One of the greatest challenges for retirees in Australia relates to the management of their retirement income. Unfortunately, the adage to “spend less than you earn” doesn’t always work for retirees as most lack sufficient investable assets to live solely off the income generated by those assets (often receiving a top-up from the Age Pension).
The government’s recent extension of the temporary reduction in superannuation minimum drawdown (pension) rates may make life easier for retirees by giving them more flexibility and choice in retirement.
The extension for a further year to 30 June 2022 builds on the reductions made available in the 2019-20 and 2020-21 financial years.
The drawdown percentage is still based on your age as of 1 July each financial year and is represented in the table below.
|Age on |
|Reduced minimum |
|Minimum for |
|65 to 74||2.5%||5%|
|75 to 79||3%||6%|
|80 to 84||3.5%||7%|
|85 to 89||4.5%||9%|
|90 to 94||5.5%||11%|
|95 or older||7%||14%|
There is no change to the maximum drawdown limit.
If you are already receiving a super pension, for the new Financial Year you should check with your super fund to understand:
- If you previously nominated to receive the minimum amount whether your super fund will automatically calculate your 2021/22 payment at the reduced rate
- What steps you need to take to reduce your pension payments under the extended temporary reduction
How much can you withdraw annually from super without the risk of it running out?
As super pension drawdown rates come into focus, it is important to re-consider your retirement income approach. Muirfield’s trusted team of retirement specialists can help you make the right choice for your own situation.
If you want to learn more about retirement portfolio risks, and how much to draw from super each year, you can access more information here.
If you would prefer to discuss your options with an Adviser, please book a time via our website or contact our office (03) 5224 2700.