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What can I do with my superannuation savings once I retire? What are my options?
So first let’s start with the preliminary question: When can I access my super?
The general rules to access super are as follows:
Turning age of 65, even if you continue working
Reaching preservation age and retiring
Reaching preservation age and commencing a Transition to Retirement if you continue working.
What can I do with my super in retirement?
Commence retirement income stream - I am a strong believer that one income stream is not the best way to set up your retirement. That obviously depends on the overall value of your investable assets, and whether Age Pension is even a consideration in your situation. If it is, the correct design of your income and split between different income streams can provide quite a substantial difference in the level of income and security of it every single year for the remainder of your retirement.
Withdraw a lump sum - once you meet conditions of release, your super is your money, and you can withdraw any part of it in a form of a lump sum. It can be a partial or a full withdrawal. Generally, I do not recommend withdrawal from the super, just to have money in a bank account. After all, once your super savings have been moved to a pension phase, they are not subject to any tax, no income tax, no capital gains tax. If instead, you invest funds directly on your name, all the profit and interest are subject to your personal income tax.
But sometimes there are reasons to make a partial withdrawal such as:
Paying off the mortgage
Home upgrades
Retirement preparation, such as a new car to have a reliable vehicle for the rest of your retirement, or a holiday
Keep savings in super - sometimes people think that on retirement they must move their super to an income stream. No, you do not, you can keep all or part of your savings in super. I am not sure what would be a reason, apart from having in superannuation more than the transfer cap, which is currently $1.9mil. This is the maximum you can currently move to a retirement pension. Therefore, if you super balance is greater than $1.9mil, the rest would need to remain in the superannuation account, and unfortunately be subject to 15% tax, unlike the rest in the pension account. If this is your situation, I am certain you realise the value of a good professional advice for your retirement.
Combine the above options in any proportion that suit you - again I repeat, there is no rule that says you have to start an income stream, just because you retired, but remember that a good, solid and reliable retirement planning takes into consideration all possible aspects of what could happen in the future, together with unforeseen circumstances.
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