Retirement accounts

Chapter 1: Smarter super in your 60s

Hi, I'm Jeff Wallens, Senior Education Specialist at CBUS.

I've spent over 25 years in super helping people make sense of what they've got and what they can do with it.

This is 'Straight Talk' We break down the parts of super that matter in plain language so you know what to do next.

By the time you hit your 60s, you've probably been working for 30 or 40 years.

That's a long time on the tools, and your super's likely grown along the way.

At this stage, there are ways to make your super work harder for you.

Specifically, you could earn tax-free income and tax-free investment returns.

In this video, we'll take you through one way to make that happen.

Your super is already a tax-effective investment, but once you turn 60, there's more you can do with it.

A Fully Retired Income Stream can help you pay less tax and give your balance a boost.

Chapter 2: How could you save on tax

When you invest outside of super, your returns are taxed at your marginal tax rate.

That's your normal income tax rate and it can be as high as 45% depending on your situation. With a Fully Retired account, there's no tax on investment earnings.

Over time that can make a real difference to your balance. It's the same with any income from those investments.

Outside super it's taxed, but with a Fully Retired account any payments you receive are generally tax free.

Chapter 3: Here's how it could work for Steve

Let's take Steve as an example.

He's 65, working full time and decides to put a bit more into his super through salary sacrifice.

That means a bit less in his take home pay, so he starts an income stream to balance it out. Because he's over 60, that income is tax free.

After speaking with a CBUS financial adviser, he learns there's a few options he could look at.

Steve could add extra to his super through salary sacrifice, for example, contributing $1,750 each month or $21,000 over a year.

This reduces his taxable income.

He could also move part of his super, such as $250,000, into a Fully Retired account.

From there he could receive regular income payments of around $1, 225 a month or $14,700 a year.

Because he's over 60, these payments are tax-free.

That could mean adding around $3,150 more into his super over the year without affecting his take-home pay.

At the same time, any investment earnings on the $250,000 in the Fully Retired account are tax-free.

If Steve wasn't working, he could still open a Fully Retired account and receive a monthly payment.

He'd still benefit from tax-free investment returns and tax-free income from that account. From age 67, he may also qualify for the Age Pension.

Chapter 4: Giving your super a boost

If you move your super into an income stream account, you may get a boost to your balance through an income stream tax refund.

That's because with super and Transition to Retirement accounts, we set some money aside for future tax.

Once your money moves into an income stream account, it becomes tax-free, so tax no longer applies and we refund that amount to you.

You're eligible for a refund if you're starting a new income stream account and your money is coming from a CBUS or Media Super accumulation account you've held for at least 12 months.

Some accounts don't apply, such as Defined Benefit Schemes, Retirement Schemes and existing Retirement Income Stream accounts.

Chapter 5: What's a Fully Retired account?

It's a way to turn your super into a regular income, one that's tax-effective and works alongside the Age Pension. It's also flexible so you can access your money when you need it.

With a Fully Retired account, you can get a regular income from your super. There are tax benefits too. Your payments and investment earnings are generally tax-free.

You've also got flexible access to your money.

You can draw a minimum each year and take extra out if you need it, with no maximum withdrawal limits.

And your super stays invested with a range of options to keep it working for you.

Chapter 6: Who can open a Fully Retired account?

You can open a Fully Retired account if you're 65 or older, or if you're between 60 and 64 and have stopped working since turning 60.

Before you open an account, there's a few things to consider.

How much income you want to receive in regular payments, how it could affect your Age Pension, investment return and investment volatility, and how long your money needs to last.

I won't go into all of these here, but I'll point you to where you can learn more.

Chapter 7: What's Next?

You've put in the hard yards, now your super can do more of the heavy lifting.

If you want to talk it through, give our advice team a call and they'll explain your options and the support available.

Or if you'd rather see how it all works, our Education team runs seminars and webinars to break it all down in simple, practical ways.

They're included as part of your CBUS membership.

You can also jump onto the CBUS website to explore tools, calculators and guides at your own pace.

And there's our podcast CBUS Super Shift, where we talk about super and retirement and what it means for you.

If you're after the full detail, head to the product disclosure statement or come and see us at one of our front counters in Melbourne, Sydney, Brisbane or Perth.

We're here when you're ready to take the next step.