After years of contributing to your superannuation, retirement finally arrives and with it comes one big question: What should I do with my super once I retire?
It’s an important decision. The way you manage your super after retirement will determine how long your savings last, what kind of lifestyle you can enjoy, and how financially secure you’ll feel in the years ahead.
Here’s what happens to your super when you retire, and the main options available to you.
Step 1: Understand What Happens to Your Super at Retirement
When you retire, your superannuation moves from the accumulation phase (when you were growing it) to the retirement phase (when you start drawing an income from it).
If you’re aged 60 or over and your super is from a taxed fund, any withdrawals you make are generally tax-free.
At this point, you can choose to:
- Take your super as a lump sum,
- Set up an account-based pension, or
- Combine both options for flexibility.
The best approach depends on your financial goals, spending habits, and whether you plan to supplement your super with other income sources like the Age Pension or investments.
Option 1: Take Your Super as a Lump Sum
You can withdraw your super as a lump sum once you retire. Many people use this option to pay off debts, renovate their home, or make a large purchase they’ve been planning for years.
While taking a lump sum gives you full control of your money, it also means you’ll need to manage it carefully to make sure it lasts. Withdrawing everything at once can reduce your eligibility for the Age Pension and limit future investment growth.
It’s often best to take only what you need immediately, and keep the rest invested in a low-risk or income-producing option.
Option 2: Start an Account-Based Pension
An account-based pension is the most common way Australians use their super in retirement. It allows you to turn your super balance into a regular income stream, similar to receiving a salary.
You transfer your super into a pension account, and you receive regular payments (monthly, quarterly, or annually) that you can adjust as needed. The remaining money in your account stays invested, meaning it can continue to grow over time.
This option offers flexibility and potential investment growth, and any income you draw after age 60 is tax-free. The main thing to keep in mind is that your balance will fluctuate with market performance and can eventually run out if withdrawals are too high.
Option 3: Use a Combination of Pension and Lump Sum
Many retirees find that combining both approaches works best. For example, you might withdraw a portion of your super as a lump sum to pay off your mortgage or cover immediate expenses, and then convert the rest into an account-based pension to provide a steady income.
This approach gives you flexibility for the short term and stability for the long term.
Example: Someone retiring with $500,000 might take $50,000 as a lump sum for home renovations and keep $450,000 in a pension account that pays a regular monthly income.
Option 4: Keep Your Super in the Fund for Now
If you’ve reached preservation age but haven’t officially retired, you can leave your super in the accumulation phase. Your money stays invested and continues to earn returns.
You might also consider a Transition to Retirement (TTR) strategy, which allows you to draw a limited income from your super while continuing to work. This can help you reduce your hours without reducing your income, making it easier to gradually move into retirement.
Step 2: Check Your Age Pension Eligibility
Once you reach 67, you may be eligible for the Age Pension, depending on your income and assets.As of 2025, the maximum Age Pension payments are around $28,500 per year for singles and $43,700 for couples.
Your super balance and how you choose to use it can affect your eligibility under the assets and income tests. Keeping some of your money in super (in pension phase) can sometimes help you qualify for higher Age Pension payments compared to holding it in cash or investments outside super.
Step 3: Keep Your Super Working for You
Just because you’ve retired doesn’t mean your super stops growing. Keeping your money invested especially through an account-based pension allows your balance to earn returns while you draw income from it.
When choosing an investment option in retirement, consider your comfort with risk and your time horizon.
- Conservative options focus on stability and preserving your capital.
- Balanced options aim for moderate growth and manageable volatility.
- Growth options offer higher potential returns but carry more risk.
Many retirees choose a mix of options to balance income stability with long-term growth.
Step 4: Plan for Longevity and Future Costs
Australians are living longer than ever, which is great news but it also means your money needs to last longer.
Make sure your retirement plan considers:
- Rising healthcare and insurance costs
- Potential aged care expenses
- Inflation and cost of living increases
- A financial buffer for emergencies
Even small, consistent adjustments like reducing withdrawals in poor market years or reviewing your investments annually can help your savings last significantly longer.
Common Questions About What to Do With Your Super After Retirement
Can I leave my super where it is?
Yes. You can leave your super in the fund until you’re ready to start drawing from it. It will stay invested and continue to grow.
Do I have to take my super all at once?
No. You can withdraw it gradually through an account-based pension or take partial lump sums as needed.
Is my super tax-free after I retire?
Yes, if you’re aged 60 or older and your fund is taxed (which most are). Withdrawals and income streams are generally tax-free.
Can I still contribute to my super after retiring?
Yes, if you’re under 75 and meet certain conditions. Employer contributions and voluntary top-ups may still be possible.
Should I get professional advice?
Definitely. Retirement income planning can be complex, and small changes in how you withdraw or invest your super can make a big difference over time.
Can I Still Work After Accessing My Super? – Find out how to keep earning while drawing from your super.
How Much Money Do Most People Retire With in Australia?– Learn how your super transforms into a reliable income stream.
So, what should you do with your super once you retire? The best approach depends on your personal goals, lifestyle, and comfort with risk. For many Australians, a mix of an account-based pension and a partial lump-sum withdrawal provides the right balance of flexibility and security.
The key is to have a clear plan one that helps your money last while giving you the freedom to enjoy your retirement years.
At Wealthlab, we specialise in helping Australians make the most of their super in retirement. We’ll help you create a strategy that turns your savings into a sustainable, tax-effective income stream.
Book a free consultation today to start planning your next chapter with confidence.