Written by Glen James

Host of the Retire Right & money money money (formerly my millennial money) podcasts & author of The Quick-Start Guide to Investing.

A member of our community recently raised an important question about superannuation management for those approaching or in retirement, specifically concerning the benefits of keeping an accumulation fund open:

‘Once retired or in a TTR (transition to retirement) phase, with most money in the pension phase, what's the best amount to leave in an accumulation fund to be tax-effective? Should it be $1,000 or less to keep the 15% tax impact minimal? Do you even need to have an accumulation account, or is it better to close it off completely once retired?’

It's a good question because most people look for ways to optimise their tax position in retirement. For those new to this retirement space when it comes to superannuation accounts, you’ll generally come into contact with the following account options:

accumulation account: used while you're working and saving for retirement; earnings are taxed at 15%.
transition to retirement (TTR) income stream: this option lets you access a portion of your super (up to 10% per year of your account balance) while continuing to work, either part-time or full-time. The tax rate inside the TTR account is 15%. If you are 55 to 65 and still working, you are taxed at your marginal tax rate, but you get a 15% tax offset. Please note that depending on your age, the eligibility to start a TTR pension may vary (i.e. age 57 if born after 1 July 1960).
account-based pension (ABP): starts once you're fully retired to provide a regular income; earnings within the fund and payments are tax-free if you're over 60 & have stopped working. After age 65, the earnings and payments are tax-free regardless of your work status.

If you're still working or plan to do so in the future—perhaps even part-time—it can be beneficial to keep the accumulation account active. Some funds have specific rules about minimum balances, especially if you have insurance policies attached. However, if you've fully retired and don't expect to return to work, leaving an accumulation account open may not be necessary. In such cases, it's often better to roll everything into the pension phase, where it can grow tax-free, knowing you can always open a new accumulation account later if needed.

Generally, you can make contributions to superannuation up to the age of 75, allowing for flexibility if you decide to return to work even in your later years. But the key takeaway from this listener question is that each decision should align with your retirement goals and your tax strategy, taking into consideration the rules of your specific super fund.

Martin and I unpacked this listener's question and some other nitty gritty tax details in more detail if you’d like to have a listen to episode 238 tax inside superannuation & aged care changes on Spotify or Apple Podcasts.

Community question

Community member asks: I'm 62 and interested in getting a home loan for a new property. What are my options, and are there lenders who are more flexible for those of us over 60?

Glen says: Just because you’re over 60 doesn’t mean your home loan options are closed! There are many lenders who are open to working with older Australians, but the process can be a bit different. The big thing banks are looking for at this stage of life is your 'exit strategy'—how you’ll pay off the mortgage if you retire before the loan term ends. Your strategy could involve using superannuation, downsizing to a smaller property, or drawing from other investments. What you need is a plan that reassures the bank you'll still be able to manage the debt, even if you're no longer earning a regular income.

Some banks are more flexible and may offer a longer loan term if they feel confident in your financial stability. For instance, if you have a solid superannuation balance or other assets, certain lenders might extend a 30-year loan term, even if you’re in your 60s. Others may insist on a shorter loan term, say 10 or 15 years, particularly if they’re unsure about your exit strategy. The key is to find a lender whose criteria align with your retirement plans and financial goals, so you don’t end up with a loan that doesn’t suit your lifestyle.

This is where a mortgage broker can make a world of difference. They’ll look at your full financial picture—your income, assets, superannuation, and retirement plans—and recommend lenders who are the best fit. It’s all about matching the right lender to your specific circumstances. If you want a loan that allows more flexibility as you approach retirement, or if cash flow is a concern, a broker can guide you through the maze of options. Remember, it's not just about getting a loan; it’s about getting one that works with where you are in life and what you envision for the future.

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