Retirement Planning: What to Do With Your Superannuation
I’m Ready to Retire – What Do I Do With My Super?
Reaching retirement is a major milestone. After decades of working and building your superannuation, many Australians arrive at this point asking the same question: “I’m ready to retire – what do I do with my super?”
The decisions you make at retirement don’t just affect your income today — they can influence your lifestyle, tax position and the legacy you leave behind for years to come. Understanding your options and planning ahead is essential.
When can you access your super?
Most people can access their super once they reach their preservation age (now age 60 for anyone born after 30 June 1964) and retire or leave an employer. From age 65, super can be accessed regardless of whether you continue working.
Importantly, access does not mean you must withdraw everything at once. How and when you draw on your super can significantly affect how long your retirement savings last and how tax-effective they are.
Option 1: Taking a lump sum
Some retirees choose to withdraw part of their super as a lump sum. This is commonly used to:
Pay off a remaining mortgage
Clear credit cards or personal debt
Fund major one-off expenses such as renovations or a new vehicle
Reducing or eliminating debt can ease cash flow pressure and provide peace of mind in retirement. However, withdrawing too much too early can reduce future income and limit long-term growth. In some cases, it may also have unintended tax or Centrelink implications.
Option 2: Starting a super pension (income stream)
Many retirees roll some or all of their super into a pension account (typically an account-based pension), which converts their super balance into a regular income stream.
Key benefits include:
Flexible income payments (subject to minimum annual withdrawal rules)
Tax-free investment earnings within the pension account
Tax-free pension payments to those aged 60 or over
An account-based pension allows your remaining balance to stay invested, providing the opportunity for continued growth while supporting your lifestyle.
Main types of retirement income streams in Australia
The most common income streams available to retirees include:
Account-based pensions – flexible and widely used, with funds invested in markets
Transition to Retirement (TTR) pensions – used before fully retiring, often alongside part-time work
Guaranteed Lifetime annuities – provide secure income for life, helping manage longevity risk
Innovative market-linked lifetime annuities – newer products that combine lifetime income with exposure to investment markets, offering potential income growth while still providing income certainty for life, along with potential Centrelink benefits.
Each option involves trade-offs between flexibility, certainty and growth, making tailored advice critical.
The importance of staying invested in retirement
Retirement can easily last 20 to 30 years or more. While many retirees become more conservative, remaining appropriately invested is vital to help your savings keep pace with inflation and maintain your purchasing power.
A well-structured retirement portfolio balances income today with growth for tomorrow, helping reduce the risk of running out of money later in life.
Creating a tax-effective legacy
Retirement planning isn’t just about income — it’s also about what happens to your super when you’re gone. One strategy that may be appropriate for some retirees is a recontribution strategy.
This involves withdrawing super (often tax-free after age 60) and recontributing it back into super as a non-concessional contribution. Over time, this can convert taxable components into tax-free components, potentially reducing the tax payable by adult children or other non-dependent beneficiaries when your super is passed on.
Used correctly, recontribution strategies can help create a more tax-effective legacy, but they require careful planning and advice to ensure contribution limits and eligibility rules are met.
Planning ahead makes all the difference
Retirement is not a single decision — it’s a long-term strategy. How you structure your income, investments and estate planning can have a lasting impact on your confidence and quality of life.
If you’re approaching retirement or considering how to turn your super into income while planning ahead for the next generation, now is the time to seek advice. The team at AGS Financial Group can help you create a personalised retirement plan that aligns your income, investments and legacy goals.
Speak with AGS Financial Group today about retirement planning advice and take control of your retirement future.