People near retirement or already retired have the option to leave their super in an accumulation phase. The accumulation phase means that the super isn’t going to be accessed, and the amount in your super fund will continue to be invested and likely continue to grow in value.
Now, not everyone has to do this. Some might be satisfied with their financial situation and start withdrawing from their super when they retire or when they reach their preservation age, which is currently approximately 60 years of age (depending on your year of birth).
However, others may have reasons to leave their super in the accumulation phase, and if you’re wondering why you’re in the right place
Here are the various reasons to leave your super in the accumulation phase:
1. You Don’t Need the Income from Your Super
If you have another source of income for your retirement or possibly you’re still working part-time’ but have reached your preservation age, you may choose to leave your super in the accumulation phase to allow it to grow.
If you have multiple retirement savings or investment vehicles, such as an employer-sponsored retirement plan and a personal retirement savings account, you may choose this option.
In some cases, it may be beneficial to leave your super in the accumulation phase and rely on your other savings to supplement your income.
2. You Want to Keep Working and Receiving Super from Your Employer
You may be over 65 and still planning on working full-time, part-time, or casually.
If this is the case for you, you can still receive the super guarantee from your employer so it may be worth keeping your superannuation in the accumulation phase.
You can also explore the transition to retirement (TTR) schemes if you want to access some of your super and still keep working.
3. Taking advantage of outstanding leave Entitlements before retiring.
Many may look forward to taking their accumulated leave payments as a lump sum once retired. Although this may seem like a good option, talking to a Retirement Financial Adviser in Adelaide can explain the tax consequences and the alternative choices available, like taking your long service leave just prior to retirement and still employed.
This option may be more financially viable as your entitlements and super will continue to be added to and grow over this period.
For some people, you may want to continue working past your preservation age and use your super savings later in your retirement years.
You might also have another source of income or investments that you can rely on initially when you retire before accessing your super.
In other words, leaving the super as is will allow your super to grow, meaning that you can ensure you have savings that will last the distance of your life.
4. If you have Life Insurance in your Super that you Want to Retain.
Many Australians have life insurance policies paid for and held by their superannuation fund.
You may hold life insurance, total and permanent disability (TPD) insurance, and income protection insurance within your super fund that will be lost once you roll your accumulation benefits to an ongoing retirement pension.
If you wish to retain these insurance benefits, you will have to leave at least a small amount in accumulation balance to retain these benefits.
Plan Your Retirement Today with Financial Advisers in Adelaide
Just remember, the superannuation accumulation phase is a great way to increase your retirement savings, so whatever the reason you may have to save your super, more savings is just one of the many benefits to be enjoyed!
Prominent Financial Services offers Australians the financial help they need to reach financial satisfaction and success. If you need financial advice in Adelaide to maximise your super, work with us today!
