What should I do with super in retirement?

Retirement means different things to different people. So how you decide to use your retirement savings comes down to your personal preferences and circumstances. 

When can you access your super?

You can generally access your super when you: 

• Turn 65, even if you haven’t retired; 

• Reach preservation age and retire; 

• Reach preservation age and begin a transition to retirement income stream. 

Preservation age

Your preservation age is the age you can access your super if you have retired or started a transition to retirement income stream. From 1 July 2024 the preservation age increased to 60 for all Australians regardless of when they were born. 

How can I access my super?

When deciding how you want to access your super savings, you have the option to: 

• Start a Transition to Retirement pension. This may be a good option if you want to ease into retirement by reducing your work hours, with the added benefit of potential tax advantages leading into retirement. 

• Start an account-based pension. This option allows you to use your super savings to receive a regular income once you have permanently retired. 

• Make a partial or full withdrawal from your super account. This may be an option if you want to clear any debts, or require some or all of your funds. There are important things to consider before you make a withdrawal including the impact on your retirement.

Deciding which option to go with can be hard, especially if you are unlikely to re-enter the workforce. You may even wish to consider a combination of the above.  Speaking to a financial adviser can also help you decide the best option for you. 

Transition to Retirement (TTR) pension

If you’ve reached your preservation age but are still working, you can use some of your super to supplement your income if you want to reduce your working hours as you ease into retirement. Or perhaps it can be used with salary sacrifice to boost your super in the latter years of your working life. 

The benefits:

• From age 60, your income payments from your TTR account are tax free; 

• Your current income and lifestyle don’t have to change; 

• You can give your retirement savings a boost and potentially enjoy tax savings when you also salary sacrifice into your super fund; 

• Use your TTR income payments to top up your take-home pay, so you can work less or save more. 

The rules:

If you decide to start a transition to retirement pension, there are rules around the minimum and maximum amounts of income payments you can receive each financial year.
1. The minimum annual payment depends on your age on 1 July each year.
2. The maximum annual income payment is 10% of your account balance in any given financial year. 

Both the minimum and maximum amounts are based on your account balance on 1 July each year. If you start a TTR pension part way through a year, the minimum amount is calculated on a pro-rata basis, however the maximum amount will remain 10% of your super account balance. 

Account based pension 

An account-based pension can be an easy to manage, tax-effective way of generating a regular income throughout retirement. It allows you to draw a regular income from your retirement savings, with the added flexibility to draw lump sums, if and when required. 

The benefits: 

• All pension earnings generated from an account-based pension are tax free. 

• If you are over the age of 60, all income paid from an account-based pension will be tax– free and may be used in combination with the age pension, should you qualify. 

The rules:

If you start an account-based pension, there are rules around the minimum income payments you must withdraw each financial year. This depends on your age and account balance on 1 July each year. 

1. If you start your pension after 1 July, the minimum payment amount for the first year is calculated on a pro rata basis.
   2. If you start your pension on or after 1 June, no minimum payment is required for that financial year.

There are no maximum limits to how much you can draw from your account-based pension. 

Partial or full withdrawal 

Depending on your super fund, you’re able to withdraw your superannuation as a lump sum payment when you retire. From age 60, it is generally tax-free. If you don’t want to withdraw your entire balance in one go, you also have the option to make a partial withdrawal.  

This information is current as at 1 October 2024 and may be subject to change. You should not rely on this article to determine your personal tax obligations or other entitlements. 

Bendigo Superannuation Pty Ltd (ABN 23 644 620 128 AFSL 534006) (Bendigo Super) is the trustee and issuer of Bendigo SmartStart Super and Bendigo SmartStart Pension (Products).
Before making an investment decision in relation to the Super Products, read the relevant Product Disclosure Statement, available from this website (www.betashares.com.au/super/) or by calling 1800 033 426, and consider whether the product is right for you. You can find the Bendigo SmartStart Super Target Market Determination here and the Bendigo SmartStart Pension Target Market Determination here. This information is general in nature and doesn’t take into account any person’s financial objectives, situation or needs. You should consider its appropriateness taking into account such factors and seek professional financial advice. Past performance is not indicative of future performance.