When retirement doesn't mean giving up work

Sydney Morning Herald

03-05-2025

Real Money, a free weekly newsletter giving expert tips on how to save, invest and make the most of your money, is sent every Sunday. You're reading an excerpt − sign up to get the whole newsletter in your inbox.
In eons past (the late 20th century), the word 'retirement' had a sort of mythos around it, one associated with triumphantly handing in your four weeks' notice and immediately booking a long relaxing holiday, never to think about your job or annoying colleagues again.
Since then, a few things have changed. Firstly, we're all living longer – in 1992 life expectancy was 74 years for males and 80 years for females, where today it's 81 and 85 respectively.
Secondly, our jobs have got better. Admittedly, this is more of a vibes-based thing than cold, hard data from the ABS, but our quality of life at work has greatly improved in the past few decades. It also helps that we're not working down the coal mines or on the railroads or whatever people did in the dark ages (the late 20th century ).
What's the problem?
What this means is that retirement is now less about never working again and more about finding a bit of a balance. This has seen the increasing popularity of things such as Transition to Retirement pensions (which allow you to reduce your working hours and start drawing down on your super to make up for lost income), but it also means more people of retirement age are maintaining some form of work. This could be part-time at your existing job, or a completely new role. In fact, an estimated 33 per cent of people aged 65 to 69 are either employed or actively seeking work, according to a survey by the Association of Superannuation Funds of Australia.
Loading
What you can do about it
So if you're in, or nearing, retirement, but aren't quite ready to give up work entirely, here's what you need to know:
What happens to your super? To start accessing your super, you need to either have reached your preservation age (typically 60) and retired, or turned 65, at which you can start drawing down on your super even if you haven't retired. But what about if you start accessing your super, and then decide you want to start working again? Thankfully, that's not an issue, says wealth management director at HLB Mann Judd, Prue Cheeseman-Goodes. 'If the funds have been transferred into a pension account where you are accessing them (i.e. not just lump sum withdrawals from accumulation), they will remain in that pension account and continue to be accessed in the same way going forward, as you have already met the condition of release for these funds,' she says. However, Cheeseman-Goodes notes if you're under 65, you will need to meet your conditions of release again (i.e. retire from your job) to access super contributions made into an accumulation account by your new employer.
What about the age pension? This one is less good news, as any increase in income due to returning to work would likely mean a reduction in your pension entitlement, though its worth noting you need to be 67 to be eligible for the age pension. Cheeseman-Goodes says it's important to keep Centrelink updated with any change in your earning situation, and notes that the Work Bonus can help retirees earn some income without putting too big a dent in their age pension. 'You can earn up to $300 per fortnight from employment income without it being counted towards the income test,' she says. 'Unused amounts accumulate in a Work Bonus income bank each fortnight, up to a maximum credit of $11,800, which can be used to offset future employment income.'
How about tax? Director of wealth at BlueRock, Daniel Zaffino, says while your super income stream is tax-free, any income you earn from additional work will be taxed at your marginal rate. The good news is that you don't need to lodge a tax return if your income is below the $18,200 tax-free threshold. However, if your earnings are below that threshold and you've paid tax on them, you may need to file a tax return to receive a refund on that amount.
Anything else? Returning to work could require you to re-think what insurances you have, Cheeseman-Goodes says. 'You might consider if you want private health cover since you might have to pay the Medicare levy surcharge if you don't hold it,' she says. 'It is also worthwhile to check your life or TPD (total and permanent disability) cover through super – if it's still active or needed.'