Many people start using their super savings as soon as they retire and can access them, but you don’t have to. If you have other income sources or savings to live on, you could leave your super savings in your super account. This means your money stays invested and you could continue to benefit from investment returns.
Benefits of Leaving Your Money in Super After Retirement
There are several potential benefits to leaving your money in super after retirement:
- Tax-free earnings: Any earnings on your super savings after you retire will be tax-free. This can be a significant advantage, especially if you have a large super balance.
- Tax-free withdrawals: When you eventually do start withdrawing your super, the withdrawals will be tax-free if you are over 60 years old.
- Potential for higher returns: Super funds are typically invested in a diversified range of assets, which can give you the potential for higher returns than you might get from other investments.
- Access to Centrelink benefits: If you leave your money in super, you may be eligible for more Centrelink benefits, such as the Age Pension.
Things to Consider Before Leaving Your Money in Super
There are also some things to consider before leaving your money in super:
- Investment fees: Super funds charge fees, so you need to make sure that the potential benefits of leaving your money in super outweigh the cost of fees.
- Access to your money: You may not be able to access your super money as easily as you could if it was in another type of investment.
- Changes to superannuation rules: The rules around superannuation can change, so it is important to keep up-to-date with any changes that may affect you.
How to Leave Your Money in Super After Retirement
If you decide to leave your money in super after retirement, you will need to talk to your super fund about your options. They will be able to advise you on how to set up an account-based pension, which is a type of superannuation account that allows you to draw an income from your super savings while still leaving the money invested.
Leaving your money in super after retirement can be a good option for people who have other income sources or savings to live on. It can allow you to benefit from tax-free earnings and withdrawals, as well as the potential for higher returns. However, it is important to consider the investment fees and access to your money before making a decision.
Frequently Asked Questions
Can I contribute to super after I retire?
Yes, you can still contribute to super after you retire, but there are some limits on how much you can contribute. You can make personal contributions, such as salary sacrifice contributions, or receive employer contributions. However, you cannot make any further contributions to an existing account-based pension.
What happens to my super when I die?
When you die, your super will be paid to your beneficiaries, which could be your spouse, children, or other dependents. You can nominate your beneficiaries in your super fund’s member portal.
What if I need to access my super before I turn 60?
If you need to access your super before you turn 60, you may be able to do so under certain circumstances, such as if you are experiencing severe financial hardship or have a terminal illness. You will need to talk to your super fund about your options.
Additional Resources
- Australian Taxation Office: Superannuation
- ASIC MoneySmart: Superannuation
- Retirement Essentials: Planning for Retirement
Disclaimer
This information is general in nature and does not constitute financial advice. Please seek professional financial advice before making any decisions about your superannuation.
Leaving your money in super after retirement can be a good option for people who have other income sources or savings to live on. It can allow you to benefit from tax-free earnings and withdrawals, as well as the potential for higher returns. However, it is important to consider the investment fees and access to your money before making a decision.
After years of working, you’d like to think that your blood, sweat and tears has finally paid off and you can now look forward to enjoying the little nest egg you’ve built to retire on.
But even though you may have overcome one obstacle, you may now face another
What to do with all your retirement savings?
You could start using an account-based pension from your super fund to pay yourself a pension, or you could leave it untouched until you really needed it. Alternatively, you could take it all or a portion as a lump sum.
It’s true that this can be one of the most difficult choices to make, particularly after you’re retired and unlikely to go back to work.
However, the truth is that your personal preferences ultimately determine how you use your retirement savings.
How super investments are taxed
Any profits from your super investments will be subject to 15% tax if you decide to leave your money in the accumulation phase (super earned during your working life). [2].
If you choose to rebalance your superannuation or make capital gains within the fund, you will also be subject to a 15% tax on the gain, unless you have owned the investment for a minimum of 12 months. In this case you’ll pay 10 per cent tax. [2].
However, any profits you make from your investment or capital gains will be tax-free if you meet the requirements to transfer your funds to an account-based pension, also known as an allocated pension. [3].