Steps to retirement

The short answer is yes, you can. Your situation and lifestyle will determine if you’ll be able to live comfortably if you leave work before you turn 60. Your age when you retire will also dictate the options that may be open to you.

As an ElectricSuper member you can access your super from age 55. However, if you do that, you are going to be taxed more heavily than if you wait until you reach your preservation age or reach age 60 to access your super.

Before retiring early, think about how much you will live on in retirement and the tax consequences of accessing your super early.

How much do you need to live on?

Retiring early is a viable option for many people, but it helps to consider your lifestyle and the amount you spend to maintain that lifestyle.

We’ve got a quick, easy calculator on our website to help give you a rough idea of the amount your current lifestyle costs each year. It will give you a bit of an idea of your current spending habits. We also have a more detailed budget calculator to give you a more accurate view of your current spending.

Once you’ve worked out how much money you need to live, consider how you might fund your lifestyle in retirement. If you are thinking about retiring before you turn 60, you have a few different options. Let’s have a look at some of them:

Accessing your super early

As a member of ElectricSuper, you can access your super from the age of 55. However, you are likely to pay tax on any super you access before you turn 60.

Taxation on super is complicated, and we don’t want to bamboozle you. However, you can find out more about the different tax that can apply on the ATO website. You can also speak to us to learn more about your situation.

If you are under 60 but have reached your preservation age (see the table below), you can take up to a certain amount from your super without paying tax. This amount is known as ‘a low-rate cap’. In 2023-24, the low-rate cap is $235,000. This means you might be able to take up to $235,000 from your super without paying extra tax.

Living on other income

If you are under 60 you could consider retiring if you have other money to live on. This could be:

• enough in savings to cover your living expenses until you turn 60 and can access your super tax-free, or until you choose to access your super before you turn 60 and pay tax on the amount you withdraw
• another household income, such as your spouse’s wage
• other income, such as incoming rent from an investment property, dividends from shares, an inheritance or a lottery win!

What about other funds?

Of course we can’t speak for other super funds, but it is worth noting that most super funds are bound by the Preservation Age Rules. It means that you may not be able to access your super in any other funds until you have reached your preservation age. Preservation age depends on your date of birth. This means members of other super funds generally can’t access their super until they are variously 58, 59 or 60 years of age.

So, if you are thinking of taking some money from another fund to live on when you retire, you need to be aware of the restrictions that Preservation Age may have on your access.

Preservation age

If you want to speak to someone about your situation and get all the facts, you can book a time to speak to our Member Services team who will be able to present you with the factual information about your situation so you are better placed to make an informed decision. Meetings with us are free.

Having money in your super waiting for you when you stop working is a great feeling. But you don’t need to access your super as soon as you retire.

If you have other money to live on when you retire, such as your spouse’s income or income from other investments or savings, and don’t need to access your super, you can leave it in your ElectricSuper account where it will continue to earn investment earnings until you access it. There is no age limit on how long it can stay in the accumulation phase and you are not required to draw an income from it.

If you do decide to access your super as soon as you retire*, and you wish to set up an Income Stream to give you a regular income in retirement, it pays to remember that it can take some time to set up a new Income Stream. You should allow yourself about a month to 6 weeks from when you complete the paperwork and finish work until you start to receive payments from your Income Stream.

If you want to speak to someone about your situation and get all the facts, you can book a time to speak to our Member Services team who will be able to present you with the factual information about your situation so you are better placed to make an informed decision. Meetings with us are free.

*You can only open an Income Stream once you have reached your preservation age

Preservation age

An Income Stream allows members who have reached their preservation age (see below) to access a regular income from their super. It gives you a place to invest your super money while still drawing payments to live on.

There are 3 easy steps to start your Income Stream.

1. Work out how much you need to live on
2. Decide how you want to invest your Income Stream
3. Complete and lodge the form

Let’s look at those in a bit more detail:

1. Work out how much you need to live on

To work out what you want or need to live on in retirement, think about the way you live before retirement.

We have a quick calculator on our website to help you work out roughly what you spend each year. It’s a very basic budget tool, with only a few details required. It won’t provide you with an extremely precise figure, but it is a good guide to get you started. There is another, more detailed budget tool also available on our website if you want to get a more accurate figure of your spending.

You are allowed to take regular payments from your Income Stream in fortnightly, monthly, quarterly, half-yearly or annual payments, so consider the frequency of payments that will work for you. You also need to take at least a minimum amount from your Income Stream each year. That minimum amount is dictated by the government. It is a percentage of your balance depending on your age. You can find the current minimum withdrawal amounts on our website.

2. Decide how you want to invest your Income Stream

You can choose how much of your money you want to use to open your Income Stream, whether it’s all of your super balance (up to maximum limits) or only a portion. What you don’t move into your Income Stream, you can leave in your Income Stream Division 5 account until you need it later (including opening a Retained Division 5 account if you are a defined benefit member).

You will need to decide how you want to invest it. You can choose any one of the options: High Growth, Balanced Growth, Conservative Growth or Cash, or you can invest your money across a mix of the options. You can get advice over the phone if you aren’t sure of which investment option will suit you. Call our Helpline on 1300 307 844.

3. Complete and lodge the form

The Income Stream form is available on our website. You will need to provide a certified copy of your identification. You can get your ID certified by a variety of people in different professions. More information about getting your ID certified is on our website.

While you are completing the form, remember that you have the option to nominate who will receive your Income Stream if you die. You have the option to nominate your spouse to receive the Income Stream in regular ongoing payments (this is known as a Reversionary Beneficiary), or you can leave the money as a lump sum to other dependants (this is known as a Binding Death Benefit Nomination). There is more information about beneficiaries on the form. Or watch our short video to learn more about reversionary beneficiaries.

Once the form is complete, just send it in and we’ll do the rest.

It can take about a month to 6 weeks for an Income Stream to be established so make sure you have other income to tide you over until your regular payments start.

If you want to speak to someone to get the facts about an Income Stream, you can book a time to speak to our Member Services team. Meetings with us are free.

Preservation age