More and more retirees in Australia are keeping their superannuation in savings and only spending the government mandated minimum.
Recent research based on data from the ATO and various superannuation funds in Australia found many Australians appear to be playing it safe with their savings, choosing to spend very conservatively when they could be spending more.
Factors such as individuals wanting to be prepared for uncertain life events, longer life expectancy or wanting to pass something onto dependents are all valid reasons suggested for this change in retiree spending.
However, retirees should keep in mind that to qualify for the tax exemption on super investment earnings, they must withdraw the minimum amount from their superannuation account as a pension on an annual basis. The minimum payment is 5 per cent of the pension’s account balance for Australians aged 65 to 74 and 14 per cent for those aged 95 and older.
The superannuation system in Australia currently has $1.6 trillion in assets and is expected to grow to $7 trillion by 2033.