29 July 2024
When you think about your retirement and how you’re going to pay for it, you may only consider your super balance. But around 58% of Australians over the age of 65 receive part or full Government Age Pension payments1. The two can work together to support you in retirement.
Super is the main source of retirement income for many people living in Australia. A large percentage of the retired population also qualifies for some level of Government Age Pension payment. These extra payments can support your super and help you manage your retirement budget.
The balance between super and the Age Pension is different for everyone, but understanding both can help you feel more confident about your retirement.
Find out how your super and the Government Age pension can work together.
Retirement income – super and the Government Age Pension
| Super | Government Age Pension |
|---|---|
| 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 can apply for the Government Age Pension if you’re 67 or older and meet other eligibility requirements. |
| Money is from your savings over your working life, held in your super fund. | Money is from the government. |
| You choose how much you access and when. | Your payment amount is set by the government and based on a range of eligibility tests, including residence status, income and assets. |
|
Over your retirement you can keep money invested in your fund so it could continue to gain investment returns. The investment returns will depend on the investment option you’ve selected and aren’t guaranteed. You can transfer a specific amount to your bank account regularly and also a lump-sum amount as needed, while the balance of your super stays invested. |
Money is paid into your bank account. |
| Designed as retirement income source. | Designed as retirement income support – a safety net for those with no super, or to support super savings. |
READ MORE: ARE YOU ELIGIBLE FOR THE AGE PENSION?
Life expectancy and your super
In Australia, life expectancy has been increasing2. That means people may spend longer in retirement than ever before. As a result, retirement savings need to last longer. While the Age Pension provides a safety net in case money runs out, it may not be enough to maintain a comfortable living standard in retirement.
This is why some people find investing their super in retirement helps their savings last after their working days are over. For example, by opening an account based pension. An account based pension provides an opportunity to grow your super savings and keep up with the rising cost of living (inflation).
READ MORE: THE BENEFITS OF INVESTING IN RETIREMENT
Calculate your retirement income
AustralianSuper’s Super Projection Calculator can help you estimate how long your super will last. It can also give you an idea of how the Age Pension can help supplement your income. It’s based on some select factors, such as your income and assets, if you have a partner and your current super balance. These tools can help you to visualise your retirement.
EXPLORE: SUPER PROJECTION CALCULATOR
Using your super as an income
Your super balance will vary compared to someone else’s. How you choose to access and use your super will differ too. It’s a personal choice.
Some people may move their savings into a bank account, some will open an account based pension. An account based pension is a specially designed retirement account that lets you access your super as an income. It will pay money into your bank account in a way that suits your needs, for example on a monthly basis.
For many Australians, moving all your super into a bank account can be overwhelming, as you’re left with a large sum of money to manage. Options such as an account based pension is a popular choice for many retirees. It can help you to manage your super balance in retirement – which for many can be more than 25 years. It could also help you save on tax. That’s because once you turn 60, you generally no longer pay tax on income payments and on investment returns from your account based pension.
EXPLORE: AUSTRALIANSUPER’S ACCOUNT BASED PENSION
Confidence in retirement planning
Knowing how much of the Age Pension you could be eligible for can help you understand your finances and feel more confident in retirement3. For many, a qualified financial adviser with knowledge of superannuation and retirement planning can help you get the right balance, and help you understand your situation, where needed.
Transition to retirement over time
You don’t have to give up your working life overnight.
Many people like to stay connected to the workplace for financial and social reasons. Transitioning into retirement by going from full-time work to casual or part-time work is becoming a popular way of getting more out of your super and adjusting to a new post-work lifestyle.
LEARN MORE: A TRANSITION TO RETIREMENT STRATEGY
Sources:
This may include general financial advice which doesn’t take into account your personal objectives, financial situation or needs. Before making a decision consider if the information is right for you and read the relevant Product Disclosure Statement, available at australiansuper.com/pds . or by calling 1300 300 273. A Target Market Determination (TMD) is a document that outlines the target market a product has been designed for. Find the TMDs at australiansuper.com/TMD.
AustralianSuper Pty Ltd ABN 94 006 457 987, AFSL 233788, Trustee of AustralianSuper ABN 65 714 394 898.