possible to redo the distribution amount. I would like to stop daily work but still do paperwork in the future for a smaller distribution.
Thankyou Sandra
Hi Sandra,
To satisfy a full superannuation condition of release, you need to be able to demonstrate that you have had an employment arrangement come to an end after reaching age 60.
If this cannot be satisfied, you should be able to commence a TTR Pension regardless of your employment status.
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Hi Chris,
Thanks for your invaluable guidance on the tricky topic of super. I’m afraid I have yet another question on the meaning of ‘retirement’. When I turned 60 early in January, I was not employed in any capacity. For the 10 years before I turned 60 I had worked on and off as a casual for the one employer. Immediately after I turned 60 I started a contract as a part-time employee with that same employer. My sense is that my circumstances meet the relevant definition of retirement for the purpose of making a lump sum withdrawal from my super. Do you share that view? Thanks, Mark.
Hi Mark, there is often debate around the interpretation of this rule. The definition of retirement includes ceasing work after reaching your preservation age with no intention of returning to full-time or part-time work OR having an employment arrangement come to an end after age 60. My interpretation is that an individual needs to have an employement arrangement come to an end AFTER reaching age 60, so I’m not sure that your situation would satisfy that definition of retirement. You should consider seeking advice from a financial planner.
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Hi Chris. I am 61 & have a transition to retirement a/c & work part time 25hrs per week.
I’m considering retiring & collecting all of my money as a lump sum but I still want to work casual 10hrs a week.
All of that I understand, however, what isn’t clear is can it be the same employer if I don’t fully resign & leave the company?
What I want to do is resign my part time position of 25hrs stepping down to casual 10hrs per week but never actually leave the company. Can I do that? Or do I have to fully resign & then have them re-employee me to be able to get my money as a lump sum? If this is the case how long do I have to wait to start working casual again?
Hi Chris, an arrangement under which you were gainfully employed needs to come to an end. My interpretation of this is that you need to specifically cease gainful employment. I do not beleive reducing your employment status from part-time to casual satisfies this condition, but I could be wrong. Here is a good article that may help https://www.dbalawyers.com.au/pensions/new-apra-guidance-confirms-retirement-members-reach-60-cease-one-two-jobs/
There is no specific timeframe of when you can commence again. You just need to meet the initial condition of ceasing an employment arrangement.
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Hi Chris , Thank you for your response. I read the article & it’s still not really clear so probably best to be cautious & fully resign & then have them re-employ me as a call in casual after I’ve had a break.
Thank you for taking the time to reply. Reading through your site you definitely explain things I’m plain English so that everyone can understand.
Thanks for the feedback Chris. Yes, it is a tricky area and not one that has been tested too much in the past. Every situation is different which is why it’s difficult to give a certain answer, given there’s not much precedence.
Hi chris
I was made redundant start 2019 , I will be 60 end June 2019.
I have been receiving Newstart for last 8 weeks and in time expect to find another job . I am wishing to access some my super as lump sum 15K reduce a outstanding debt. I am not sure if newstart would cease or reduce, but would lump some be possible if I paid debt directly. Once employed again in near future will then salary sacrifice to cover such withdrawal.
Hi Paul, it is unlikely that you are able to access your super unless you have unrestricted non-preserved components within you fund (speak to your fund and ask if your balance includes this). You first need to meet a condition of release. Reaching age 60, in itself, is not a condition of release. You need to have ceased an employment arrangement after reaching age 60, or be retired with no intention of returning to work.
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Hi Paul,
I retired from my full time position at age 61 last October 2018 with no intention of returning to work. Since then (after meeting the requirements for the release of my Super) I have withdrawn a lump sum to clear my mortgage and have been receiving a pension payment from the remainder. In May 2019, I returned to work with the same employer but in a totally different role on a casual basis of up to 30 hours per week. I have now had an offer to change jobs with this employer to a full time position in another entirely different role. Are there any issues with this? Would I now transfer my pension account to a TTR and continue drawing funds?
