Retirement

Introduction to retirement

Retiring is a major milestone in a working person's life. While many people can't wait to hang up their working boots, or suit for good, others prefer to ease themselves into retirement while still being active in the workforce.

The good news is that people approaching retirement now have more choices. You can:

• access your super benefit tax-free as a lump sum or income stream when you retire at age 60
• convert all or part of your super into a transition to retirement income stream if you are between 55 and 65 and continue to work in a full or part-time capacity
• leave your retirement benefit in your super fund indefinitely
• continue working and contributing to your super up to the age of 75

Accessing your super tax-free

You can now access your super benefit tax-free at the age of 60, whether you take it as a lump sum or pension.

If you want to access your super as a lump sum or commutable retirement income stream you will need to be retired and of preservation age. A commutable income stream gives you the flexibility to convert your income stream into a lump sum if you need to.

Your preservation age depends on your date of birth.

Your date of birth	Your preservation age
Before July 1960	55
July 1960 to June 1961	56
July 1961to June 1962	57
July 1962 to June 1963	58
July 1963 to June 1964	59
After June 1964	60

The beauty of rolling your super into a pension product is that you don't pay any tax on your investment earnings or capital gains and your regular payments aren't subject to income tax.

Transitioning to retirement

If you are between 55 and 60 you can ease yourself into retirement under the Government's transition to retirement rules. This way you can continue working full or part time while drawing an income stream from your super in the form of a pension.

Due to the restrictions some people convert part rather than all of their super benefit into a transition to retirement income stream (TRIS). For example, you have to wait until you retire permanently, reach 65 or satisfy another condition of release before converting your TRIS into a lump sum. Minimum and maximum limits on the level of income payments you can access each year also apply.

Leaving your benefits in super

If you don't want to access your super immediately, you may be able to leave it in your fund indefinitely. Your investment earnings will continue to be taxed at a maximum of 15 per cent and you may also pay capital gains tax until you roll your super into an income stream product.

You can withdraw income payments tax-free from your super fund as you need them.

Continuing working and contributing to super

You can continue contributing to super up to the age of 75 provided you meet certain work test conditions. This means you must have been gainfully employed for at least 40 hours within a period of 30 consecutive days during the financial year in which the contribution was made.