Retirement used to mean a clean break from work – being presented with a retirement gift and not looking back. But times have changed. With Australians now living longer, retirement has shifted from full stop to flexible phase.
Around 33 percent of Australians aged 65–69 are still working or looking for work. Many are blending part-time work with super drawdowns, using options like Transition to Retirement pensions.
But returning to work after retirement isn’t as simple as clocking back in. There can be important implications for superannuation, the age pension, and tax obligations, so understanding the rules can help avoid surprises.
Accessing super while working
Those who have already started drawing an income stream from their superannuation through an account-based pension can keep accessing it even after returning to work. That’s because they’ve met a “condition of release,” and those funds remain accessible under the same rules.
However, any new contributions received from employer super guarantee payments (12 percent of salary from 1 July 2025), or personal contributions, will go into a separate accumulation account. Whether these new funds can be accessed depends on your age and retirement status.
If you’re over 65, you’re automatically eligible to access super, regardless of whether you’re working or not. You can start a new pension account at any time using the accumulated funds.
If you’re between 60 and 65, you must meet another condition of release to access newly contributed super, which means ceasing an employment arrangement (including paid board roles).
If you haven’t met that condition, you may still access funds through a Transition to Retirement Income Stream (TRIS) once you’re over 60, which allows you to reduce your working hours and start drawing down on your super to make up for lost income. While a TRIS provides flexibility, earnings on the underlying super are still taxed, unlike a full account-based pension.
Impact on the age pension
Working while receiving the age pension requires reporting employment income, which is assessed under the income test and could see a reduction in your payment.
The Work Bonus helps offset this by allowing people to earn up to $300 per fortnight from work without affecting their age pension. Any unused amount accumulates in a Work Bonus income bank, up to $11,800, and can be used to offset higher earnings in the future.
Be aware that if income exceeds the threshold for more than six consecutive fortnights, the age pension may be suspended for up to two years.
Tax considerations
If income stays below the tax-free threshold of $18,200, and no tax has been withheld, a tax return generally doesn’t need to be lodged. But if you’ve had tax withheld or earn above the threshold, you may need to lodge a return.
Total income may also affect eligibility for tax offsets (such as the Seniors and Pensioners Tax Offset) and liability for the Medicare Levy or Medicare Levy Surcharge, particularly for those who don’t have private health cover.
Making super contributions while working
Those aged 67 to 75 who want to claim a tax deduction for personal contributions must meet the work test; at least 40 hours of gainful employment within a 30-day period in the financial year.
Volunteering doesn’t count, and this test must be declared to the super fund. The work test no longer applies to non-concessional contributions or salary sacrifice contributions, thanks to rule changes in 2022.
Those who have recently stopped working and met the work test in the prior year may be eligible for a 12-month exemption to continue making personal deductible contributions, provided their total super balance is under $300,000.
Other considerations
Returning to work might increase taxable income, so consider delaying major asset sales that could trigger large capital gains.
Review insurance; do you need private health cover to avoid the Medicare Levy Surcharge? Is your Life or TPD cover through super still active and relevant?
Working in retirement offers many benefits, but it’s essential to understand the financial and regulatory landscape in order to make the most of super and entitlements.
Prue Cheeseman is a financial adviser of HLB Mann Judd Wealth Management (NSW) Pty Ltd (AFSL 526052) ABN 65 106 772 696. This article contains general advice which does not consider your particular circumstances. You should seek advice from HLB Mann Judd Wealth Management (NSW) who can consider if the strategies and products are right for you.