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.
Move your super into a retirement account
Leave your super where it is to continue accumulating
Withdraw your super balance as a lump sum
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:
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.
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.
How are market changes affecting your super? Our Chief Investment Officer Damian Graham explains in our latest Investment Update.
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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A Retirement Income account is how you pay yourself a regular income from your super.[M5] Here’s how it works:
Like all financial decisions, it’s important to understand the pros and cons of starting a Retirement Income 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.
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| 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).
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.
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| 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 |
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:
Join our experts as they break down super and finances into easy-to-understand topics through our live webinar education series.
We'll help you turn your super into a regular income when you retire. Keep getting paid and keep investing your savings.
No matter where you’re starting from, we’ve got expert insights and tools to help you set up for retirement.
