Super for beginners, part 24: Do I have to withdraw my super when I turn 65?

Q: I retired, sold my large house, downgraded, invested spare money into my super believing I would be making $25,000 per year until age 65. One month after I invested, I lost $50,000 just like that. I would like to know what the chances are, of the government increasing the cut off for this Super Scheme from 65 to maybe 67 to give those of us that did have this experience, a chance to recover some of the money lost and make a little. Saying this I would like to remind you that the Government has already legislated that retirement age is going up gradually anyway.

A: I’m very sorry to read about your situation.

I’m not 100% certain of the question that you’re asking, but I’m guessing that you’re referring to the old rules ( no longer applicable) that required you to cash out your super monies, or start an income stream, at the age of 65 unless you satisfied a work test.

This is no longer the case. An individual can keep savings in the super system indefinitely without starting an income stream, or withdrawing a lump sum. If an individual does keep his or her super benefits within the accumulation stage (that is, doesn’t start an income stream or withdraw lump sums), any earnings on those fund assets are subject to 15% earnings tax.

The following comments may also assist you in your understanding of the super rules:

• If an individual has reached their preservation age (currently 55 but rising to age 60 depending on a person’s birth date) and retired, then they can access super benefits. You can find out more by reading other articles on our SuperGuide website.
• Individuals can contribute to super up to the age of 74 (although anyone aged 65 to 74 intending to make a super contribution must satisfy a work test). The ability to contribute beyond the age of 65, subject to meeting a work test, gives those individuals hit hard by the Global Financial Crisis some additional opportunity to boost super savings.
• The age 65 is relevant for those who want to continue working, because when you turn 65, you can access your super benefits without retiring or satisfying another condition of release. The Government has announced that it has no intention of extending the retirement age of 65 for the purposes of accessing super, although Age Pension age is increasing to age 67 over time.