20 June 2022
When you think about your retirement and how you’re going to pay for it, you may only consider your super balance. But around 62% 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 – Government Age Pension vs super
If you’re eligible for the Age Pension and have super, it’s important to know how they work together so you can maximise your income. How you access your super could have a big impact on your retirement. Read some of the features of each below.
| Super | Government Age Pension |
|---|---|
| Can access once you reach preservation age and retire, or meet a condition of release. | Can apply at qualifying age, if eligible. |
| 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 residency 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 who need additional support for their super or savings in their retirement. |
READ MORE: PRESERVATION AGE VS QUALIFYING AGE
READ MORE: ARE YOU ELIGIBLE FOR THE AGE PENSION?
Life expectancy and your super
In Australia, life expectancy is 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 help 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 and 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 – account based pensions
Your super balance will vary compared to someone else’s, and 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, who are used to a regular income, 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 over 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 or investment returns from your account based pension.
EXPLORE: AUSTRALIANSUPER’S ACCOUNT BASED PENSION
Confidence in retirement planning
Recent research into retirement confidence by AustralianSuper and Monash University3 found people aged 50 and over – who take time to understand and plan their finances – are less anxious about transitioning into retirement. It found they were more confident overall about their retirement options.
Knowing how much of the Age Pension you could be eligible for can help you understand your finances in retirement. 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 assets, where needed.
Did you know you can 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:
- Age Pension – Australian Institute of Health and Welfare. 16 September 2021.
- ABS – Population Projections, Australia.
- Source: The 2021 AustralianSuper Monash University Retirement Confidence Index. Based on 3,060 answers from people aged 50 years and over. Retirement scores are compared to the Australian average, estimated from the key socio-demographic variables captured in the study
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Investment returns aren’t guaranteed. Past performance is not a reliable indicator of future returns.
This information may be general financial advice which doesn’t take into account your personal objectives, situation or needs. Before making a decision about AustralianSuper, you should think about your financial requirements and refer to the relevant Product Disclosure Statement. 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.
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