Drawing on super doesn’t necessarily mean stopping work
Starting to draw on your super doesn’t necessarily mean you have to stop working. Many people assume that once they start receiving income from their super, they can only earn a limited amount from part-time or casual work. For self-funded retirees, that’s generally not the case.
Can you work while receiving super?
If you meet the rules for accessing your super, you may be able to continue working while drawing on it.
Once you turn 65, you can generally access your super even if you’re still working. You can receive your super as an income stream, a lump sum or a combination of both.
If you’re younger than 65, different rules apply. Depending on your age and circumstances, you may be able to access your super after retiring, leaving an employment arrangement after turning 60, or through a transition-to-retirement income stream.
What if you want to reduce your working hours?
Retirement doesn’t have to mean stopping work altogether. Once you reach your preservation age, you may be able to start a transition-to-retirement income stream (TRIS) while continuing to work. This allows you to draw a regular income stream from your super, which could help supplement your income if you decide to reduce your working hours.
There are specific rules around transition-to-retirement income streams, so it’s important to understand how they apply before making changes to your work or super arrangements.
Is there a limit on how much you can earn?
If you’re a self-funded retiree and don’t receive the Age Pension or another means-tested government payment, drawing on your super doesn’t automatically place a limit on how much employment income you can earn.
Your wages or other employment income will continue to be taxed under the normal income tax rules.
If you receive the Age Pension or another government benefit, different rules apply. Your employment and other income may affect your entitlement, so it’s important to consider those rules separately.
What if you retire and later return to work?
Retirement plans can change. You might retire and start accessing your super, then decide later that you want to return to part-time, casual or even full-time work. Whether this affects your access to super depends on how and when you originally met the relevant condition of release.
Rather than assuming returning to work will stop your existing super payments, check how the rules apply to your particular circumstances before making the change.
Can you still receive employer super contributions?
Returning to work can also mean building your super again. Employers still need to make compulsory super contributions for eligible employees, including eligible employees who receive a super pension or use a transition-to-retirement income stream.
This means you could potentially draw an income from your existing super while your employer continues contributing to your super through your employment.
What about tax on your super?
If you’re aged 60 or over, your super payments may be tax-free, depending on the type of fund and benefit you receive. The tax treatment can vary depending on factors such as your age, whether your super comes from a taxed or untaxed source, and whether you receive an income stream or lump sum.
Any employment income you earn remains subject to the normal income tax rules.
Thinking about working again?
Retirement looks different for everyone. You might want to reduce your hours gradually, return to work after retiring or continue working while drawing an income from your super. The important thing is to understand how your super, employment income and tax position work together before making a decision.
If you’re drawing on your super and considering changing your work arrangements, talk to us. We can help you understand the tax implications and how your employment income may fit alongside your retirement income.
