You can access your superannuation at 55 if you have reached your superannuation preservation age.
You will have limited access to your savings if you are still working, but may have full access to your super in the form of an income stream or lump sum if you have permanently retired.
There may be tax consequences associated with withdrawing your superannuation under age 60, as discussed below.
If you were born prior to 1 July 1960 you may be able to withdraw your super at 55 under the superannuation retirement rules.
You need to understand the retirement rules to determine the amount that you are able to withdraw and the way in which you can withdraw it.
Age 55 is the Preservation Age for people born prior to 1 July 1960.
The Preservation Age for people born after 30 June 1964 is age 60.
If you were born in between these dates, your Preservation Age will be somewhere in between, as detailed in the table below:
| Date of Birth | Preservation Age |
|---|---|
| Before 1 July 1960 | 55 |
| 1 July 1960 – 30 June 1961 | 56 |
| 1 July 1961 – 30 June 1962 | 57 |
| 1 July 1962 – 30 June 1963 | 58 |
| 1 July 1963 – 30 June 1964 | 59 |
| After 30 June 1964 | 60 |
Can I Access My Super at 55 and Still Work?
If you have reached age 55 and are still working, or intend on returning to work, you should be able to access your super via a Non Commutable Account Based Pension.
A Non Commutable Account Based Pension may also be referred to as one of the following:
Non Commutable Allocated Pension
Transition to Retirement Income Stream (TRIS)
Transition to Retirement (TTR) Pension
In this instance, you commence an income stream with some or all of your superannuation savings and must draw an income stream between a minimum of 4% and a maximum of 10% of the capital value of the pension, as calculated on 1 July of each year.
For example, let’s say you are 59, still working, and plan on commencing a Non Commutable Pension on 1 July using your total superannuation savings of $500,000.
In the first year, you would be required to withdraw an income of between $20,000 (4%) and $50,000 (10%).
If your balance had reduced to $480,000 by the following 1 July, you would then need to withdraw an income somewhere between $19,200 and $48,000 for the year.
In a Self Managed Superannuation Fund (SMSF) these payments can be taken whenever you like.
However, a regular monthly payment or one-off lump sum is recommended for ease of management and administration.
If you have a retail or industry account, you will generally receive payments monthly, quarterly or annually.
You cannot withdraw more than 10% or less than 4% in any one financial year under the transition to retirement rules.
This is how you can access your super at 55 and still work.
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Can I Withdraw My Super at 55 if Retired?
In most cases, you are able to withdraw your super, with no limitations, if you have reached your Preservation Age (55 if born prior to 1 July 1960), have retired and have no intention of returning to work.
However, there may be tax implications on the portion of your withdrawal that includes a taxable component.
The tax-free element of the withdrawal will always be received tax free.
You can find out the tax components of your balance by contacting your superannuation provider.
All withdrawals must be made proportionately from each tax component.
If you have met the superannuation definition of retirement, you should be able to withdraw some or all of your super as a lump sum and/ or use some or all of your super to commence an income stream.
Where you have met the definition of retirement, there is no need for the income stream to be non commutable. You can commence an ordinary Account Based Pension.
This main differences between a TTR Pension and ordinary Account Based Pension is that you are not limited to a maximum income of 10% each year with an ordinary account based pension.
Also, all earnings derived from investments in an account based pension are received tax free; whereas earnings within a TTR Pension are taxed at the same rate as Accumulation Phase – up to 15%
Why Would I Withdraw My Super at 55?
Superannuation is a tax effective environment, whereby all earnings received from assets within super are taxed at a concessional rate or received tax free if in pension phase (excluding TTR Pension).
Therefore, superannuation is a good place to invest.
However, you may wish to withdraw your super for the following reasons:
1. As part of a Transition to Retirement Strategy
2. Withdrawing super to reduce or pay off debt, such as a mortgage or credit card.
3. To assist with covering living expenses.
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Your individual circumstances will determine whether it is beneficial for you to access your superannuation.
The intention of the Government allowing you to access your superannuation at 55 (or whatever your Preservation Age is) was to allow you to ease into retirement and hopefully work a few more years.
Even working part time and supplementing your income with partial draw downs from a super income stream can reduce the stress on social security.
The Government hopes this would allow you to save more for retirement, pay more taxes by continuing to work, draw down less on your savings (compared to being fully retired) and prolonging your request for the Age Pension.
