FAQ:
Q: How do I know if my super balance is on track?
A: Compare your current balance against age based benchmarks such as those published by the Association of Superannuation Funds of Australia (ASFA). Consider your desired retirement lifestyle and consult our financial advisers for personalised guidance.
Q: What can I do if my super balance is lower than expected?
A: Consider increasing voluntary contributions if possible, consolidating multiple super accounts to reduce fees and reviewing your investment options to align with your retirement goals.
Q: How does the recent rise in the Super Guarantee affect me?
A: The Super Guarantee has increased to 12%, meaning more compulsory contributions from your employer will boost your balance over time, helping to improve your retirement savings.
Q: Are there different rules about accessing my super now?
A: Yes, the minimum age for unrestricted access to super is 60. There are also stricter rules around early withdrawals due to hardship or emergencies.
Q: Why do men generally have higher super balances than women?
A: Factors include career breaks, part-time work and the gender pay gap that affect contribution amounts. Efforts are underway to close this gap through policy changes and better financial education.
Q: Should I rely solely on my super for retirement income?
A: Super is a key pillar, but many Australians also rely on the Age Pension and personal savings. Planning a diversified retirement strategy with professional advice is recommended.
Q: Where can I find help to plan my super and retirement?
A: Contact your super fund’s financial advice services or our qualified financial advisers to review your superannuation and retirement strategy tailored to your circumstances.
60 IS NOW THE MILLION DOLLAR QUESTION…
What are the tax impacts for retirees aged under and over 60?
For retirees, tax impacts vary significantly depending on whether you are under or over 60, reflecting different rules on super withdrawals and income taxation.
Retirees under 60
Generally, accessing superannuation before age 60 triggers tax consequences. Lump sum withdrawals and pension payments are subject to concessional tax rates but often include a tax component, typically taxed at 15% plus Medicare levy on taxable components.
Additionally, early withdrawals may incur extra penalties unless qualifying conditions such as severe financial hardship or medical grounds are met.
This means retirees under 60 face higher taxes on super income compared to their older counterparts. Earnings within the super fund remain taxed concessionally at 15% but may be higher in specific situations.
Retirees aged 60 and over:
Once you reach 60, superannuation withdrawals (both lump sums and income streams) are generally tax free, provided they come from a taxed super fund. This tax free status is a significant advantage, reducing the tax burden on retirement income.
Moreover, Social Security or Age Pension income is subject to separate rules, and while some pension income may be taxable, many retirees benefit from tax offsets that reduce their taxable income.
Other considerations:
- Investment earnings on assets supporting retirement income streams (pension phase accounts) are usually tax free for retirees over 60.
- Recent legislative changes have raised the minimum pension eligibility age to 60, aligning super access with retirement rules and encouraging longer accumulation phases.
- Retirees should consider how super withdrawals affect overall taxable income, including potential impacts on other benefits or tax offsets.
In essence, reaching age 60 opens a more favourable taxation environment for retirees, with tax free super withdrawals significantly improving retirement income efficiency.
Those under 60 face more complex tax liabilities, often discouraging early access unless under strict qualifying criteria.