Making the most of your super at every life stage

To make sure you’re making the most of your super – while you’re working, as you retire and during your retirement years – it’s important to know what your choices are and the steps you can take to secure your financial future. 

In this article we highlight important decisions you need to make at different stages on your retirement journey, what you need to consider and where you can get extra information and advice.  
 

Before age 58

Maximising your super balance while you’re still working

When you’re still looking forward to a decade or more of working life, it’s well worth knowing what you can do to maximise your super savings and income for retirement. After all, the more you have put by for retirement, the more choices you have for how you’ll live.   

• Look at salary sacrifice: it can be one of the most tax-effective ways to add to your super. It’s arranged through your employer who pays an agreed amount from your pre-tax salary into your super account on your behalf. And the best part, you only pay 15% tax on your contributions, which is generally much less than your marginal tax rate. Even small amounts can make a difference. Contributing an extra $10 a week from age 45 could mean you’ll have $13,000 more in retirement.¹ You and future employers can't make additional contributions to your SASS deferred account. You will need another super account to salary sacrifice. There are limits on how much you can pay into your super fund each financial year without having to pay extra tax.² These limits are called 'contribution caps'
  
  
• Review your investment options: As a deferred member your benefit is 100% invested
  
  You can choose one of the following four investment options: 
  
  
  • Growth
  • Balanced
  • Conservative
  • Cash
     

Each one comes with different levels of risk and potential returns so it's important to consider your personal objectives and financial  situation. You should also consider seeking professional advice from a financial planner.

               Discover more tips on boosting your super
 

           Things to consider

• You can roll over your deferred benefit to another super fund at any age, but it may not be the best option for you. If you’re under age 58, you may be better off leaving your benefit deferred within the scheme. It’s always a good idea to get expert advice on your scheme to understand your options.

• Before opting to salary sacrifice into your super, it's important to assess your current financial situation and work out how much additional money you can afford to contribute to your super. It's also vital to understand that money contributed to super typically cannot be accessed until you meet a condition of release, such as retiring and reaching the preservation age. If you can make it work, though, diverting extra cash into super contributions is one of the best ways to increase your retirement savings.

Age 59-65

Making the most of your super when you retire

If your retirement is just around the corner, you’re likely to be planning for all sorts of changes, including when you’ll retire and what to do about money. When you are ready to start cashing out your money as a source of income in retirement, you’ll need to decide what to do with your SASS deferred benefit.  

Keep working and access your deferred benefit

From age 60 you can roll over your deferred benefit to another superannuation fund and start a transition to retirement account. A transition to retirement account pays you an income from your super savings while you continue to work. This means you can ease into retirement on your terms.  

When you have both a transition to retirement account and a regular super account they can work together in a tax-effective way.

• Work less but maintain your income. Topping up your salary with super gives you flexibility – you can work less, but not live on less. 

• Combined with making additional contributions to super such as salary sacrifice or a personal deductible contribution, a transition to retirement income account is a smart way to put your money to work and save on tax.

• When you salary sacrifice to super you only pay 15% tax, which could be less than your marginal tax rate.¹

• Choose when you get paid. Your income payments can be paid fortnightly, monthly, quarterly, half-yearly or yearly. It’s up to you.

• Your super stays invested. The investment returns you earn by keeping your money invested can help you enjoy a higher income in retirement. 

• Your income payments from your super become tax-free.

• Income payments are subject to minimum and maximum limits. You must withdraw at least 4% of your account balance each financial year up to a maximum of 10%.

• When you reach 65, your transition to retirement account will automatically convert into a retirement income stream account (also known as an 'account-based pension') which we discuss later in this article.  
   

Turning your super into a retirement income

You might like to stop working altogether when you turn 60. You may also think that once you stop working, the tax benefits of your super end too. However, the truth is that tax advantages continue if you stay in the super system for retirement:

• Investment earnings are 100% tax-free when you convert your super into a retirement income account.
• Income payments are 100% tax-free if you’re 60 or over. 
   

A retirement income account allows you to pay yourself a regular income and make extra cash withdrawals whenever you need. You can choose how much you receive each year, and there is no maximum limit. You can also withdraw lump sums when needed.

Deciding when to retire

There are all sorts of things that can influence your choice of when to retire. Health and family circumstances can definitely come into it but having access to your super will also be an important consideration.

There is no fixed retirement age in Australia but there are rules around when you can access your super. Your age and your work status determine when you can withdraw your super.

1. Your age: Except in limited circumstances such as financial hardship and permanent incapacity, most of your money is preserved in super until age 60. The amount you can cash out is limited to the unrestricted non preserved amount.
    

2. Your work status: If you have reached 60 (but not yet 65), you can access your super if you change employers or temporarily or permanently cease employment. Any contributions you receive from a new employer or when you start work again will be preserved until you cease another employment arrangement or turn 65.
    

Everyone can access their super when they turn 65 even if you haven't retired or ceased an employment arrangement.

Download our guide to retirement for SASS members for a help planning your health, wealth and relationships in retirement.
 

Age 65+

To work or not to work?

What you spend your time doing in retirement is a very personal choice. It could be that continuing to work in some capacity is the ideal way to add to your income and bring routine and purpose to your days in retirement.   
 

What SASS deferred members need to know

• Choosing a retirement income account: if you want to keep working and start receiving an income from your SASS benefit, you can look at opening a retirement income account. To do this you’ll need to roll over your SASS deferred benefit into another super fund.   
   

• How income from work could affect your finances: if you’re continuing to work, it’s important to consider how your earnings will impact your tax liability and your entitlement to the age pension. Find out more about your income when you retire.
   

Thinking about what your best retirement looks like? Our finding your retirement purpose guide can help you focus on what’s important to you in this life stage.

Where to next?

Disclaimer

¹ Retirement balances are rounded to the nearest $1,000 and are stated in today's dollars, deflated using Average Weekly Ordinary Time Earnings (AWOTE) at 3.5% p.a. Investment returns are based on the Aware Super MySuper Life Cycle option, assumed to be CPI + 4% until age 55, reducing from CPI + 4% to CPI + 2.75% between the ages 55-65 (inclusive) and CPI + 2.75% from age 65 onwards.

CPI is assumed to be 2.5% p.a.

Salary Sacrifice contributions and savings increased in line with annual salary increase of 3.5% p.a. and assumes concessional contribution caps are indexed in line with AWOTE.

Investment returns are assumed to be net of tax.

This example is for illustrative purposes only and is not intended to provide a guarantee on outcome. It is a broad illustration of the steps a member could take, but the actions appropriate for an individual will vary depending on their personal circumstances.

The case study is based on current regulatory requirements and laws, including tax rates, which may be subject to change. Investment return assumptions are for illustrative purposes only and for simplicity assume an average rate of return each year throughout the investment period. Actual returns year on year may vary materially and can be negative as well. If investment returns/inflation are higher/lower, final balances will differ.

² Caps, limits and tax on super contributions | Australian Taxation Office (ato.gov.au)

Issued by Aware Financial Services Australia Limited (ABN 86 003 742 756, AFSL 238430); wholly owned by' Aware Super (ABN 53 226 460 365).

Past performance is not an indicator of future performance.

General advice only. Consider if this is right for you having regard to your objectives, financial situation, or needs, which have not been accounted for in this information. Read the PDS and TMD before deciding to acquire, or continue to hold, any financial product. You should read the Financial Services Guide, before deciding about our financial planning services.