What should I do with my super at retirement?

Retirement isn’t just a time to take a step back from work; it’s a golden opportunity to utilise your superannuation efficiently for a comfortable and enjoyable lifestyle.

Understanding Australia’s retirement system is crucial. It’s divided into two phases: the accumulation phase, where you’re actively contributing to your super, and the drawdown phase, where you utilise these accumulated funds.

What should I do with my super at retirement?

Common Misunderstandings and the Reality

Many retirees find themselves puzzled about how to effectively use their funds during the drawdown phase. Contrary to common belief, the superannuation system is actually designed for you to use both the returns and the capital of your retirement savings.

Exploring Your Options

Upon retirement, you have several choices:

  • Continue in the Accumulation Phase: You can leave your money in your super account, letting it grow until you need it.
  • Lump Sum Withdrawal: Take out all or part of your super as a one-time withdrawal.
  • Account-Based Pension: Convert your super into a flexible pension account, offering regular income with varied investment options.
  • Annuities: Choose a more stable, regular income stream through an annuity, albeit with less flexibility compared to pension accounts.

These options aren’t mutually exclusive. Many retirees find that a combination of these strategies suits their individual needs and retirement goals.

When Can You Access Your Super?

You can typically access your super at 65. If you’re younger but have reached your preservation age (between 55 and 60, depending on your birth year), you can also access it under certain conditions, like retirement or changing employment after 60.

Superannuation Strategies: Spend or Save?

Leaving your super untouched is one approach, but it might not always be the most advantageous. Actively using your savings, as recommended by the Retirement Income Review, can actually boost your retirement income without necessitating additional savings during your working years.

Deciphering Pensions and Annuities

Choosing between an account-based pension and an annuity depends on your need for security versus flexibility. Annuities guarantee a fixed income, independent of market fluctuations, offering peace of mind. On the other hand, account-based pensions provide more control over your investments but come with varying returns.

The Balance Transfer Cap: A Limit to Consider

There’s a cap on how much super you can transfer into tax-free retirement products, currently at $1.9 million. This cap influences how much of your super can be moved into income streams like pensions or annuities.

Impact on Your Age Pension

Your decisions regarding your super will influence your Age Pension eligibility and amount. It’s crucial to understand this interplay to make informed decisions.

Ready to Make the Most of Your Retirement?

Navigating your superannuation options and how to use your super in retirement can be complex, and making the right choice is essential for a secure and enjoyable retirement. At United Global Capital we are dedicated in guiding you through these choices, ensuring that your retirement plan is not just safe but also rewarding. Reach out to us today for expert advice and start shaping a retirement that you truly deserve!

UGC General Advice Past Performance Warning

Recent stories

UGC Monthly Market Update | February 2024

Welcome to the UGC’s Monthly Market Update for February 2024. Join UGC’s CEO & Chief Investment Officer, Joel Hewish, as…

Read more

How to Make the Most of the Stage 3 Tax Cuts

The introduction of stage 3 tax cuts represents a great opportunity for Australians to enhance their financial well-being. With 13.6…

Read more

Investing for a House Deposit

In today’s economic landscape, purchasing a home is a significant milestone that requires careful financial planning and strategic saving. For…

Read more

The Power of Dollar Cost Averaging in Building Wealth

In the realm of investment strategies, Dollar Cost Averaging (DCA) stands out for its simplicity and effectiveness, particularly for those…

Read more

Understanding the ASX 200: A Key Indicator for Investors

The ASX 200 is more than just a number—it’s a vital indicator of the Australian share market’s health and a…

Read more