Super Lump Sum Withdrawal Estimator
A retirement-focused tool for estimating super lump sum withdrawals.
Quick Use Samples
Withdrawal Details
Estimated Results
When withdrawing a lump sum of $50,000 from your super at age 62, the tax implications are key. Because you are 60 or over, your withdrawal is entirely tax-free. You will receive the full $50,000. Your remaining super balance will be approximately $250,000.
Impact on Super Balance
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What Is a Super Lump Sum Withdrawal Estimator?
A Super Lump Sum Withdrawal Estimator helps you understand the tax implications and effects on your remaining balance when you withdraw a lump sum from your superannuation in retirement. It's a crucial tool for planning major expenses in retirement, such as a home renovation or a new car.
Behind the Formula
The calculator applies the Australian tax rules for superannuation withdrawals. For most people over age 60, withdrawals are tax-free. For those under their preservation age, tax can be complex, often involving a tax-free portion and a taxable portion taxed at marginal rates or a special 'lump sum' rate. The calculator estimates this tax and shows the net amount you would receive.
Expert Insights
- Reaching your 'preservation age' is the first step, but accessing super tax-free is generally only possible after you turn 60. Withdrawing between your preservation age and 60 can have significant tax consequences.
- A lump sum withdrawal permanently reduces your retirement savings. This means your capital base for generating future investment returns is smaller, and any ongoing income stream (like an account-based pension) will be lower.
- Consider the impact on your Age Pension eligibility. A large withdrawal that is then held in a bank account or used to buy an assessable asset could increase your assets under the Assets Test, potentially reducing or eliminating your pension payment.
Actionable Tips
- If possible, wait until you are 60 to make significant lump sum withdrawals to ensure they are completely tax-free.
- Before making a large withdrawal, model its impact on your long-term retirement income. It might be more beneficial to use a smaller withdrawal or other savings.
- Speak to a financial advisor, especially if you are under 60 or have a complex financial situation. They can provide advice on the most tax-effective way to structure your withdrawals.
Real-World Examples
Buying a Caravan in Retirement
A 65-year-old couple withdraws $70,000 from their super to buy a caravan. Because they are over 60, the withdrawal is tax-free. However, the caravan is now an assessable asset, which they must declare to Centrelink.
Early Withdrawal Due to Hardship
Someone aged 58 needs to access their super due to financial hardship. The calculator shows them that a portion of their withdrawal will be taxed, and the net amount they receive is less than the amount they applied for.
Paying Off a Mortgage
A 62-year-old decides to use a $100,000 lump sum from their super to pay off their remaining mortgage. This is a tax-free withdrawal and reduces their living expenses in retirement by eliminating mortgage payments.
Glossary of Terms
Preservation Age
The age at which you can first access your superannuation. It is between 55 and 60, depending on the year you were born.
Lump Sum
A single payment of money, as opposed to a series of regular payments (like a pension).
Account-Based Pension
A retirement income stream product that you can purchase with your superannuation money. It provides you with regular payments.