Access your super and keep working

coins 150x150 Access your super and keep workingSuperannuation is meant to fund your retirement, however if you are over age 55 you may be able to access your super without having to fully retire.

Pre-retirees can start a “non-commutable income stream” from their super prior to retirement. This means you can draw an income from your super while you are still working (but you are not allowed to cash out lump sums).

So, how does this work?

Jack is aged 57. He is a successful executive but is finding the pace of work very tiring. He wants to slow down but doesn’t want to fully retire because he still enjoys a bit of a challenge. He’d also like to play a bit more golf.

He talks to his boss who doesn’t want to lose a key and valued employee. She offers him a project role working 60% of normal hours. His salary would reduce from $100,000 to $60,000. Jack is attracted to the proposal but is concerned his take home pay will not be sufficient to sustain his lifestyle – he will be about $10,000 a year short.

So his financial adviser tells him that he can use his super to top up his income. If Jack uses a non-commutable allocated pension, he has flexibility in the amount of income he draws each year but he can’t cash any of it out. The pension income will be taxed at his marginal tax rate of 34.5% but he will be eligible for a tax offset of 15%. This means if he drew out $12,000 he would only pay tax of $2,340.

The arrangement is flexible

For instance, if Jack finds his expenses are lower than expected, he can cancel the allocated pension and “roll” the balance back to his super fund. If he works fewer hours, he can start another allocated pension to further top up his income. Once he fully retires, Jack will be able to cash out amounts from his super or his allocated pension.

Other issues to consider

The ever-changing rules governing superannuation provide more choices for people considering retirement. However the rules are complex and there are a range of issues to consider. These include:

  • how to ensure your income stream is as tax-effective as possible,
  • consideration of debt reduction strategies, and
  • managing access to Centrelink benefits.

Discuss your personal circumstances and goals with us on (07) 3040 4840 to see what’s best for you.


The advice on this site may not be suitable to you because it contains general information that has not been tailored to your personal circumstances. Please seek personal financial advice prior to acting on this information.  Please also refer to our general advice warning under contact us tab on our website.  The article is based on information available at the time of writing only and therefore care should be taken as to the accuracy of the content.

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