Retirement is just the beginning, for you, and your super

The popular view of retirement involves someone withdrawing a giant wad of money from their superannuation and living off the proceeds in the hope it doesn’t run out before they do.

And more than 50 per cent of Australians do that just that – accessing their super in a lump sum.

But there’s a way to live well off your super, while it remains invested, and you put your feet up and enjoy retirement – even if you don’t have a giant wad and you’ve got just a small amount of savings.

It’s called a retirement income stream. It’s available to anyone who’s reached the preservation age – the age at which they can access their super. For most Australians approaching retirement, that’s 55.

You simply set up an account through your superannuation fund, transfer some or all of your super into it, and the fund pays you a regular sum, determined by you, which is tax-free if you’re over 60 and taxed at just 15 per cent if you’re aged 55 to 59.

In the meantime, the money within the account continues to be invested by your fund, just as your super was invested while you were working.

You can still treat yourself with a holiday by withdrawing money whenever you want.

And if your circumstances change, or you want to take a great holiday or do some renovations, you can simply withdraw what you need, when you need it.

This income stream option is also useful if you want to ease your way into retirement, by cutting back on work hours.

You can use the retirement income stream to top up your income so you are still earning what you did when you were full-time, while your super remains invested thanks to yours and your employer’s contributions.

Alternatively, you might continue working full-time, take a larger regular income from a retirement income stream, and salary sacrifice a significant portion of your weekly wage into your super, enjoying the tax break that entails and further bolstering your super.

How long your retirement income stream lasts depends on how much you withdraw, the size of the investment returns and how much you pay in fees.

If you choose a product from an Industry SuperFund the fees will generally be lower, and all profits are returned to members, as opposed to shareholders.

There is also a minimum amount you must take out each year, depending on your age, ranging from 4 per cent if you’re 64 and under, to 14 per cent if you’re over 95.

And – like your super – your retirement income stream balance will be included in an assets test for the government age pension.

Most super funds offer a retirement income stream product, so contact yours to find out more.

Keep your super invested when you retire and grow your income.
Turn your super into an income stream when you retire and you can receive a regular income to top up the Age Pension, while the balance stays invested.

Everything you need to know is at industrysuper.com.