Getting your super

Funding retirement

When you reach retirement you'll need to work out if you will access your super as a regular pension, a lump sum or a combination of both. There are rules around accessing your super early and heavy penalties if you break them. Here we explain when you can legally gain access to your super and what factors determine how much you'll get.

When can you legally access your super?

You can access your super when you reach your 'preservation age'. This is the minimum age, set by law, that your super must be 'preserved' until. Your preservation age is currently between 55 and 60, depending on when you were born.

When you reach preservation age, you can access your super as long as you are permanently retired (or reached age 65). If you haven't permanently retired, you can still access part of your super via a transition to retirement pension.

Work out when you can access your super.

Super and pension age calculator

Defined benefit super members

Members of some defined benefit super funds can access a defined benefit pension from age 55, regardless of when they were born. Speak to your fund for eligibility requirements as each fund is different.

Taking your super as a retirement income stream, lump sum or both

You can choose to receive your super as a lump sum, a retirement income stream (e.g. $600 a fortnight), also known as an account-based pension, or a combination of both. If you choose to receive your super as a regular income stream, the money that you're not accessing continues to work for you and earn an investment return.

Most super fund members transfer all or most of their accumulation account to an account-based pension so that they can continue to receive a regular income after they have stopped working.

Transfer balance cap

On 1 July 2017 a limit was introduced on how much money can be held in an account-based pension. This is called the transfer balance cap and is currently set at $1.6 million. Details of this and other changes to super are available on the Australian Tax Office (ATO) website.

Super pension

Transferring your accumulation account to an account-based pension account means you will continue to receive a regular income. Many people find this much easier than having to look after a large sum of money themselves.

An account-based pension is similar to your super accumulation account, only instead of putting money into it you will be drawing money out of it. There is a minimum amount you must withdraw each year depending on your age, for example if you are aged between 65 and 74 you must withdraw at least 5% of the balance each year as income payments.

Investment returns of an account-based pension are not taxed and if you are aged 60 or over your income payments will also be tax free. Different rules may apply to untaxed or defined benefit funds. Check with your super fund for more information.

Cashing in your super

When you retire you can take your super as a lump sum. You don't have to take it all at once, you may decide to leave it in super and withdraw it a bit at a time as you need it.

Taking your super as a lump sum can have tax and Centrelink implications and is often not the best way to deal with your super. The returns on investments outside super are usually taxable. If you make a mistake you might not be able to put the money back into super.

If you are aged 60 or over you can withdraw your super tax free. If you are under age 60 you may have to pay tax depending on the components of your super, see retirement income and tax for an explanation on what makes up the different components of your super.

Super lump sum plus pension

Your third option is to take some cash and convert the rest to a pension. Most accumulation accounts and some defined benefit funds will allow you to do this. This gives you the flexibility to take a holiday, renovate your home or upgrade your car, for example, but still receive a regular income. Most account-based pensions will also let you withdraw lump sums in the future so you don't need to make these decisions straight away.

While having the flexibility is great, remember that anything you take out as a lump sum may reduce the amount of regular income you receive and affect how long you money will last. Seek financial advice if you need help working out what's best for you.

How much super will you get?

Your final retirement benefit is determined by:

  • Your employer's contributions over your working life
  • Your own additional contributions
  • Your investment returns
  • The tax you pay
  • The amount of fees you pay

You may be entitled to a full or part Age Pension from Centrelink so your super can be used to top up your Centrelink income and improve your standard of living.

Work out how much income you are likely to have at retirement.

Retirement planner

Can you access your super early?

There are some very limited circumstances when you can access your super before you reach your preservation age:

  • Incapacity - if you suffer permanent or temporary incapacity.
  • Severe financial hardship - if you have received Commonwealth benefits for 26 continuous weeks but are still unable to meet immediate living expenses.
  • Compassionate grounds - to pay for medical treatment if you are seriously ill.
  • Terminal medical condition - if you have a terminal illness or injury likely to result in death within 2 years, as certified by two registered medical practitioners, at least one of whom is a specialist.

The ATO has some useful resources on the early release of superannuation.

Carefully consider whether you really need to access your super early. Seek advice if you're unsure. Accessing your super now may not be a long term financial solution if money is tight and will reduce the amount you have for retirement.  

You may also be able to access your super early if you are permanently leaving Australia or if you have less than $200 in your super account. Go to the ATO's individuals' superannuation webpage and select the 'receiving benefits' option.

Super is a lifetime investment that will provide for you when you retire. Grow your super before you stop working so you can make the most of it after you retire.

Related links

Last updated: 22 Oct 2018