This is all part of the Government’s plan to reduce the impact baby boomers are having on our economy now that they are all beginning to reach the average retirement age.
The evolution of the TTR Pension has seen full time workers take advantage of these measures by making concessional contributions to super and then withdrawing tax-effective or tax-free income from super.
Referred to as a TTR Strategy, this can reduce the amount of income being taxed at marginal tax rates, while still providing an individual with the same net, after-tax income.
I have shown a working example of a Transition to Retirement Strategy here.
A Transition to Retirement Strategy can be employed with or without a SMSF.
Tax Consequences of Withdrawing My Super at 55
Withdrawals made from superannuation by a member over the age of 60 are received tax free (unless the balance includes a taxable (untaxed) component).
Superannuation withdrawals made under age 60 will usually include assessable income.
Let’s break it down.
Your superannuation is made up of two main components – the Taxable and the Tax Free component.
The Tax Free component of your balance consist of contributions made to your super account where a tax deduction was not claimed (non-concessional contributions).
The Taxable component represents the remainder and effectively includes SG contributions, Self Employed contributions, Salary Sacrifice contributions, plus earnings received in accumulation phase.
Withdrawing Super at 55 – 59: Income Stream
When you commence an income stream, all earnings and withdraws will be proportionate between these components.
For example, a 59 year old has a super balance of $500,000 which consists of $50,000 Tax Free components and $450,000 Taxable components.
By commencing an income stream, these proportions become static upon commencement – 10% Tax Free and 90% Taxable.
All earnings from investments within the pension account will be allocated in this proportion.
All income withdrawn into personal bank accounts must also be proportionate.
If this member opted for minimum required pension payments of 4% or $20,000 in the first year, $18,000 (90%) of this payment would be from the Taxable component and $2,000 (10%) from the Tax Free component.
From a personal income tax perspective, this $2,000 would not be counted as taxable income.
The $18,000 would be taxable at the recipients marginal tax rate; however, a tax rebate (not deduction) would be received equal to 15% of the $18,000 Taxable Portion, which would be $2,700.
Once the recipient reaches age 60, all income would be received tax free, as it is exempt pension income, assuming the balance does not include the uncommon taxable (untaxed) component.
Withdrawing Super at 55 – 59: Lump Sum
You are able to access your super as a lump sum if you have reached your Preservation Age and permanently retired.
If you are aged between 55 – 59, tax may be payable on the ‘Taxable Component’.
However, you have a lifetime lump sum low rate cap where benefits can be received tax free.
The low rate cap in the 2019/20 financial year is $210,000.
This means that you can make lump sum withdrawals from the Taxable (taxed) component up to $210,000 at any stage between age 55-59 without paying tax on the withdrawals.
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Withdrawals must still be made proportionately from components; however withdrawals from the Tax Free component do not count towards the cap.
If any part of your balance includes the Taxable (untaxed) components (not overly common), lump sum withdrawal tax of 15% up to the lifetime cap of $230,000 is payable; 30% between $230,000 and $1,65M; and 45% for amounts over $1.65M.
These amounts exclude Medicare and other levies.
Withdrawing Super Over Age 60
If you are over age 60 and still working, you can access your superannuation via a TTR Pension.
All income should be received tax free, excluding any taxable (untaxed) component.
If you are over age 60 and have met the superannuation definition of retirement, you may have unrestricted access to your super.
When over 60, the definition of retirement can include working after retirement under the working after retirement rules.
What Age Can I Withdraw My Superannuation?
As you can see, there are a few circumstances that affect what age you can withdraw your superannuation.
There is no single superannuation withdrawal age.
In an attempt to summarise:
- The earliest age you can access your super is your Preservation Age (use this Preservation Age calculator)
- Provided you have met your preservation age, you can access your super via a TTR Pension in all circumstances
- If you are under age 60 and retired with no intention of returning to work, you can have unrestricted access to your super
- If you are aged 60 or over, you can have unrestricted access to your super if you meet the superannuation definition of retirement
- If you are aged 65 or over, you have unrestricted access to your super, regardless of your employment status
Once you have accessed and withdrawal from superannuation, you can use it at your discretion.
For example, the withdrawal can be used to pay off debt, put onto your mortgage, buy a car, buy a house, or simply cover retirement expenses.
Accessing Superannuation has strict rules. You should consult an adviser and/or speak with your superannuation provider prior to making withdraws from your superannuation account.
