Q: I am 58 years old. Apparently, you can get a lump sum of super before 60 if you have permanently retired. Can you still later look for work again? How do you prove you have permanently retired?
A: The question that you ask is a popular question, and we receive many queries on this topic. The term ‘retirement’ and what that means for accessing superannuation can mean many different things.
The short answer to your question is: generally yes, you can return to work after retiring, but at the time of retiring, the intention to retire must have been genuine. I explain this in more detail later in the response.
In the olden days, most women ‘retired’ when they married and men retired only when they turned 65. Indeed, until the 1980s, women could access their super benefits when they left work to have children because the presumption was that these women would never return to the workforce.
The world had changed a lot since then, and the concept of ‘retirement’ is now more fluid. Confusion over when someone is considered ‘retired’ has prompted dozens of questions from readers about retirement age, superannuation access and returning to work after retiring. In this article, I answer the following three questions:
- Can I retire at any age?
- Can I return to work after retiring?
- Can I access my preserved benefits if I’m still working?
Can I retire at any age?
An individual can retire at any age if they so wish, but for the purposes of accessing super benefits, you must have reached your preservation age AND retired. For anyone born before 1 July 1960, preservation age was 55 years (all of the Australians who have a preservation age of 55 years have now already turned 55; the last batch on 30 June 2015).
Anyone turning 55 on or after 1 July 1960, has a preservation age of at least 56 years and as old as 60 years, and since July 2017, at least 58 years, and from July 2018, at least 59 years (depending on date of birth). Any Australian born after June 1964 has a preservation age of 60 years. If you were born after June 1960 but before July 1964, your preservation age can be 56, 57, 58 or 59 years, depending on your specific date of birth.
What this means is that a person who has retired and reached their preservation age, can access super benefits. For more information, see SuperGuide articles Accessing super: What is my preservation age? and Accessing super: Preservation age moves to 59 years and Retirement Age Reckoner: Discover your preservation age and Age Pension age.
‘Retired’ for the purposes of accessing super benefits means the trustees of the individual’s super fund are reasonably satisfied that the person intends never to again become gainfully employed, either on a full-time or a part-time basis. Note that ‘part-time’ is defined as working up to 30 hours a week and a minimum of 10 hours a week.
In other words, if a person’s intention is to work fewer than 10 hours a week, then that person can be considered to be retired, subject to the person ceasing his or her current employment arrangement. In nearly all cases, the super fund will request that the retiring individual sign a declaration stating that he or she never intends to be gainfully employed for more than 10 hours per week.
Note: Reducing your hours with the same employer, rather than ceasing employment, is not considered retiring. I explain this scenario in the SuperGuide article Does changing to part-time at 60 count as retiring?
Can I return to work after retiring?
Signing a retirement declaration doesn’t preclude returning to full-time work, or deciding to work part-time (more than 10 hours a week), if a person’s circumstances change. The declaration relates to the person’s current intention at the time of retiring. Personal or financial circumstances can change requiring individuals to return to the workforce. For example, the devastating effect of the GFC (global financial crisis) on super pension investments in Australia and internationally forced many retirees to return to work.
Some public sector funds have special rules relating to ‘retiring’ from the public service. If you belong to one of the older public sector funds, then you need to check with your super fund about your retirement options.
What is a reasonable timeframe between retiring, and returning to work?
The key issue is the intention of the individual at the time of retirement, although anecdotally we understand that 6 months is a common timeframe for individuals to get restless after retiring.
Retiring from the workforce with the genuine intention of never working part-time (more than 10 hours and up to 30 hours a week) or full-time (more than 30 hours a week) again, does not preclude the possibility that a person reconsiders this situation at a later date. The key issue is, at the time a person retired, the intention to retire was genuine.
Note that this comment cannot be taken as advice or be relied upon for your decision-making. We make this comment merely to assist you in your endeavours for further information.
Note: Tax may be payable on super benefits taken before the age of 60, although super lump sums under $205,000 (for the 2018/2019 year) may be free of tax due to the low-rate cap. For more information on tax on super benefits taken before the age of 60 see SuperGuide articles Retiring before the age of 60: the tax deal and Super tax tables: When UNDER 60 years of age.
Can I access my preserved super benefits if I’m still working?
Generally no, but like all rules there are some exceptions:
- Reach the age of 65. If an individual has turned 65, he or she can access super benefits without retiring from the workforce. An individual who has reached 65 years of age can continue working full-time or part-time and start drawing down on super benefits.
- Take a transition-to-retirement pension (TRIP, also known as a TRIS). If you have reached your preservation age (55 if born before July 1960, and at least 57 years if born after June 1961, and at least 58 years if born after June 1962, and at least 59 years if born after June 1963), then you can start a transition-to-retirement pension – what I call a TRIP. You can withdraw a maximum of 10% of your account balance each year, and you’re not permitted to withdraw additional lump sums, except in very specific and limited circumstances (for more information on TRIPs see SuperGuide article TRIPs: 10 important facts about transition-to-retirement pensions). When you retire, or turn 65 (whichever comes first) however, you can have more flexibility when accessing your super benefits.
- If you’re aged 60 or over, and cease an employment arrangement. If an individual resigns or otherwise ceases an employment arrangement after they have turned 60, then the rules permit the individual to access preserved super benefits related to his or her employment arrangement. The rationale behind this exception is that most individuals ceasing employment at this age are more likely to be retiring than returning to the workforce (see SuperGuide article Does changing to part-time at 60 years, count as ‘retiring’?).
Note one: Merely turning 60 (or reaching your preservation age) doesn’t give you automatic access to your preserved super benefits. You must satisfy a condition of release, as discussed above and outlined in the SuperGuide article Accessing super early: 14 legal ways to withdraw your super benefits.
Note two: If any of your super benefits are ‘unrestricted non-preserved’ benefits, then you can access these benefits at any time. I explain non-preserved benefits in the article Unrestricted access to super, sometimes.