As retirement approaches, many people wonder what actually happens to their superannuation. Do you take it out? Does it stay invested? How do you turn it into income?
The reality is that super doesn’t just stop when you retire. Instead, it usually moves into a new phase designed to provide you with regular income throughout retirement.
Step 1: Your Super Moves From Accumulation to Retirement Phase
During your working life, your super is usually in what’s called the accumulation phase. This is when:
Contributions are made by you or your employer
Your balance grows through investment returns
Earnings in the fund are taxed at up to 15%
When you retire and begin drawing an income, your super typically moves into the retirement phase.
In retirement phase:
Investment earnings are generally tax-free
You can begin receiving regular income payments
Your super continues to be invested
Step 2: You Can Start a Retirement Income Stream
Most retirees convert their super into an account-based pension. This allows you to receive regular income payments from your super while the remaining balance stays invested.
You can usually choose:
Monthly payments
Quarterly payments
Half-yearly payments
Annual payments
The government requires retirees to withdraw a minimum amount each year once they start a retirement income stream.
For example:
| Age | Minimum Withdrawal |
|---|---|
| Under 65 | 4% |
| 65–74 | 5% |
| 75–79 | 6% |
| 80–84 | 7% |
| 85–89 | 9% |
| 90–94 | 11% |
| 95+ | 14% |
These withdrawals are designed to ensure super savings are used to support retirement income.
Step 3: Your Super Can Continue to Grow
One common misconception is that super stops working once you retire. In reality, your balance usually remains invested.
This means your super can continue generating returns through:
Dividends
Interest
Capital growth
These investment returns help support your retirement income and may allow your savings to last longer.
Step 4: You May Be Eligible for the Age Pension
Many Australians assume they won’t qualify for the Age Pension if they have super. However, a large number of retirees receive part Age Pension payments.
Eligibility depends on:
Your age
Your assets
Your income
The Age Pension can provide:
Additional retirement income
Access to the Pensioner Concession Card
Discounts on healthcare, utilities and services
For many retirees, the Age Pension becomes an important part of their overall retirement income strategy.
Step 5: Your Super Can Be Accessed as Lump Sums
Even after starting an income stream, you can usually withdraw lump sums from your super if needed. Many retirees use lump sums for:
Home renovations
Purchasing a vehicle
Travel
Helping family members
Medical expenses
Having flexibility to access lump sums can be an important part of retirement planning.
Tax on Super in Retirement
One of the major benefits of superannuation is the favourable tax treatment in retirement. For most people aged 60 and over:
Withdrawals from super are tax-free
Income from account-based pensions is tax-free
Investment earnings in retirement phase are generally tax-free
This makes super one of the most tax-effective ways to generate retirement income.
Retirement Is About Creating Sustainable Income
Retirement planning is not just about building a super balance. It’s about turning that balance into a reliable income that can support your lifestyle for decades.
Important decisions may include:
How much income to withdraw each year
How to invest your retirement savings
How to maximise Age Pension entitlements
How to manage inflation and market risk
With the right strategy, your super can provide income, flexibility and peace of mind throughout retirement.
Are You Approaching Retirement?
If you’re nearing retirement, understanding how your super can support your lifestyle is an important step.
A personalised retirement plan can help you understand:
How long your super may last
The income it could generate
Whether you may qualify for the Age Pension
The investment strategy suited to your goals
With the right plan in place, retirement can be approached with clarity and confidence.
General information disclaimer:
This page provides general information only and does not take into account your objectives, financial situation or needs. Consider seeking personal financial advice and/or tax advice before making decisions.
The figures used in this article are examples only and rely on a number of assumptions including investment returns, inflation and retirement spending. Actual outcomes will vary depending on individual circumstances.