Hi Colin, there is no issue with this at all. Ceasing an employment arrangement after age 60 is considered a full condition of release, providing you with unrestricted access to your super. There are no future employment limitations on this. No, there is no need to change your account based pension to a TTR pension. In fact, you probably wouldn’t want to, as investment earnings within a TTR pension are taxed at up to 15%, compared to 0% in account based pensions. One thing to keep in mind is that you do not have access to any subsequent contributions made into your super account until you meet another condition of release. For example, contributions made to your super account after Oct 2018 are unable to be accessed. You may, however, have access to those contributions if you meet another condition of release (changing jobs). But then, again, any subsequent contributions from your new job would not be accessed until you met yet another condition of release. Confusing, I know!
Hope it helps!
Chris
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Hi Chris
I am 63 & still working full time and have over $470k in my Westate Super Fund.
I bought a house 3 years ago & want to pay off my remaining mortgage of $173k before I decide to retire.
Is it best to wait until I am 65 to access a lump sum to pay off my mortgage or alternatively set up a TTR now and opt for the maximum amount of 10% to enable me to pay a larger amount off my mortgage and in doing so also reduce my interest repayments.
Are there any advantages tax wise in doing this now?
Thanking you
Hi Lynne,
This is a common question leading into retirement. In short, there is no wrong answer, both are viable options, but there are other options too. To help you make a decision, consider this:
1. What are the costs associated with setting up a TTR Pension?
2. If you are continiung to make/receive contributions to super, you will need to have a TTR Pension AND an accumulation account, as contributions cannot be made to an accumulation account
3. What are the expected after-tax returns from your super investments over the next 2 years vs the interest rate on the loan?
4. Would you feel more comfortable paying off debt faster?
5. Will you/ Are you salary sacrificing?
You are at an age right now where you should be capitalising on all of the benefits of super. You really need to consider your main objectives and then compare a few strategies to see which one comes out on top (i.e. current situation vs TTR Strategy vs TTR to pay off debt). You might also want to think about setting yourself up now for maximum social security benefits in a few years and getting more of your savings into super.
I know that’s a bit vague-ish, but there are countless options right now for you over the next few years.
Chris
Chris, thank you fo this article I cannot tell you how useful it is. I would appreciate your feedback on my situation. I have a significant super balance and at age 61 I ceased employment with my last employer in December 2018. I have reached the preservation age for my super balance. I would like to work again but am unable to find a role and my assets mean no government support of any kind which I am ok with. What I would like to know is rather than retire can I access a lump % of my super (10%?) to be able to have a bank balance while I continue to seek work? If I cannot do this my only option would be to retire. Appreciate any feedback.
G’day Michael,
Thank you for your comments. I’m glad you have found it useful.
In relation to opportunities available to you, you are in a very enviable position given your age, employment status and significant super balance.
From what you say, it appears you ceased an employment arrangement after reaching the age of 60. This meets the definition of a full superannuation condition of release, meaning you have unrestricted access to your super via lump sums or an income stream, regardless of whether you decide to return to work or not. Also, being over age 60, all withdrawls are generally received tax free.
Because you have met this condition of release, you are not limited to a TTR Pension. A TTR Pension is for people who have not met a full condition of release.
Off the top of my head, I can think of at least 3 strategies that can reduce your current and future tax considerably. I strongly suggest obtaining personal advice from a financial planner (feel free to click here and check us out if you don’t have one), as I am certain you could capitalise on this position you are in, particulalry prior to returning to work. Withdrawing 10% of your balance to put in your bank account is unlikely to be your best option.
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Hi Chris,
we just sold our home, and we want to know can I resign from my full time job, take all of my savings funds to buy a house out of the city to own it outright and still work. I have reached my preservation age and with what we made from the sale of our house and my super, we think we can buy a nice downsized home in the country.
I don’t want to retire early as I will still need a job to live and keep busy and with my wife’s part time earnings we should be able to live comfortably and debt free (our ultimate goal).
Hi Jeff,
Given the title of this article, I will assume you are over age 60. Ceasing an employment arrangement (e.g. resigning from your current job) meets one of the superannuation definitions of retirement, which is a full condition of release. A full condition of release gives you unrestricted access to the super savings you accumulated up until meeting that condition of release.
Meeting this condition of release and accessing your super does not preclude you from returning to work in another role. However, any subsequent contributions made to your super account, after meeting the initial condition of release, will not be accessible until you meet another condition of release.
