Key Highlights

  • Retirement planning starts with checking super balances, locating lost or unclaimed amounts and keeping personal details current.
  • Extra super contributions can increase retirement savings, but contribution caps need to be considered because exceeding them may result in additional tax.
  • Eligible Australians can access super after reaching preservation age and retiring, while other access pathways apply at age 65 and under transition-to-retirement arrangements.
  • Super benefits can be received as a lump sum, income stream or combination, with tax treatment depending on factors including age and whether the super is taxed or untaxed.

Preparing for retirement involves understanding where Superannuation is held and how much has accumulated. The Australian Taxation Office recommends checking existing super accounts, identifying any lost or unclaimed super and considering whether multiple accounts should be consolidated.

Keeping personal information current is also important. Members should ensure their contact and banking details are up to date with both the ATO and their super fund, including after retirement. If a fund cannot maintain contact with a member, it may be required to transfer super to the ATO.

The ATO also recommends monitoring total super balance and contribution caps, particularly for people planning additional contributions. Concessional and non-concessional contribution limits can affect how much additional money can be placed into super without creating additional tax consequences.

Finding Lost and Unclaimed Super

Lost or unclaimed super can form part of a person’s retirement savings and should be checked during retirement planning. ATO online services allow individuals to review their super information and determine whether the ATO holds lost or unclaimed amounts.

People should also check that the ATO has appropriate bank account information or an active super fund nomination. For individuals aged 65 or older, the ATO may pay unclaimed super directly into a bank account where it is able to do so.

People who want unclaimed amounts to remain within super need to ensure an active fund nomination is recorded. Without one, legal requirements may result in the money being paid directly to the individual when received from a super fund.

Estimating Retirement Income Needs

Determining how much income may be required in retirement is another part of the planning process. ASIC’s Moneysmart provides tools covering super and pension eligibility, household budgeting and potential retirement income from super and the Age Pension.

Super funds may also provide calculators to help members estimate their retirement position. Services Australia’s Financial Information Service provides information through webinars that can help individuals understand aspects of their financial circumstances.

These tools can help people assess their expected living costs and compare those needs with potential retirement income sources.

Increasing Super Before Retirement

Individuals can increase their super through additional contributions, subject to eligibility requirements and applicable caps. Options can include concessional and non-concessional contributions, use of unused concessional cap amounts, downsizer contributions for eligible people aged over 55 who have sold a primary residence, spouse contributions and certain government contribution arrangements.

The government co-contribution can provide up to $500 for eligible personal contributions, while the low income super tax offset can also provide up to $500 for eligible individuals. Certain small-business owners may have access to retirement exemption contributions when selling a qualifying business, subject to the relevant conditions.

Employer contributions count towards an employee’s concessional contribution cap. Individuals with several super accounts may also consider consolidation, which can reduce the number of accounts and potentially help avoid paying fees across multiple accounts.

Considering an SMSF

Some Australians may consider establishing a self-managed super fund to manage retirement savings. An SMSF places responsibility for Investment decisions and compliance with superannuation and tax laws on its trustees.

Before establishing an SMSF, individuals need to understand the administrative, legal and investment responsibilities involved.

Accessing Super in Retirement

Super can generally be accessed after reaching preservation age and retiring. Access is also available from age 65, while people aged 60 to 64 may be able to access super under transition-to-retirement arrangements while continuing to work.

Retirement savings can generally be received as a lump sum, an income stream or a combination of the two, depending on the applicable rules and fund arrangements.

A person may also return to work after retirement and potentially make further super contributions. However, returning to employment can affect overall income and government payments, including the Age Pension, making the consequences important to consider.

Tax Treatment of Super Benefits

Tax treatment for super benefits depends on factors including a person’s age, the amount received and whether the super is classified as taxed or untaxed. For people aged 60 or over, super payments may be tax-free in certain circumstances.

Individuals considering an income stream also need to consider the transfer balance cap. Exceeding the applicable cap can result in additional tax, and the rules can also apply to death benefit income streams.

Conclusion

Retirement planning requires more than checking a super balance. Australians approaching retirement can review their accounts, identify lost or unclaimed super, keep contact information current and consider their contribution position. Understanding available contribution methods, retirement access rules and the potential tax treatment of benefits can also form part of the preparation process.