How to Manage Money in Your 60s and Approaching Retirement in Australia

For most Australians born after 1 July 1964, super becomes fully accessible at age 60 - and the transition from accumulation to pension phase is one of the most important financial decisions you will make.

• Preservation age is 60 for those born after 1 July 1964 - you can access super from 60 if you have met a condition of release (retirement, cessation of employment, or simply turning 60 and starting an income stream)
• Account-based pension (ABP): converting super to an ABP moves money from accumulation (15% earnings tax) to pension phase (0% earnings tax on assets up to the Transfer Balance Cap of $1.9 million)
• Minimum drawdown: once you start an ABP, you must draw at least 4% of the account balance per year at ages 65–74; 5% at 75–79; 6% at 80–84 - there is no maximum for an ABP (unlike a TTR pension)
• Pension payments from a taxed super fund after age 60 are completely tax-free - both the income stream payments and any lump sum withdrawals
• Transfer Balance Cap: only $1.9 million can be moved into pension phase per person; any excess must remain in accumulation or be withdrawn - careful planning is required for large balances
• Sequencing the transition: if still working, consider keeping accumulation open to receive employer SG contributions while beginning to draw down a partial pension - you can hold both accumulation and pension accounts simultaneously

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For those still working in their early 60s, these are the last years to aggressively build super. Several powerful strategies are available that are not accessible earlier in life.

• Downsizer contribution: if you are 55 or older and sell the family home held for more than 10 years, you can contribute up to $300,000 each ($600,000 per couple) into super outside the normal contribution caps
• Carry-forward concessional contributions: use up to five prior years of unused concessional cap if your balance is below $500,000 - at high marginal rates this is a powerful catch-up mechanism
• Non-concessional bring-forward: $360,000 over three years if under age 75 - funded from investment property sales, inheritances, or business sale proceeds
• Work test: from age 67 to 74, you must meet a work test (at least 40 hours of work in 30 consecutive days) to make voluntary contributions unless you satisfy the work test exemption (balance below $300,000, worked previous financial year)
• Spouse contribution splitting: split up to 85% of your concessional contributions to your spouse's account each year - useful for equalising balances to maximise use of both partner's $1.9M TBC and age pension assets thresholds
• Age pension super strategy: if one partner is below age pension age, keeping more of the household's assets in that partner's super can reduce assessable assets for the older partner's age pension - super is not assessed until you reach pension age

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The age pension is available from age 67 (for those born after 1 January 1957) and can provide meaningful supplementary income even for those with significant assets - but the means test requires careful planning.

• Full pension rates (March 2025): $1,149.60 per fortnight for a single person; $1,732.20 per fortnight for a couple combined - indexed to CPI and wages
• Homeowner assets thresholds: full pension up to $301,750 (single) or $451,500 (couple); pension cuts out at $674,000 (single) or $1,012,500 (couple) - the assets taper is $3 per fortnight per $1,000 above the lower threshold
• Income test and deeming: financial assets are deemed to earn 0.25% on the first $62,600 (single, March 2025) and 2.25% above - actual investment returns are irrelevant to the deemed income calculation
• Work Bonus: pensioners who work can earn up to $300 per fortnight without it counting toward the income test, plus a cumulative Work Bonus bank of $11,800 that accumulates over non-working periods
• Gifting rules: gifts above $10,000 per year or $30,000 over five years are treated as a deprived asset for five years - they continue to be assessed even after the gift is given
• Superannuation below pension age: a partner who is below pension age can hold super that is not assessed under the assets or income test - a strategic way to shelter assets for couples with an age gap

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The decade around retirement is when sequencing of returns risk is at its peak. A major market fall in the first years of retirement, when you are drawing down heavily, has a disproportionately large impact on long-term wealth.

• Sequencing risk: drawing down from a portfolio that has fallen 30% locks in losses and permanently reduces the base from which future returns are earned - unlike accumulation where you can wait for recovery
• Bucket strategy: divide retirement assets into short-term bucket (cash/term deposits, 1–3 years of expenses), medium-term bucket (bonds/balanced, 4–7 years), and long-term bucket (growth assets, 8+ years) - only replenish short bucket from medium/long during good markets
• Minimum drawdown trap: the 4% minimum drawdown from an ABP during a market downturn forces selling - hold enough in cash or term deposits within the fund to fund minimum drawdowns without selling growth assets at depressed prices
• Longevity risk: an Australian woman retiring at 65 has a median life expectancy to 88, a 25% chance of reaching 94 - retirement may last 30+ years, making too conservative a portfolio (all cash and term deposits) a real long-term risk
• Target allocation in early retirement: 50–65% growth assets is still appropriate for a 65-year-old with a 25–30 year time horizon - gradually reduce to 40–50% growth as you move through your 70s
• Annuities: a lifetime annuity from an Australian provider converts a lump sum into guaranteed income for life - useful for covering essential expenses not covered by age pension, removing longevity risk on the essential income floor

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The 60s are the decade to finalise estate planning and begin understanding the aged care system - both for parents who may need care now and for your own future planning.

• Binding death benefit nominations: review and renew BDBNs (they lapse after three years in most funds); ensure your super goes to the right people in the right proportions
• Super death tax: large super balances paid to adult non-dependant children attract 17% death benefits tax - consider voluntary re-contribution strategy (withdraw tax-free after 60 and re-contribute as non-concessional) to convert taxable to tax-free component
• Private health insurance: move to Gold tier before major health events - hospital cover with fewer restricted or excluded services is more important in the 60s than in earlier decades; LHC loading is already locked in from earlier decisions
• Aged care for parents: if parents are entering residential aged care, understand the means-tested care fee (based on income and assets), the Daily Accommodation Payment or Refundable Accommodation Deposit (up to $550,000 or more in major cities), and how family home treatment affects Centrelink assessments
• Seniors and Pensioners Tax Offset (SAPTO): available from age 67 for those eligible for the age pension; can reduce tax liability to zero on rebate income up to approximately $32,279 for singles - worth reviewing if income is primarily pension payments and investment income
• Timing retirement: every additional year of work at peak income, maximum super contributions, and without drawdown adds substantial compounding - model each year carefully using a retirement income calculator before committing to a retirement date

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The decisions you make in your 60s - when to start a pension, how to structure age pension assets, how to handle downsizing - shape the quality of your retirement for decades. Getting the detail right matters.

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