Q: I retired, sold my large house, downgraded, invested spare money and one month after I invested, I lost $50,000 just like that. I would like to know whether I can keep my super going beyond age 65, perhaps to age 67 to help recoup my losses on my outside investments?
A: I’m very sorry to read about your situation.
I’m guessing that you’re referring to the old rules (removed 14 years ago, from July 2004, and no longer applicable) that required you to cash out your super monies, or start a super pension, at the age of 65, unless you satisfied a work test.
This old rule is no longer the case. An individual can keep savings in the super system indefinitely without starting a super pension, or withdrawing a lump sum. If an individual does keep his or her super benefits within the accumulation stage (that is, doesn’t start a super pension in retirement phase, 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:
- Preservation age. If an individual has reached their preservation age AND retired, then they can access super benefits. Your preservation age will be age 55 if born before July 1960, and at least age 56 if born after June 1960, and at least age 57 if born after June 1961, and at least age 58 if born after June 1962, and at least age 59 if born after June 1963. If you were born after June 1964, your preservation age is 60 years, which is the maximum preservation age. You can find out more about your preservation age by reading the 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.
- Age 65. The age of 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. If an individual has reached the age of 65, they can access super benefits without retiring, or they can choose to keep super benefits in their super fund indefinitely (or more specifically, until they die). For information on the super and retirement rules, see SuperGuide articles What are the super and retirement rules for over-65s? and Over-65s work test: How does it operate?
- Super contributions beyond the age of 65. 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, or other adverse circumstances, some additional opportunity to boost super savings. Employees receive Superannuation Guarantee contributions beyond the age of 65, and indefinitely, when eligible. For information on the contribution rules for older Australians, see SuperGuide articles For over-65s: Ten tips when making super contributions and Employer super (SG) contributions paid for over-70s.
- The government’s current position is that it is not extending the retirement age of 65 for the purposes of accessing superannuation benefits, although Age Pension age is increasing to age 67 (and the Liberals want to further increase the Age Pension age to 70 years although the Liberals have recently announced that they have gone cold on this idea). For information on your Age Pension age, see SuperGuide article Age Pension age increasing to 67 years (not 70 years), and for information on working out your Age Pension age, see Retirement Age Reckoner: Discover your preservation age and Age Pension age.
Note: The federal government’s new downsizing and super policy may be of interest to some readers. Since 1 July 2018, the federal government allows older Australians (65 and over) to contribute the part or all of the proceeds of their home (up to a limit of $300,000 per individual), without the need to satisfy a work test, and even when an individual is aged 75 years or over. For more information on this new policy, see SuperGuide articles Contributing super by downsizing your home: 10-point guide and Over 65? Sell your home and contribute more to super.