Income from super

Making the most of your super

Superannuation is a major source of retirement income. Explore how you can grow your super and make it last as long as possible.

The benefits of super

The main benefit of super is that most people pay less tax than if they had invested outside super. You can also keep your money in the super fund indefinitely and take out money as you need it. The downside of super is that your money is generally locked away until you are between 55 and 60.

Before you retire

If you are thinking about retiring in the next few years, here are some things you can do to boost your super money.

  • Use our retirement planner to see what income you are likely to get from your super. It also offers advice on what you can do now to improve your retirement income.

Retirement planner

Making the most of your super

There are a number of ways you can use your super. Choose one or a combination of options. Keep in mind there are tax implications associated with each option. See the ATO for details on how your super payout is taxed or seek financial advice.

Take some money as a lump sum

You can take a lump sum payment from your super fund when you retire. You pay low (or no) tax on lump sums up to $195,000 or if you are age 60 or over. This money can be put into a high-interest bearing account (see savings accounts and term deposits) or invested. See investments outside super for more information.

The drawback of taking your money out of super is that you may have to pay tax on your investment earnings.

Draw down a regular income

You can keep your money within the superannuation system and transfer it from an accumulation fund to an account-based pension. You can do this when you retire or reach your preservation age (the age at which you can access your super) - see our super and pension age calculator.

Super and pension age calculator

This option gives you the flexibility to vary the amount you receive each year. There are also tax benefits as you pay no tax on investment earnings. See account-based pensions for more information.

Purchase an annuity

You can buy an annuity from a super fund or life insurance company using your super payout or other savings. This option gives you a guaranteed income for a defined period of time or for the rest of your life, regardless of market performance. However, annuities are not as flexible and generally pay less than account-based pensions. See annuities for more information.

Transition to retirement

If you're not quite ready to give up your job when you reach preservation age, you can continue to work and draw some money from your super. You'll pay less tax on your super income and can keep contributing to your super. See transition to retirement for more information.

As each person's circumstances are unique, we recommend you seek financial advice before withdrawing your super. Otherwise you may close off better options or face a nasty tax surprise. With careful thought and proper planning, you can stretch out your super money.

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Last updated: 02 Aug 2016