Question 1

Hello. I am 58, single, have no debt and am desperate to leave work. I have $620,000 in my super and a mortgage of roughly $60,000.  

I am aware I can take only 10 per cent of my super each financial year. However, is there a way I can pay off my mortgage when I retire and still access super for living expenses ? 

Thanks

Many people around your age can get frustrated with work if they don’t enjoy their job. All they can think about is retiring.

However, is it work you hate or just your particular job? Before leaving the workforce all together, perhaps ponder seeing if there is another job you may enjoy? Even part time? Even just for a couple of years?

Starting a new job can help motivate you and this would, of course, provide additional income. Meaning your super can keep on compounding and last longer, or it can provide a higher standard of living when you do retire.

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Having said the above, it’s not always easy to find a new job when you are older. The Australian Human Rights Commission has just published a report detailing how many employers are biased against older (and young) workers. It’s still a lot.

“Preservation” age, the age you can start to access super, has gradually been moving up from age 55 to 60. Therefore, I don’t believe you will be able to access any of your super unless you have some un-restricted non-preserved benefits (check with your fund).

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What you are referring to is a transition to retirement pension, where you can still work but access 10 per cent of your super each financial year. But this now can only be started from age 60.

Once you have turned 60 and have left an employer, you can access the full amount of your super.

Question 2 

Hi Craig, I have sold my home and moved to a retirement village. I have $200,000 left.  

I am 65 and have only $10,000 in super (thanks to a nasty divorce). Should I put the money in my super or leave it in the bank? I’m on a disability pension. 

Regards, Belinda

Hi Belinda,

Ouch, yes divorce can have a big impact emotionally and financially. Having one household split their finances in half (or whatever the split) can put pressure on both individuals.

From an age pension or tax perspective, it probably won’t make much of a difference whether the funds are in super or not.

However, putting the majority of the $200,000 in super could provide the following advantages:

•  If you are receiving any other Centrelink payments (i.e. disability support pension), then keeping money in super won’t be assessed by Centrelink until age 67. So for the next couple of years this would be an advantage.
• You can convert your super to a regular income stream. Many people find receiving a regular monthly payment convenient and easier to budget, rather than just having money sitting in a bank account.
• Your money invested in super/super income stream should provide better long-term returns rather than a bank account. However, you need to ensure you choose an appropriate investment option(s) that you are comfortable with. Your super fund will help you with this.

Question 3

If I start a transition to retirement pension while working, can I continue with it if I retire?

A transition to retirement pension can be commenced once you attain preservation age (now 60 for everyone), regardless of if you are still working or in between jobs.

When you turn 65, your transition to retirement pension will automatically change to an account-based pension.

If you stop working for an employer or retire, you can let your fund know. That will also move your account to an account-based pension, where you will have full access to your funds.

You should be able to keep your same account number but you will need to confirm this with your super fund.

Disclaimer: The responses provided are general in nature, and while they are prompted by the questions asked, they have been prepared without taking into consideration all your objectives, financial situation or needs.

Before relying on any of the information, please ensure that you consider the appropriateness of the information for your objectives, financial situation or needs. To the extent that it is permitted by law, no responsibility for errors or omissions is accepted by IFS and its representatives.