If you are getting ready for retirement or are already in your retirement years, there are some super withdrawal changes about which you need to be made aware regarding your superannuation withdrawal changes. Starting 1 October, there are new changes on how retirees access their super savings. Superannuation changes will outline on how retirees access their retirement savings.
What is changing?
A key determinate of any withdrawal changes is longevity risks on retirees. These changes are to provide retirees with the ability to respond to changes while making superannuation retirement sustainable. These changes will allow retirees to deinvest their pension phase account and lump-sum super accounts. For retirees, there is greater control, flexibility, and retiree self-response on how and the order of payment streams can be adjusted.
What does that mean for the retirement income you currently receive?
If you are currently withdrawing from your superannuation or pension account and your super account or pension account balance changes, your monthly payment will need to be readjusted. Super accounts have new minimum withdrawal limits, which will adjust how much you will will be receiving on a retiree balance. Super accoungs are designed to endure sustainability of superannuation. Those who have account-based pensions should pay particular attention. If your super withdrawals take your income beyond thresholds, the new thresholds could impact your Age Pension eligibility. Accessing your super while still retaining some government assistance becomes a bit of a juggling act.
Early Access and Compassionate Grounds
The new legislation untangles even more grounds to access superannuation early, on compassionate grounds. The government hasn’t made it easier to access super, before the preservation age, but they have made the application, and the circumstances on which it can be made, a little easier. For those who have genuine hardships and medical emergencies, this will be a bit of a relief. The strict early access requirements, aimed at flowing retirement savings, still serve to protect the retirement savings of the majority of Australians.
Planning Ahead: What Retirees Should Do
Financial planners have suggested that, prior to the 1 October, that you review your retirement income strategy. Consider arranging a session with a financial adviser, who will help to reposition your strategy relative to these changes and suggest the more optimum way of your withdrawals. Key actions include assessing the impact of new minimum drawdown rates on your payments, whether your withdrawal strategy is still tax-efficient, and any changes to your Age Pension entitlements.
New Superannuation Withdrawal Rules
The government is trying to make sure the retirement system is sustainable, while still providing enough retirement income. As the population ages, so too will the superannuation rules, so they will be able to meet the economic and demographic changes. Retirees need to adjust to the changes. While they may seem bad, the changes are more or less indifferent. Some retirees will enjoy the changes, while others will need to make more adjustments to their retirement plans, either by spending less, or recalculating their budget.
Don’t Leave It Too Late
Make sure to cover everything before the new rules take effect on October 1st. Go through your super statements, and note your outer limits, and the new rules to your retirement will make changes. The new rules are made to improve your retirement, and deficits are made to finances over time. If there is still confusion, and the new rules are complicated to understand, they need to be followed with professional assistance to make sure finances are fine over time. The most important thing is to be proactive. Having the new rules on superannuation is better than suffering under financially stress.
