Can I access my super at 60 without retiring?

Reaching age 60 is quite a milestone, especially when it comes to our super savings.   

That's because for most working Australians, 60 is 'preservation age' - the point at which we can start to draw on super without having to retire.  

You may already know that you can use a transition to retirement income stream to dip into your super from age 60.  

What's less widely known is that from age 60, it may be possible to withdraw all or part of your super as a lump sum when you leave a job. This can apply even if you have a new job lined up.  

In theory, you could leave a job on Monday, withdraw all your super savings, and start a new role the following week.   

This isn't a recent rule change. It's just one of those quirks of super many of us don't know about.  

But like a lot of super-related issues, there are a few things to consider. Here's what to weigh up.  

When can you access your super?  

The golden rule of super is that it's money for retirement.   

During our working lives, it may be possible to access super early on compassionate grounds, including for certain medical treatment, or because of severe financial hardship. Strict conditions apply, though. 

Then, from age 65, the rules relax and we can generally draw on our super regardless of work status.  

For people aged 60 to 64, the rules are a little less straightforward.  

At this stage, there are three main ways to unlock your super:  

Hang up your work boots for good  

You can access your super at age 60 if you fully retire. This usually means you have no plans to work in a paid job for more than 10 hours a week.  

Dial down your working week  

If you're itching to cut back your working hours, but not so keen for a cut in take-home pay, another option is to invest part of your super in a transition to retirement income stream (TTR).   

Available from age 60, a TTR can supplement employment income while the rest of your super keeps growing for retirement.   

In practice, a TTR works as an account-based pension, paying income at regular intervals, such as monthly, quarterly, half-yearly or annually.  

The real sweetener is that payments from a TTR are generally tax-free from age 60. That's why a TTR can be so useful when it comes to cutting back work hours, as it may help make up for lower take-home pay. 

A TTR can also be a tax-effective way of giving your super a last-minute boost. It may be possible, for example, to continue working full-time and divert a chunk of your pre-tax wage or salary into salary sacrifice super contributions. These contributions are generally taxed at 15%, which may be lower than your marginal tax rate. This can be a more tax-friendly way to boost your super than using after-tax money from your own pocket. You just need to make sure you stay within the concessional contributions cap. 

Using salary sacrifice will lower your take-home pay, but the payments from a TTR can make up the difference.   

All good so far. However, there is one major drawback of a TTR. Each year, you need to withdraw between 4% and 10% of your account balance, with the minimum percentage rising as you get older. You can't withdraw lump sums.  

This brings us to a third possibility.  

Leave one job, start another  

Once you reach 60, leaving a job can meet a 'condition of release'. This may give you full access to the super you had built up at that point - even if you have a new job lined up. 

Naturally, a few rules apply. 

Unlike permanent retirement, you don't have to promise you'll never work again. But you do need to genuinely leave your current job. 

You can have a new role lined up or start one afterwards, but your old employment arrangement needs to have genuinely ended. 

It may even be possible to take a new role with the same employer. However, the original role needs to end and the new one needs to be genuinely separate. Simply changing your hours or job title, amending your contract or moving to another team may not be enough. 

When you ask to withdraw the money, your super fund may ask you to provide documents showing that you've left the job. What it needs will vary between funds. 

If you take up a new job, your employer still needs to make super contributions on your behalf. However, any new contributions will generally remain locked away until you meet another condition of release - for example, turning 65, permanently retiring or leaving the new role. 

Why would you draw a lump sum of super if you're still working?  

Super offers a very tax-friendly environment, so it typically doesn't make financial sense to pull money out of super just to invest it elsewhere.  

That said, one reason some people consider withdrawing a lump sum from super while they're still working is to avoid heading into retirement with a mortgage still to pay.  

The standard path Australians used to follow into their 'golden years' was to pay off the home loan and retire mortgage-free.   

That pathway is changing. According to the CFS Rethinking Retirement Report, 28% of Australians approaching retirement, aged 50 to 64, have a mortgage. And 14% of retirees are still paying off a home loan.  

Heading into retirement with a mortgage in tow can bring challenges. Loan repayments can place a heavy drain on a retirement income, eating into money earmarked for lifestyle and leisure. Having to meet monthly repayments from retirement savings can also see you burn through your nest egg sooner.  

On the flip side, withdrawing a chunk of super to pay off a home loan brings its own problems. It can mean missing out on the potential benefits of compounding, leaving you with less to live on in retirement and increasing the risk of exhausting your nest egg earlier than expected. 

The drawback of dipping into super before retirement 

Let me stress, you don't have to dip into your super once you turn 60. If you're keen to keep working, it's possible to keep growing your super through employer contributions, salary sacrifice contributions or your own tax-deductible contributions.  

However, if you're heading towards 60 or have already passed that milestone and are still paying down a mortgage, it's definitely worth speaking with a financial adviser who can offer strategies tailored to your situation.  

As we've seen, changing jobs past age 60 can free up super to pay down debt. But dipping into your retirement savings before you stop work can come with a heavy price later on.