A classic question that pre-retires seeking retirement planning advice is, “Can I go back to work after I have accessed my superannuation.” The typical reason for this question is that pre-retirees have generally been working for 40+ years and they are unsure whether they will enjoy all the free time that retirement offers. We are creatures of habit and for some, this change creates a dilemma of what to do with all their free time when for the past 40 or so years, for 5 days per week they have had a very organised routine.
Superannuation
Superannuation is a critical component of retirement planning in Australia, and strict rules govern its access. One common question individuals ask is whether they can return to work after accessing their superannuation. The answer depends on the condition of release under which the super was accessed, the individual’s age, and the form in which benefits were taken — either as a lump sum, an account-based pension, or a combination of both.
Conditions of Release for Superannuation
Superannuation funds can only be accessed once a condition of release is met. The most common conditions include:
Reaching Age 60 and Retiring – If an individual is aged 60 or older and declares they are permanently retired, they can access their superannuation. However, if they later decide to return to work, they do not have to repay any withdrawn super.
Ceasing an Employment Arrangement After Age 60 – If an individual ceases an employment arrangement after reaching age 60, they can access their superannuation without declaring permanent retirement. This allows them to return to work later without any restrictions on their super benefits.
Reaching Age 65 – At age 65, superannuation can be accessed without any requirement to retire. Individuals can continue working while drawing down their super as an account-based pension or a lump sum.
Transition to Retirement (TTR) Pension – Individuals who have reached age 60 but have not yet retired can access a Transition to Retirement (TTR) pension while still working. However, they cannot withdraw lump sums unless they meet a full condition of release.
Severe Financial Hardship or Compassionate Grounds – If super is accessed early under these provisions, returning to work does not impact the released funds, but further access may be restricted.
Returning to Work After Accessing Super
Returning to work after accessing super is entirely possible, but the implications depend on the reason for accessing the funds:
If super was accessed after ceasing an employment arrangement at age 60, there are no restrictions on returning to work.
If super was accessed at age 65 or through a TTR pension, work status does not impact the ability to receive payments.
Payment Options: Lump Sum vs. Account-Based Pension
When accessing superannuation, individuals have different options for receiving their benefits:
Lump Sum – This provides immediate access to a large sum of money, but individuals must consider tax implications and long-term financial security.
Account-Based Pension – This allows for regular income payments while keeping the remaining balance invested, which may be more tax-effective.
Combination of Both – A mix of lump sum and pension withdrawals can provide flexibility while ensuring long-term financial stability.
Conclusion
Returning to work after accessing superannuation is possible, but individuals must consider their condition of release and tax implications. It is advisable to seek financial advice to ensure compliance with superannuation regulations and long-term financial security.
Should you require further information about accessing your superannuation please feel free to contact Peter Quinn by submitting an enquiry or calling us on +61 2 9580 9166 to book an obligation-free appointment.
The information in this document does not consider your personal objectives, financial situation or needs, so you should consider its appropriateness regarding these factors before acting on it. It is important that your personal circumstances are taken into account before making any financial decision, and it is recommended that you seek assistance from your financial adviser.