Finance Your Budget Ask the Expert: Transitioning to part-time work and drawing down super

Ask the Expert: Transitioning to part-time work and drawing down super

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Licensed financial adviser Craig Sankey answers your burning finance questions. Photo: TND
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Question: I am nearly 60 and want to move from full-time work to part-time work, three days a week, but can I get access to my super to supplement my reduced income?

I don’t want to fully retire yet, but I’m not sure I can afford to go part time.

Once you attain your preservation age, you can access up to 10 per cent of your superannuation funds each year without having to fully retire. Your preservation age depends on your date of birth, but will be somewhere between 55 and 60, as outlined in the table below.

Source: ATO

There is no requirement for you to retire or even to reduce your working hours. You can simply move some of your superannuation money into what is known as a ‘transition to retirement’ income stream.

Once the funds are in one of these income streams, you are required to withdraw between 4 per cent and 10 per cent of the balance each year.

This can be in an annual payment, or you could have the payments structured similarly to your salary, i.e. fortnightly or monthly.

Your income payments are paid directly to your bank account, and since you’re still working, employer contributions can continue to be paid to your existing super account.

Once you attain age 60, all income payments from the income stream are received tax free.

These types of income streams are perfect for someone wanting to transition from full-time work to part-time work, or for anyone who needs to top up their income.

Additionally, these are also commonly used to repay debt faster, or just to recycle funds back into super in a tax-effective way.

Once you fully retire, or reach age 65, these funds can then be converted into a regular income stream, where no maximum withdrawal limits apply, or simply be cashed out.

Be aware that as you are drawing down on your super, this will affect your future super balance and the amount on which you will have to retire.

Your superannuation fund or financial adviser will be able to provide you with additional information and advice.

Question: Hello Craig, We are considering buying our single daughter her own apartment. Our concern is that if she meets and lives with someone for a year at her apartment, and the relationship sours, will that someone be entitled to half of the property?

These days it is becoming reasonably common for parents to help children enter the property market and, as a result, it’s also common for parents to share similar concerns to those you have stated.

Can a partner be entitled to half the house after being in a de facto relationship for say 12 months? This is very unlikely. Generally, a de facto relationship must have existed for a duration of two years unless other factors are at play.

The family law courts can order a division of any property (regardless of whether it is owned individually or jointly) if satisfied of one of the following:

  • The de facto relationship lasted at least two years or more
  • There is a child of the de facto relationship
  • One party made substantial financial or non-financial contributions and serious injustice would result if the order to split property was not made
  • The relationship is registered in a state or territory with laws for the registration of relationships.

Also note that while laws are generally consistent across Australia, there are some differences across states, especially for those in Western Australia.

If there is a successful claim, then many things are considered as to what percentage should be paid, including who brought what assets into the relationship.

You can talk to your daughter about this issue, and suggest that, if she does have a partner move in, she should look at an agreed financial arrangement upfront to potentially avoid disputes later on.

It may be a good idea to seek legal advice if you have any specific concerns.

Craig Sankey is a licensed financial adviser and head of Technical Services & Advice Enablement at Industry Fund Services

Disclaimer: The responses provided are general in nature, and while they are prompted by the questions asked, they have been prepared without taking into consideration all your objectives, financial situation or needs.

Before relying on any of the information, please ensure that you consider the appropriateness of the information for your objectives, financial situation or needs. To the extent that it is permitted by law, no responsibility for errors or omissions is accepted by IFS and its representatives.  

The New Daily is owned by Industry Super Holdings