Planning for retirement isn’t just about saving; it’s about knowing how to access your superannuation in the most tax-effective way. Whether you’re nearing retirement age or already there, understanding the tax treatment of super withdrawals can help you make smarter financial decisions for Transition to Retirement (TTR).
When Can You Access Your Super?
You can access your super when you reach your preservation age (between 55 and 60, depending on your birth year) and retire, or once you turn 65, even if you’re still working.
Lump Sum Withdrawals
If you choose to withdraw your super as a lump sum, the tax payable depends on:
- Your age (under or over 60)
- The components of your super (tax-free and taxable)
Tax treatment:
- If you’re 60 or older, most lump sum withdrawals from a taxed super fund are tax-free.
- If you’re under 60, the taxable component may be taxed at a lower rate, either your marginal tax rate or a capped rate (up to 17%), whichever is lower.
Transition to Retirement (TTR) Income Streams
Not ready to fully retire? A Transition to Retirement Income Stream (TRIS) lets you draw down from your super while you continue working part-time.
Tax implications:
- Under 60: Income is taxed at your marginal rate with a 15% tax offset.
- 60 and over: Payments are generally tax-free.
This can be a powerful tool to boost your income or reduce work hours without dipping into savings.
Minimising Tax and Maximising Returns
Strategic planning can help you reduce tax and improve your retirement outcomes. Consider:
- Timing withdrawals to align with your age bracket changes
- Salary sacrificing into super before retirement
- Re-contributing strategies to convert taxable components to tax-free
- Seeking personal financial advice to tailor your approach
Professional Guidance Matters
Superannuation and retirement income rules can be complex, and getting them wrong may result in unnecessary tax payments. At Certum Advisory, our team provides expert guidance to help you navigate superannuation withdrawals, optimise tax, and secure your financial future.
Get in touch today to plan your retirement with confidence.
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