If you’re just starting out, thinking about retirement probably doesn’t take up much of your headspace. And you think about working after retirement even less. Now is the time to start thinking about retirement, and what you are going to do with your life when you reach retirement age.
In Australia, there are working after retirement rules to follow. These rules also relate to your superannuation pension. Superannuation is such a mouthful that everyone refers to it as your super, and so will we.
Looking at how active your parents or grandparents over the age of 65 are will give you some idea of how much energy you’re likely to have at that age. If you have a healthy lifestyle, there’s no way you’ll want to be sipping tea in a rocking chair the moment you retire.
Let’s examine the rules governing your super, how to access your super in the way that works best for you, and how you can return to work after you have officially retired.
Can I Return To Work After I Start Receiving My Super Pension?
The short answer is yes, you can. Retirement isn’t an irreversible state of being. Once you’ve retired, you’re not obliged to stop work forever.
As you know, many retired people find that they miss the excitement of working life, and are not ready to curtail their contribution to society and the economy completely. They are more inclined to want to earn money by offering their experience and expertise under terms and conditions that suit them. Death by boredom is not an option for them, nor should it be for anyone.
Then there are the retirees who realise that they might outlive their pensions, and actually need to work for a few years longer to ensure they can take care of themselves in their later years.
Super Factoids
We’ll state from the outset that it helps to have pension experts such as Crescent Wealth Super help you manage your super pension. The earlier you do this, the better. For example, did you know that you can have more than one super?
The type of additional investment in super pensions depends on two main things. Knowing your total superannuation balance, and knowing what your transfer balance cap is. While the Australian Tax Office has a detailed FAQ dealing with these matters, it is incredibly useful to have a pension professional navigate the rules and regulations for you.
Crescent Wealth can help you make wise decisions for your life and life after retirement, and dispel any confusion that you might have. So, let’s start with some basic questions.
How Do I Access My Super?
To access your super you have to do what is called satisfying a condition of release. The rules governing how you do this will depend on your age.
Younger than 60
If you’re under 60, you have to have reached your preservation age and have retired. Your year of birth will determine your preservation age. At the moment, the preservation age is 57 for anyone born on or after 1 January 1962. It increases gradually for every year of birth after that and is currently at 60 for anyone born on or after 1 July 1964.
Your Crescent Wealth super fund, or another super fund, will ask you to sign a declaration confirming that you are no longer in paid employment and stating your intention to retire permanently.
The same rules apply to Self Managed Super Funds (SMSFs). Members of SMSFs need to state in writing in a letter to the fund’s trustee that they are retired and do not intend to return to work. Very often, this is nothing more than a note to yourself, but it does have to be in writing and signed by you.
The keyword to note here is ‘intend’. There is no reason why you cannot return to work as long as your intention at the time you sign the declaration, is genuine.
If you do decide to return to work, you will continue to receive your super pension because the condition of release has already been satisfied.
Between the Ages of 60 and 65
From your 60th birthday onwards you can retire without making any declaration about your intentions to work in the future. After 60, you can withdraw your super as a lump sum or begin withdrawing it as a pension. All you have to do is notify your fund that you are retiring. In the case of an SMSFs, you simply write a ‘note to self’ saying as much.
Once you’re 60, you don’t need to retire fully. For example, if you work more than one job, all you have to do is retire from one of them to satisfy a condition of release. of the superannuation pension.
If you only had one job, even though you have started to receive your super pension, you can return to working at any point, and still receive your pension.
65 or Older
We all know 65 is a special age. This is definitely true in relation to your super pension. Whether you have retired or not, you can access your super from age 65. At this age, you do not have to satisfy any conditions of release.
The special part is that you have the option to continue working either full time or part-time. Or you can retire, and return to work if you feel the desire to do so, or suddenly realise that life would be more interesting if you did.
Working After Retirement Rules About Adding to My Super
If you do return to work, you can rebuild your super via compulsory Super Guarantee contributions from your employer or your own voluntary contributions.
Even though you can continue to access your super after you return to work, any new contributions will be ‘preserved’ until you meet a new condition of release. This rule applies unless you are already over 65.
Once you turn 65, you may make voluntary contributions only if you satisfy the work test. The current rule is that you need to show that you’ve worked for at least 40 hours in any 30-day period during the financial year in which you make the contribution.
Once you turn 75, you are no longer permitted to make voluntary contributions.
The Pros and Cons of Going Back to Work After Retiring
Even before you retire, it is worth considering the pros and cons of returning to work after you have retired. You need to understand what the repercussions will be in relation to your super and your future retirement income.
The main benefit you derive from retiring first, and then going back to work — possibly doing something different, or part-time — is that the funds in your super pension are tax-free after the age of 60.
There are other, more personal reasons why retirees return to work that have to do with remaining active and engaged. Most people like to have a sense of purpose and to continue to contribute in some way to their community for as long as they are able. Many retirees enjoy a job in a different field to the job they held when they were young and express interest in learning new things.
One negative effect of retiring early (as soon as you turn 60, say) for good and accessing your super is that you might outlive your savings. This is a real risk for those whose nest egg is not especially large.
Satisfying a condition of release to access your super and then returning to full or part-time work could well be worth considering to get the best of both worlds.
An Important Financial Decision
Crescent Wealth has just the kind of specialist expertise you need to help you make the important financial decision as to when to access your super. The advice in this article on working after retirement rules is general in nature. With a professional, you can examine the specific detail of your finances and goals to work out the best options for a way forward.
A Super Partner That Keeps You Informed
One other significant aspect of the services and financial products that Crescent Wealth provides is that we invest in asset management funds that are in line with Islamic investment principles. You don’t have to be a Muslim to be a member of the Crescent Wealth Super Fund, though.
We’re simply saying that we offer all Australians an attractive superannuation alternative that aligns Islamic beliefs and ethics with Islamic investing.
If you have additional questions that are related to working after retirement rules or your super pension but not necessarily to the idea of working again once you retired, we are sure you will find your answers in our helpful FAQ. To keep informed of updates and news, and stay connected, follow us on our social media platforms.
If you would like to chat, give us a call directly from our website. Alternatively, send us an e-mail from our contact us page. To get the full benefit of all the information on our website and our expertise, select the Join Now button at the top of every page to become a Crescent Wealth Superannuation member. We look forward to welcoming you.