Hope this makes sense.
Regards,
Chris
Hi Chris
Im a 60yo Nurse. Im looking at ceasing my full time employment and commencing a casual employment with the same hospital soon after. Would this be considered a ceasing of employment arrangement? Would i be able to withdraw a lump sum of my super?
Hi Brett,
Ceasing an employment arrangement usually means that no agreement or understanding is in place about future employment with the same employer (i.e. a gainful employment arrangement remains in place and is therefore not ceased). Therefore, this may not satisfy the requirements.
This is exactly why I do not put money into super because its convoluted and i dont want to have to meet some lame rules to access my own money. Add to that the fact that the government can change any of the rules anytime they want. I dont trust them one bit. It wouldnt surprise me at all if when i reach 60 they change it to 70
Hi Ben, you are right. There is always going to be legislative risk with superannuation, as there is with anything in this crazy world of ours. It’s always important to be aware of the risks and then determine the risk-reward of a particular strategy.
I am 61 and just finished a work contract and now no longer working. I was advised by someone to go on newstart allowance so I could work on my own business and do voluntary work, which would cover my centerlink obligations. My concern is that my superannuation will dry up with fees if I leave it. If I draw on my super, am I able to have a business? It won’t be a big money earner, rather an interest. What do you believe would be best?
Hi Carolyn,
Generally, if you stop working your super will remain invested and, although there are usually fees deducted, the earnings from investments are intended to produce returns in excess of the fees over the long-term. However, it depends on how your funds are invested and how high the fees are. Some super funds have very high fees. By ceasing an employment arrangement after age 60, you have achieved a superannuation condition of release. This means that all the super you accumulated up until the day you stopped working should be accessible in full, regardless of whether you continue to work or not. However, you will not be able to access any subsequent super contributions without meeting another condition of release.
Hope this helps,
Regards,
Chris
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Hi Chris,
I was made redundant at the age of 59 and have just turned 60 and have not been re-employed. I am not planning to go back to work but to look at withdrawing some of my super as a lump sum to pay off mortgage etc. So at this stage I am not intending to work so I consider myself retired. If in the years to come I get another job elsewhere either full or part time can there be any tax issues with the lump sum I am taking out now and will there be any restrictions on taking out any further lump sums of the money I had in super when I was first made redundant. Many thanks John
Hi John,
Reaching your preservation age and retiring with no intention of returning to work meets the definition of retirement, which is a full condition of release, providing you with unrestricted access to your super. This intention needs to be genuine. However, it does not prohibit you from obtaining work in the future, provided your initial intentions were genuine. Returning to work will not change the taxation of any previous super withdrawals or your ability to access the part of your super balance that became available to you. However, any subsequent super contributions (e.g. from future employment) will not be accessible until you meet another condition of release.
Regards,
Chris
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Hi Chris,
I am now 64 and retired when I was 55 having cashed in a small superannuation policy of about $25,000 with an Australian super fund which had accrued from employment in Australia. I have not had gainful employment since I was aged 55 and returned to Australia. I spent most of my working career overseas and when I was 62 transferred a large foreign superannuation fund balance to an Australian SMSF I set up at age 62. I now wish to access this contribution (being the after tax proceeds of the foreign superannuation transfer) as it is the only super I have. Can I access it as my employment status has not changed since I met a condition of release when aged 55 or do I need to meet another condition of release and if so, can that condition of release be just the same condition of release I met at age 55, i.e.confirmation that I never again intend to seek gainful employment and have retired? I have no job to cease gainful employment.
Hi Brian,
Transfer of foreign super into Australia is a complex area, so it would be best to obtain personal advice from your accountant, adviser or SMSF administrator. However, generally, a standard condition of release should allow you to access these funds in full. And, yes, being over your preservation age with no intention of returning to work can be used as a condition of release, despite having previously used this condition of release. SMSF minutes will need to be prepared to to change the preservation status of these benefits.
Regards,
Chris
Chris,
Belated thanks for your prompt response to my inquiry. As you so often say on this blog, ”every situation can be different”. I find your replies as clear and to the point as any other could be, given the limited facts you have.
