Summary
Super and funding your retirement
You may or may not be well on the way to organising your retirement plan and calculating how much super you'll need. Either way, have you thought about how you can use your super to provide an income in retirement?
Once you’re eligible to access your super, there are several ways you could use your super, here are a few:
- Open an account-based pension
- Start a transition to retirement strategy
- Take your super as a lump sum
What's an account-based pension?
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Show transcript
Enjoying your retirement means not having to worry about money. You've worked hard for many years building your super. Now it's time to make that super work for your retirement.
You may choose to take all your super out as a lump sum to pay off your home, invest elsewhere, spend on essentials, or put it in the bank.
Another option is to consider transferring all or some of your super into an account based pension with a super fund.
At AustralianSuper, we call our award-winning account based pension Choice Income.
It allows you to keep your money invested and earning returns while you receive regular payments.
By putting your super into an account based pension like Choice Income, you can draw a regular income like a salary, keep your savings invested so they continue to work for you, and enjoy tax savings after you turn 60.
And you may be eligible for the Government Age Pension alongside your Choice Income payments.
You can choose from different investment options and change them easily.
You can also choose how much and when you want your payments, and withdraw additional money anytime for life's little surprises.
Once you've considered all your options and read the Choice Income product disclosure statement, it's easy to open a Choice Income account.
Simply fill in our online form or use the paper form at the back of the Choice Income product disclosure statement.
To learn more, visit australiansuper.com/ChoiceIncome, or call us at 1300 300 273.
End transcript
Managing your super, your way
Whatever your situation, being in control of your finances is one of the main factors to feeling confident in retirement1. Retirement planning, knowing your options and staying focused on your needs can all help you make the right choice for you.
When you retire, you might think the normal thing to do is take your super as a lump sum, but that’s not necessarily the case. You actually have a range of options for drawing income from your super, including taking advantage of an account-based pension.
Remember: how you manage your super in retirement is up to you
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Account-based pension – Choice Income
When you retire, you can receive a regular income from your super while keeping your super balance invested by using an account-based pension. You use money from your super account to open an account-based pension like AustralianSuper’s award-winning Choice Income account2. Then you can choose the frequency of payments (or income) - just like a salary - to meet your financial needs.
Some of the benefits include:
- Flexible payments - plus you can withdraw extra money when you need1
- Your super stays invested to help it last longer
- Potential tax savings.
Transition to retirement
A Transition to Retirement (TTR) strategy lets you access some of your super5:
- while you’re still working and
- when you’ve reached preservation age - the age when you can access your super, under the Transition to retirement rules, age 60-64.
You can start a TTR strategy by opening a TTR Income account alongside your regular super account. This way you could save more before you retire by maintaining super contributions or you could wind back on work, while topping up your take-home pay from your super5.
Lump sum
AustralianSuper members who are retiring and eligible to withdraw super can request a part or full withdrawal.
Choosing to withdraw your super as a lump sum and putting it in your bank account could seem like a good option if you want immediate access to all of your money or have any debts to pay off. But, whether your money is in a term deposit or savings account, you’ll have to manage a lump sum for your entire retirement, which could be 25 years or longer.
If you’re age 60 or over and eligible to withdraw from super, generally your benefit is received tax free. Investing outside super will mean that any interest or return you receive will be assessable in your tax return. See the ATO for all details.
Q&A: When and how can you access your super?
Do you know when you can access your super and how it works? Host Shane Hancock talks to Education Manager Peter Treseder about accessing your super – from age requirements to options for drawing an income from super.
Source: AustralianSuper Moments that Count Podcast, Episode 11 Published July 2023
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Q: Shane Hancock - When can someone access their super?
A: Peter Treseder - To access super, you generally need to cease work, and be 60 years or older. But if you’re 65 and over, you can access your super if you’re still working.
Accessing your super savings
You can access your super when you reach 60 years of age and retire. The meaning of ‘retire’ depends on your age and how and when you finished work:
- If you’re 60-64:
- You stopped working permanently, or
- You stopped working for any employer after you turned 60
- If you’re 65 or older: you can access all your super, even if you’re still working.
Q: What if I reach preservation age, retire, and then go back to work a year later and I'm still under 65? Do I have to give my super back?
No. You can keep accessing it as you like.
Your new employer will pay contributions into your super account. You can't access those super contributions until you cease work again.
Q: If someone accesses their super through retirement preservation age, can they take it all as cash?
Yes.
"There's a tap on the side of your super
account that you control,” says
AustralianSuper Education Manager Peter
Treseder.
Q: What are some other things people might want to consider before accessing their super?How long is that money going to last? The later you retire, the more you accumulate, and the money might last longer. We refer many members to our online calculator to see how much super they might have at retirement. We also might suggest speaking to a financial adviser. Understanding what you're aiming for, and how you’re tracking, can comfort people.
Q: What else could they do?
They could move it into an account-based pension which sits in that concessionally taxed world of superannuation. The difference is there's a tap on the side of your super account that you control.
After you move over the minimum amount required by the government, you can turn the tap on as hard as you want. Sometimes that's a better way of managing money in retirement, as it gives you an income in a similar way to your working life - each week, fortnight, or month.
Q: Can you still invest the money in that [account-based pension super] account? For example, in a growth asset or balanced fund?
It's just like your superannuation account; you can choose how it's invested. I might choose one investment option and I might draw out, let's say, 4%, but the option earns 6% in returns. I've then got more in my balance at the end of that first year than I started with.
Q: Are there different tax arrangements for account-based pension versus taking the money out?
There are slight differences. The consistent one is if you're over 60, withdrawals from super are tax-free - whether lump sums or income from an account-based pension.
If you're under 60, the income from an account-based pension is taxed at your marginal tax rate, but you get a 15% offset against that tax. So, if my tax rate is $0.30 in the dollar, I'll effectively pay $0.15 in the dollar.
Q: If someone meets preservation age and opens an account-based pension, is that money locked away or can they access it?
They can still access it. As I said, there's a tap at the side that may be giving me $1,000 a week or a month. I decide I want to go on holiday to Europe. I can put my hand in the bucket and pull out a lump sum.
Read more
- Super fund or bank account in retirement
Discover the retirement funding options for your needs
- If you’re 60-64:
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Important Information
- The government has set a minimum amount that must be taken as an income each year from account based pensions such as Choice Income. This amount varies with your age. There is a lifetime limit on the amount of super you can transfer into any tax-free retirement income accounts. To learn more view the Choice Income Product Disclosure Statement.
- AustralianSuper received the Canstar Outstanding Value Award – Account Based Pension in 2018-2024. Read the full methodology here. Awards and ratings are only one factor to be taken into account when choosing a super fund.
- AustralianSuper Retirement Cohort Research Q2 May 2023. 2,384 members 50+, working.
- TTR can be complex and isn’t suited to everyone. It’s a good idea to get financial advice before deciding if a TTR Income account is right for you.
- Salary sacrifice may affect some Government benefits and employee benefits. We recommend you consider seeking financial advice before deciding if a salary sacrifice arrangement is right for you.