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 2021/22, the low-rate cap is $225,000. This means you might be able to take up to $225,000 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.
Date of birth
|01/07/1960 – 30/06/1961||56|
|01/07/1961 – 30/06/1962||57|
|01/07/1962 – 30/06/1963||58|
|01/07/1963 – 30/06/1964||59|
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.