Ask most people in their fifties when they can get at their super and you will hear one of three answers. Sixty five. Sixty seven. Or a slightly uncertain “when I retire, I suppose”.
All three are wrong, or at least incomplete, and the gap between the assumption and the reality is often several years of options nobody knew they had.
Preservation age is sixty
Preservation age is the age at which you can legally start accessing super. It used to slide around depending on your date of birth, which is where a lot of the confusion comes from.
That sliding scale has finished. Preservation age is now sixty for everybody.
Sixty seven is the Age Pension age, which is a completely separate thing run by a completely separate department. Sixty five is a number that has stuck in the public imagination and no longer means very much at all.
What sixty actually unlocks
Two things become possible, and they are not the same.
The first is full access. If you reach sixty and an employment arrangement comes to an end, your super becomes available to you. You do not have to stop working permanently. You do not have to intend to. An arrangement ending is the test.
The second is a transition to retirement income stream. From sixty, you can start drawing an income from super while you are still working, within limits. People use this to cut back to four days, or three, without cutting their household income by the same proportion.
Why this matters more than it sounds
The question we get asked most often by people in their late fifties is not “can I retire”. It is “am I stuck”.
Somebody is doing a job they have quietly gone off, at an age where changing feels enormous and staying feels like the safe option. They assume the money is locked away for another five or seven years, so they put their head down.
Often the money is not locked away at all. And knowing that changes the conversation from “how do I endure this” to “what do I actually want the next ten years to look like”.
That is a much better question.
The obvious warning
Being able to access super and being wise to access it are different propositions.
Money you take out at sixty is money that is not compounding at sixty five, or seventy, or eighty. Drawing early to fund a lifestyle you have not modelled is how people run into trouble in their late seventies, which is precisely when running into trouble is hardest to fix.
A transition to retirement strategy also has tax consequences that vary a lot depending on your circumstances. It suits some people well and suits others badly.
This is not a case where knowing the rule tells you what to do. It only tells you what is on the table.
What we do with it
For every client approaching sixty we model the same three things. What happens if you keep working as you are. What happens if you cut back. What happens if you stop.
Three numbers, side by side, out to age ninety.
Most people have never seen those three scenarios written down next to each other. Once they have, the decision usually makes itself, and quite often it is not the one they expected walking in.
The point is never to talk somebody into retiring. It is to make sure that if they keep working, they are doing it by choice rather than by assumption.
If you have been assuming you are stuck until sixty five, that is worth fifteen minutes to check.