The many professionals with whom I sought advice on my matter have all been somewhat unclear with their opinions. One, a leading super lawyer thought it should be OK to access the contribution, I having retired older than my preservation age without the intent of again seeking gainful employment and thus had already met a required condition of release, the circumstances for which had not changed at the time I sought access to my foreign super contributions. Another lawyer and accountant felt it was likely I had to have ceased gainful employment (as a condition of release) since making the foreign super contribution before I could access the foreign super contribution and required a large fee to investigate the matter further. This requirement, as I advised in my query, was not possible as I had not had gainful employment since making the small super withdrawal.
The ATO was helpful and verbally said I could access the funds as I had already met a condition of release and retired but would only verify this if I made a request in writing which I did not as it was going to take too long for their reply.
In the end I resolved the uncertainty by checking the preservation status of the initial withdrawal which contrary to all advisers assumptions was an unrestricted non preserved benefit for which a condition of release was never required. Thus there was no reason why I could not access the foreign super contribution having met a condition of release being retired older than my preservation age and not intending to seek gainful employment again. A different condition of release such as ceasing an employment arrangement post the contribution was not necessary.
I feel the last paragraph is important as I think you suggested I only needed to meet a condition of release for restricted benefits, which could be the same condition of release as I had previously used for other restricted benefits I held in my super but importantly the condition of release did not need to be necessarily different. This point of whether the condition of release must be different each time you access preserved benefits previously not released or whether it can be just another condition of release (being the same condition of release as used previously but for still restricted benefits) seems unclear to the sample advisors I have consulted.
Hi Chris
Excellent website.
Just a quick question, my mum is 60 and I’m in charge of her SMSF and want to buy her a house with some of it. Under the current rules, can she quit her job/ get fired to access her super (as per your writings above)…and then the very next day get hired from the same employer and start working again? The initial contract would have technically been ceased.
Cheers
Hi Jason,
Thanks mate! The rules state that an employment arrangement needs to have come to an end in order to meet that particular condition of release. It’s widely considered that, under the scenario you propose, an arrangement has not ended due to the intention to re-hire. That is, an arrangement (to re-employ) remains in place. Despite the contract technically ceasing, I’m not sure it would satisfy the condition. The specifics of the situation would determine whether or not the condition has been met.
Regards,
Chris
I am 61 years old and currently working as an Electrical supervisor i plan on going part time next year
i have applied for holidays from 1st jan – 30 april
i have signed a new contract starting on the 5th of jan as a part time 3 days per week in a new position as an electrical team leader and will report to the person who has
taken over my current position
have i met the requirement for change of employment arrangement or will i need to hand in my resignation to end at the end of the year and have my holidays paid out
Hi Trevor,
Thanks for the question.
The retirement definition ‘having an employment arrangement come to an end after age 60’ can be a tricky one sometimes. My understanding is that an arrangement must come to an end. The fact that you have in place an arrangement (whether verbal, written or implied) that you will be returning part-time suggests that an arrangement with your employer never ended and you do not meet the definition, despite reducing from full-time to part-time and working in a different capacity. I’m still not sure you would meet the definition even if you resigned and had your holidays paid out, because the arrangement to be re-employed is there prior to resigning.
Regards,
Chris
Hi, Chris
I turn 60 in 2020 and just resigned from my full time work for the past 100 years due to the conflict with the new employers. I am not confident that I can find work again due to my age and health issues. I do hope to continue working at least part-time as my children are still young in primary school and my super balance is only around 500K, I still have mortage to pay.
I wonder if I can get 400K of my super out to reduce my mortage and may be invest 100k in overseas shares. I wonder if the capital gain or divident income from the share investment need to paid tax if i am no longer be able to acquire a paid work. What is the Tax implication for income/capital gain inside the super vs outside super? any benefit?
Hi Vivian,
In order to have full access to superannuation, you need to have met a full condition of release, such as retirement. One definition of retirement is ‘having an employment arrangement come to an end after reaching age 60’. If you resigned from your job after age 60, then it is likely this condition was met. You would need to notify your super fund of this as soon as possible, so that they know you have met this condition of release.
