To access your superannuation, you need to meet a 'condition of release' which for most people occurs due to reaching a certain age and/or retiring.
Commonly, people think that you need to reach age 67 to retire however this is not necessarily the case.
The three important ages to consider are:
Age 60: At this age you can either withdraw up to 10% of your superannuation balance each year by starting a 'transition to retirement' pension if you are still working OR if you are retired, you can access more than 10% (including the full amount) if you wish via an 'account based pension'.
Age 65: This is the age at which a 'transition to retirement' pension automatically converts to an 'account based pension'. This means that even if you are still working, you are no longer restricted to taking only 10% of the account balance each year, and, the investment returns made in the account now become fully tax free.
Age 67: The age at which you can apply for Centrelink Age Pension and could start receiving money from the government (if you pass the income and asset test limits).
It is very important to make this distinction as some pre-retirees are unaware that they could afford to retire sooner, costing themselves valuable years enjoying retirement. It is even possible to retire well before age 60, providing that you have built up a suitable amount of savings and non-super investable assets to utilise before you are able to access your superannuation.
It is imperative that people begin to start preparing for their retirement no later than in their 50's. A Financial Planner can help by:
Illustrating what client's current and potential retirement could look like via modelling and projections of anticipated asset position and income levels throughout retirement. The below graph is an example of the asset value and number of years an Adviser can help add to a client's retirement.
Implementing tax effective superannuation contribution strategies to save tax and build for retirement.
Maximise Centrelink Age Pension entitlements where applicable.
Protect retirement savings against longevity risk (the risk of outliving your savings)
Assistance managing wealth transfers if you would like to provide early inheritance / gifts to children or grandchildren.
You can download a free Retirement Guide, and book an obligation free initial appointment at https://www.sourcewealth.com.au/retirementplanning
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