Four things to know about super when you retire

You’ve worked hard – now it’s time to enjoy the rewards. But what do you need to know about accessing your superannuation in retirement?

First, you’ll want to check your eligibility. Australians can access their super from age 60 if they’ve permanently retired from the workforce, or at age 65 even if you’re still working.

If that’s you, you can now switch your super over from the ‘accumulation phase’ to the ‘retirement phase’ – which brings with it a whole new world of benefits.

Aware Super’s Peter Hogg

Here’s a brief guide to the financial side of your golden years.

1. You need to choose how to access your super

When you’re ready to start accessing your super, the first big decision you’ll need to make is how you’ll draw that income.

The most popular option, says Peter Hogg, general manager of guidance & advice at Aware Super, is turning your superannuation into an income stream, or an account-based pension.

“That basically means just switching on the tap to start drawing a regular income,” says Hogg.

The money in your account stays invested as per your wishes – but now starts paying out a regular income.

Another option is what’s called annuities, where you “effectively buy yourself a guaranteed income”, Hogg says.

For instance, you might choose to commit $100,000 of your balance to an annuity and get a guaranteed income of $10,000 a year for the next ten years, no matter what happens in the market.

Unsure about what option is right for you? A good super fund should be able to offer the services of a financial advisor to help guide you, says Hogg.

2. It’s tax-free

And here’s the really great news – once your super has flipped over to the retirement phase, any income you draw from it is tax-free.

“The government’s helped us a bit over the years. There are some funny quirks here and there, but once you’re in retirement phase, it’s completely tax-free,” says Hogg.

“It’s a really great tax-free world to be in [aged] post-60 with superannuation.”

The only caveat is the ‘transfer balance cap’, which limits the total amount you can transfer into tax-free retirement accounts.

This currently stands at $1.9 million, however “most members we see are well and truly under that limit,” says Hogg.

Cheers ... make the most of your retirement years by seeking sound advice.Credit: Getty Images

3. You can keep working and still get your super

That’s right. As long as you’re 65 and over, you can keep working and still access your super. In fact, it’s a popular option, says Hogg.

“What we’re finding much more common today is that people don’t just work for 35 years, stop and retire,” he said.

“People are coming back and forth into the workforce. They’re maybe reducing hours and testing the concept of retirement out, before they commit to that fully.

“You can absolutely then start to draw an income from your super, whilst continuing to work – and that’s a really common transition to retirement strategy.“

4. You can access your super and get the age pension at the same time

Another great perk of the super system is that you can access the age pension (which kicks in at age 67) and your super at the same time.

Your income and assets will be assessed in determining your eligibility for the age pension, but Hogg says that 70 per cent of Aware Super members still have access to some of the aged pension, even if it’s a small amount.

Sadly, it’s a benefit many Australians are leaving on the table.

“We did a bit of research on this and, on average, 32 per cent of Australians don’t apply to the age pension until at least a year after they could have – and that could be up to $18,000 that they’ve missed out on,” says Hogg.

“So, we certainly encourage people to investigate that and seek help from a super fund on how to do that, because typically people can get both at the same time.”

• Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.