Minimum pension withdrawals are a fairly straightforward aspect of moving from the saving to spending phase of retirement. Or they should be. But in recent adviser consultations, Retirement Essentials members have revealed a degree of concern and confusion about what is usually their main income stream. Today we explain how these withdrawals work, what the government requires you to do – and some of the options you have to maximise your overall income. You may be surprised at the flexibility you have and how, by reviewing your drawdown settings, you can improve your overall financial outcome.
Let’s start with the ‘what’…
What are minimum drawdown rates?
When you reach Preservation Age, you are able to access your super. The majority of Australians will do so by ‘rolling’ all or part of their savings into an Account-Based Pensions (ABP). This decumulation account pays no tax. But regardless of whether you are paying yourself from an ABP or your own Self-Managed Super fund (SMSF) you are required by the government to withdraw a minimum amount every year. The rate depends upon your age.