Whether or not you should access your super to reduce debt and how you should invest any remaining balance will be based on your immediate and long-term objectives. There may be tax implications of selling investments within super, but there may also be ways to ensure you don’t pay tax. I strongly suggest obtaining personal advice in relation to what you should be doing at this stage, so that you can have comfort in knowing you are making the right decisions. If you do not already have a financial planner, feel free to make a complimentary 15-minute appointment with our practice, Toro Wealth, to see how obtaining personal advice can help you. Click here to make a booking https://calendly.com/torowealth/15mincall
Kind regards,
Chris
Hi Chris. Im 62 in October 21. Id like to access my super through a TTR acc . I have about 185000 in super. I work full time. Id like to continue full time work and from what i can understand i can access my super via a TTR acc am i correct in my thinking.
Hi Ray,
This is correct. In general, a person who has attained their preservation age is eligible to use their super to start a TTR pension. However there are some things to be mindful of including; potential loss of insurance, notifying your super fund of any deductions to be claimed on contributions and ensuring your employer still has a place for contributions to be made to… to name a few. Most importantly, you need to be confident you are starting a TTR for the right reasons. Feel free to make an complimentary 15-min appt with us using this link if you would like to discuss personal advice https://calendly.com/torowealth/15mincall
Regards,
Chris
Great I might need you in future for advice
Any time Jacky, I’ll be here!
I am over 60 and retired i have taken small lump sums from my super that were tax free. Do I have to put these withdrawals on my tax return. I am currently on job seeker.
Hi Kerrie, section 8 of the 2021 personal income tax return requires an input for lump sum withdrawals from superannuation. A lump sum withdrawal can consist of one or more of the following: tax-free component, taxable component and untaxed component. Even though lump sum withdrawals are generally received tax free over age 60, the withdrawal itself will still usually consist of various tax components. You will need to contact your super provider and ask them what components your lump sums consisted of and then add them together. Tax may be payable if your balance includes an untaxed component. All of this should be discussed and confirmed by a tax professional.
Regards,
Chris
Thanks for the previous advice so appreciated. I had 2 super funds i rolled over $83000 into one super fund. The super fund transferred $74000 into the other fund and sent $9000 to the ato. Would i be taxed again by taking out some small lump sum withdrawals. Their was $30000 in the other fund.
Hi Kerrie, it is difficult to say – the answer will depend on the tax components that make up your balance. Generally, tax-free components can be withdrawn tax free and taxable (taxed) components can also be withdrawn tax free over age 60. However, any taxable (untaxed) components may incur tax, even over age 60. All withdrawals from super must be made proportionately from each component. You will need to contact your super provider to ask them what tax components your super balance consists of.
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Hello, my name is Clive , turned 60 recently, I work as a casual 15 to 20 hours a week can I access my super fund to pay off debts occurred an how much can I access ,
Hi Clive, nice to meet you.
In order to have full access to your super, you need to be retired and have no intention of returning to full-time or part-time work ever again. Part-time for superannuation purposes is defined as 10 hours+.
You should, however, be able to have limited access to your super (10% of your balance each year) via a transition to retirement income stream, even while you are still working.
Read more here https://superguy.com.au/superannuation/when-can-i-access-my-super/
Regards,
Chris
I am currently 61 turning 62 this year. I am working, however, I would be prepared to leave. I want to claim ALL my super. Can I do this?
Hi Betty,
Ceasing an employment arrangement on or after age 60 meets the superannuation definition of retirement and gives you unrestricted access to all of your super, which can be taken as a lump sum or income stream.
If you decide to continue working, instead, you can still access up to 10% of your balance each year via a transition to retirement pension.
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Hi Chris
I am going to turn 65 next January and am thinking of drawing a lumpsum from my super while still employed. Question is can draw and re-contribute into the non-concessional portion of my super and get a tax break at the end of the financial year? Thanks
Hi Ali, when over age 65, you can generally access your super tax free as a lump sum withdrawal, even if still working. Personal concessional contributions are contributions made to super that provide you with a personal tax deduction – however, such contributions will incur contributions tax, which should be considered. Also, the concessional contribution cap (which includes SG contributions, salary sacrifice and personal concessional contributions is $27,500 per person per financial year.
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