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Sources of income in retirement

Most people need to make sure they'll continue having an income in retirement - a bit like a payday, but without needing to show up to work. The main ways retired Australians access an income in retirement are through their super and the Government Age Pension

Some people also have personal savings and investments they can lean on to fund their retirement. And, of course, if you continue some form of employment during retirement, you’ll also have that wage. 

 

What happens to your super when you retire 

Once you become eligible to access your super, there are a few options to choose from. You can do one or a combination of all three: 

Move your super into a retirement account

Leave your super where it is to continue accumulating

Withdraw your super balance as a lump sum

 

Setting up regular pay days in retirement 

You can use your super to pay yourself a regular income. It’s simply a matter of setting up a Retirement Income account. These types of accounts are managed by your super fund, and they can: 
 

  • Provide you with regular payments – a bit like a pay day. Plus, you control how much and how often you get paid[M5]
  • Help your money last longer, because your super stays invested
  • Save you money on tax 
  • Give you access to lump sums when you need it 
  • Plus, they work alongside the Age Pension. 

Eligible Aware Super members can get a retirement bonus to help you retire with more. 

Open a Retirement Income account and you may receive up to $12,350 tax-free.[M6] It’s a loyalty bonus for eligible Aware Super members.

 

Keep your savings invested when you retire 

Over the years, you’ve worked hard to build up your super savings. Your balance has grown through: 

Contributions made by you and your employer

Earnings on the investments made by your super fund

The earnings from your super investments play a major part in helping your money go further and last as long as possible even after you retire. That’s because when your money stays invested, it can keep growing.  

We estimate that around 30% of the income paid from your super comes from investment earnings you make in retirement. You can keep earning investment returns in retirement by starting a Retirement Income account

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How a Retirement Income account works

A Retirement Income account is how you pay yourself a regular income from your super.[M5] Here’s how it works: 

  1.  You open a Retirement Income account, opens in a new window and move some or all of your super into it. It’s worth knowing that there’s a cap on how much you can transfer; the general lifetime limit is set by the government and is currently $1.9 million.  
  2. Choose the amount you’d like for each “pay day” and the frequency of your income payments.
  3. You choose an investment option for your money, or go with the default Conservative Balanced option our retirement investment experts have developed.
  4. You can change your payment amounts and frequencies at any time. You can also take out lump sums when you need them.
  5. Enjoy your income payments until your super balance runs out.  
     

Advantages and considerations

Like all financial decisions, it’s important to understand the pros and cons of starting a Retirement Income account.

Learn more about a Retirement Income account

Get an income from super even if you’re not retired yet

 

A Retirement Income account is different to a super account

In short, for most of your working life, your super is held in an accumulation account, where your employer makes contributions, and you can add extra savings if you choose. A Retirement Income account is where you access your saved super and turn it into regular income.[M5] Both types of accounts are provided by your super fund. 

When you open a Retirement Income account your money stays in the super system but there are some differences in how the account works.  
 

Scroll table horizontally on mobile

  Retirement Income account Future Saver super account
What is this account for? For when you’re setting up or in retirement  For when you’re building your super savings 
Income Choose when and how much you get paid (including lump sums if you need them) In general, you cannot access your money until you retire
Tax Money you transfer into a Retirement Income account is tax free up to the transfer balance cap. Your income payments are also 100% tax free.  The money your employer contributes to super is taxed at 15%. 
Tax on your investment earnings Your investment earnings are tax free Your investment earnings are taxed at 15%
Investment options You can choose from a range of investment options including investment options specifically designed for retirement You can choose from a range of investment options
Contributions You can’t add money to your Retirement Income account, but you can open more than one Retirement Income account You can make additional before and after-tax contributions to your super to keep it growing


It’s entirely your choice when it comes to how much of your super you’d like to move to a Retirement Income account. You can leave some or all of your money in your super account (which comes in handy if you want to return to work after retiring).

 

Your super and the Age Pension work together 

The Government Age Pension is there as a safety net if you don’t have much super or if your super runs out. The important thing to know is that you can still be eligible for Age Pension payments even if you have super savings. A Retirement Income account is designed to work together with the Age Pension. 
 

Scroll table horizontally on mobile

  Retirement Income account Government Age pension
Age In general, you can start payments from age 60 once a condition of release is met You need to be 67 before you can apply for the Age Pension 
Where does the money come from Your super savings Money from the government 
Payment account You choose when and how much you get paid Your payments are set by the government and based on your eligibility 
How long do payments last Your payments will stop once your super runs out  Your pension payments will continue as long as you are eligible 

 

Withdraw your super as a lump sum 

Staying in control of your money might have you considering withdrawing some or all of your super as a lump sum when you retire, but there are a few important things to think about:
 

  • Lump sums can look great on your bank balance, but making your money last - and keeping up with inflation - is a challenge.   
  • Keeping your super invested when you retire means it has the potential to keep growing, so your money goes further and lasts for longer. 
  • Learn more about investing for retirement.[M5]

 

FAQ

Where to next?

Attend a retirement webinar

Join our experts as they break down super and finances into easy-to-understand topics through our live webinar education series.

Retirement pay days set up for you

We'll help you turn your super into a regular income when you retire. Keep getting paid and keep investing your savings.

Learn with Aware Super

No matter where you’re starting from, we’ve got expert insights and tools to help you set up for retirement.