SUPERANNUATION ADVICE

When you reach your preservation age and retire, you can access your super to fund your retirement.

You can also access your super:

• when you turn 65 years old

• under the transition to retirement rules (if you are eligible), while you continue to work.

You don’t have to cash out your super just because you’ve reached a certain age, however, you need to check if the rules of your particular super fund specify otherwise.

Your preservation age is not the same as your pension age. Your preservation age is the age you must reach before you can access your super and depends on when you were born.

The tax payable on super benefits depends on a number of things, including:

• your age

• the amount of the payment

• whether you receive your super benefits as a super income stream or a super lump sum

• whether your super comes from a taxed or untaxed source.

Some super benefits have a tax-free component and a taxable component. The tax-free component generally includes:

• amounts you have contributed to your super fund without claiming those amounts as a tax deduction

• certain other tax-free amounts you may have rolled into your super fund.

ASFA estimates that the lump sum needed at retirement to support a comfortable lifestyle is $640,000 for a couple and $545,000 for a single person. This assumes a partial Age Pension.

ASFA estimates that a modest lifestyle, which covers the basics, is mostly met by the Age Pension. They estimate the lump sum needed to support a modest lifestyle for a single or couple is $70,000.

However, this might not be enough for you, it is important to seek advice on this with a Financial Planner; the team at OakView Financial can sit down with you and work out your required balance to meet your retirement needs.

It’s fair to assume that the average Australian might hope to live comfortably, if not lavishly, in retirement.

The widely reported ASFA Retirement standard suggests couples can enjoy a ‘comfortable lifestyle’ on around $65,000 a year. It stands to reason then that a single person should be able to live more than comfortably on $60,000.

If $60,000 a year sounds like your kind of retirement, the next step is to work out how much super you will need to fund it. That’s where our expert team comes in.

The Association of Super Funds Australia (ASFA) latest report states the average superannuation balance required for a comfortable retirement is $640,000 for a couple and $545,000 for a single person. This assumes you will withdraw your superannuation as a lump sum and receive a part Age Pension.

However, the average superannuation balance of a 60–64-year-old Australian is $359,870 for men and $289,179 for women. This, unfortunately falls short of the required amount needed to live a comfortable retirement.

The good news is that you still have time to change these numbers; time in the market beats timing the market. By working with a Financial Planner, you can employ strategy’s to boost your superannuation so you can hit all your retirement goals and live that well-deserved comfortable retirement.

The transfer balance cap is a $1.7 million transfer balance cap on the amount of money you can shift into a super pension account. Excess amounts will need to remain in a super accumulation account or outside super, where earnings will be taxed. The interaction of the transfer balance cap with other income and investments can be complex, so we advise you to seek professional advice.

The $1.7 million cap applies to individuals, which means a couple could have up to $3.4 million in individual accounts. However, if a couple has one account between them in a single name, the $1.7 million limit applies.

The Department of Social Services reviews the eligibility for the Age Pension each year, increasing the upper limits to scale with inflation. Australian Parliament may also introduce policy changes to the limits, it is best to review your retirement strategy with your Financial Planner each year to ensure you are always taking advantage of the best outcome.