Summary
Discover retirement funding options
Planning for retirement means taking stock of your super and deciding the best ways to manage your finances. For many people, super plays a key part in financing their retirement years. And super can also supplement the Government Age Pension if you’re eligible.
There are several options to manage your retirement savings. Some people choose to keep their super invested throughout their retirement using an account-based pension. This allows their super to potentially earn investment returns and may help it last longer into retirement.
See the different retirement funding options:
Types of funding
Options for funding your retirement
There are lots of ways to fund retirement - savings, investments, Government Age Pension, even downsizing if that’s right for you. On top of that, once you reach preservation age and have met a condition of release, you’ll be able to access your super.
Choosing how to manage your super nest egg in retirement is an important factor in how long your savings will last and the lifestyle you can lead. And understanding the income options available to you in retirement can be a great way to get your retirement planning started and boost your confidence. Explore some options below and see which could suit your retirement needs.
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Option 1
Option 1
Leave money in your super account until you need it, your money stays invested and could continue to benefit from investment returns.
Option 2
Option 2
Take your balance as a lump sum. You could consider opening a savings account or investing outside of super. It’s best to seek financial advice on what may be best for you.
Option 3
Option 3
Transition to Retirement (TTR) Income Stream. Get the flexibility to continue to work with less hours with your income topped up with a TTR account or potentially reduce the amount of tax you pay. Transition to Retirement (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.
Option 4
Option 4
An account-based pension keeps you in control of your super balance in retirement by allowing you to take your super as a regular income payment – similar to when you were working. AustralianSuper's flagship Balanced investment option has consistently delivered strong long-term performance for members. The Balanced option for Choice Income accounts has delivered an average annual return of 8.97% over the last 10 years and 9.25 % over the last 15 years to 30 September 20241. This option keeps your super invested meaning it could potentially earn returns helping your super to last longer.
Spotlight: the difference an account-based pension could make
According to the Australian Bureau of Statistics (ABS), life expectancy has increased over the past decade, which means your super will most likely need to last longer. If you’re looking to make the most of super throughout your retirement, an account-based pension could help. It can give you a regular income from your super while keeping the rest invested.
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Here’s how it works: you use money from your super account to open an account-based pension like our award-winning Choice Income account2, and you can set it up to suit your financial needs with:
- Flexible payments3. Choose how much you want paid straight into your bank account and how often. You can also take out extra money from your Choice Income account anytime, to pay for unexpected bills or large costs like travel or a new car
- Control how you invest your balance or leave investment decisions to our experts
- Stay invested so your super could earn more throughout your retirement helping your savings last longer
- Save tax. Once you’re retired, you no longer pay tax on investment returns. And if you’re 60 or over, you won’t pay tax on your income payments.
Make sure to note the Transfer Balance Cap applies and drawdowns are subject to minimum rates.
Learn more about Choice Income with our video here.
The difference Choice Income could make
Let’s look at the example of Sunil and Pia, both are aged 65 and both have a super balance of $75,000 when they retire.
- Sunil works as an IT services manager, and when he retires, he puts his super balance into a savings account. He budgets well and makes sure he’s careful about how much he withdraws each fortnight.
- Pia works as a nurse and opens a Choice Income account with AustralianSuper when she retires. She likes the benefit of keeping her super invested and knows she has the flexibility to withdraw extra money anytime she wants.
Now, let’s consider the difference Choice Income could make. Sunil and Pia’s fortnightly income payments and government Age Pension payments are the same. But because Sunil’s money is put into a savings account – instead of staying invested with Choice Income – his balance runs out 7 years before Pia's.
Here’s how an account based pension can help your super can go the distance:
This example is for illustration purposes only, rounded to the nearest $1k. The actual benefits you receive will depend on a range of factors including future economic conditions, investment performance and legislative change. Investment performance is not guaranteed. Fortnightly withdrawal amounts increase each year at 3.5% p.a. Assumes AustralianSuper Choice Income admin fees of $52 p.a. plus 0.10% of your account balance up to a maximum of $600 p.a. and investment 6.0% p.a. returns for Choice Income after fees and taxes. Assumes bank account incurs no fees and investment return of 3% p.a. after taxes. All figures calculated in today’s dollars by discounting at wage inflation of 3.5%. Source: AustralianSuper calculations February 2024.
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Important information
- AustralianSuper Balanced investment option compared to the SuperRatings Fund Crediting Rate Survey - SRP50 Balanced (60-76) to 30 September 2024. Investment returns aren’t guaranteed. Past performance isn’t a reliable indicator of future returns.
- AustralianSuper received the Canstar Outstanding Value Award for Account Based Pension in 2024. Awards and ratings are only one factor to be taken into account when choosing a super fund.
- The government sets 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 account(s). To learn more view the Choice Income Product Disclosure Statement.