There are lots of rules when it comes to our super system. But not every rule applies to you at every age, so it’s worth figuring out which ones have an impact in your particular age group.
The rules at different ages govern how much and when you can contribute to super, when you can get your hands on your savings and how much tax you will pay. These rules are designed to ensure super is used for its intended purpose – to provide retirement income – in return for generous tax benefits offered as part of Australia’s super system.
To make things a bit easier to understand, here’s SuperGuide’s simple explainer of the super rules that apply in the latter years of your working life.
Super rules if you’re in your 50s
Now you’re closing in on retirement, the rules around contributing and withdrawing your super start to change. Although the annual contributions caps stay the same, for most people this decade tends to be when you are earning the most and many of the big drains on your income – like mortgage payments and school fees – start reducing, leaving you with more scope to boost your retirement kitty.
When it comes to accessing your super, if you decide to withdraw it now, you will generally pay more tax than if you wait until you turn 60.
The rules that apply to your super during your 50s are split between those covering:
- When money goes into your super account (contributions)
- When money comes out (withdrawing).
1. Contributing to super
Superannuation Guarantee (SG)
Once you are aged 18, your employer must pay SG contributions on your behalf into your super account. The SG contribution rate is currently legislated to rise incrementally to 12% in July 2025.
If you meet the eligibility conditions, SG contributions are payable whether you are classed as working full time, part time or as a casual, or if you are a temporary resident. If you are a contractor paid ‘wholly or principally for labour’, you may be considered an employee for super purposes and entitled to SG payments.
If you work in a private or domestic capacity (for example, as a paid nanny), you still need to work more than 30 hours per week to qualify for employer-paid SG contributions.
Your employer is not required to make SG contributions on your behalf if you don’t meet the SG eligibility conditions.
Super fund stapling
From 1 November 2021, if you start a new job you are required to inform your employer about the super fund into which you would like them to make regular SG contributions on your behalf.
If you don’t advise your employer of your choice of super fund, they are required to check with the ATO to see if you have any existing super fund accounts into which they can make their SG contributions. This existing account is called your stapled account, as it is linked to you and follows you as you change jobs.
Stapling of a super fund is designed to stop new super accounts being opened every time you change employer, so you don’t end up paying multiple account fees. You are free to change your stapled account at any time by providing your employer with the details of your preferred super fund.
There are annual limits or caps on the amount of money you and your employer can contribute into your super account.
From 1 July 2021, the annual general concessional (before-tax) contributions cap is $27,500 for everyone, regardless of their age.
Some people may have a higher annual concessional contributions cap for a particular year. From 1 July 2018, you can make carry-forward concessional contributions if you qualify. Carry-forward contributions allow you to use any of your unused annual concessional contributions cap for up to five years to make a larger concessional contribution.
From 1 July 2021, the annual general non-concessional (after-tax) contributions cap is $110,000. Your personal non-concessional contributions cap may be different depending on how much you already have in the super system.
As you are aged under 75, you may also be able to contribute up to three years of your annual non-concessional cap in a single year. Using the bring-forward rule, you can contribute up to $330,000 ($110,000 x 3 years = $330,000) in a single year. The actual amount you may be able to contribute using the bring-forward rule depends on your current Total Superannuation Balance (TSB).
Personal (or voluntary) tax-deductible super contributions
From 1 July 2017, most people in their 50s – whatever their employment status – are able to claim a tax deduction for any personal voluntary contributions they make into their super account.
If you’ve got cash to spare and would like to boost your retirement savings, making a tax-deductible voluntary super contribution can be a great way to do it in the latter years of your career.
Downsizer super contributions
Once you hit age 55, you have a new opportunity to make super contributions using the downsizer rules, which have no work test requirement or upper age limit.
Downsizer contributions allow you to contribute up to $300,000 ($600,000 for a couple) from the sale of your main residence to your super. These contributions are not counted towards either of your annual contribution caps.
Self-managed super funds (SMSFs)
For people in their 50s interested in taking more control of your retirement savings, it could be worth thinking about establishing your own SMSF. However, it’s important to be aware that SMSFs must adhere to lots of rules and you will have the ATO looking over your shoulder.
An SMSF can have no more than six members at any one time and no member can be an employee of another member unless they are related.
You can’t be a trustee of an SMSF if you have been convicted of an offence involving dishonest conduct, been subject to a civil penalty under super law, are insolvent or an undischarged bankrupt, or been disqualified from acting as a trustee of a super fund.
2. Withdrawing your super
Getting your money
To access your super, you must have reached your preservation age and have met a condition of release.
If you are currently in your 50s, your preservation age will be 59 or 60.
Hardship, compassionate and COVID-19 provisions
If you are in your 50s, it’s possible to access some of your super early if you are suffering severe financial hardship, provided you meet strict eligibility conditions.
You can also apply for early release based on compassionate grounds in certain circumstances, such as paying for some medical treatments or palliative care, making mortgage payments to prevent losing your home and paying for funeral expenses.
Paying tax on your super
If you decide to access your super benefits during your 50s, you will pay a higher rate of tax on your money than if you wait until you turn 60.
Also be aware that you will pay different rates of tax on your super benefit if you access it when you are under your preservation age, compared with accessing it if you are over your preservation age but under age 60.
Taking a super pension
If you decide to start a super pension, you will be required to withdraw a minimum amount from your pension each year. This minimum amount is based on your age and is set by the government.
At this stage of life, it may be worth starting a transition-to-retirement (TTR) income stream as you move towards retirement. This type of super pension allows you to gradually draw regular payments from your super benefits while you’re still working.