How to make your super last longer

The fear of running out of money keeps many retirees awake at night, but it doesn’t have to be that way.

How long your super lasts will depend not only on the size of your balance but also on the products you choose to provide your retirement income, how you invest and the lifestyle you want during your retirement years.

If you’re planning frequent international travel and entertaining, you will need more savings than if you intend on spending lots of time pottering in the garden and playing with the grandkids.

When there is a big gap between how much money you need and your nest egg, you need to act.

Whether it’s choosing a product with guaranteed lifetime income or taking on more investment risk, making your retirement savings stretch as far as possible can be done with some simple changes.

Keep in mind that if you’re married or have a long-term partner then acting together is important. Tips that don’t work for you could be important for your spouse.

How long might your retirement be?

If you retire in your 60s, your savings may need to support you for 25 years or more. And life expectancy figures are averages, so many people live well beyond them.

A good place to start is our lifetime estimator calculator, which gives you an idea of how many years your savings may need to stretch across.

How to test whether your money will last

No single calculator settles the question, but you can make a couple of checks to give you a better picture.

First, compare what you actually withdraw each year with the minimum pension drawdown rates. Drawing well above the minimum isn’t wrong, but it changes how long your balance can last, so it’s worth knowing where you sit.

Second, look at your withdrawals as a percentage of your balance and see how that rate holds up over a long retirement. Our guides on pension drawdown strategies and whether pension withdrawal rates are safe walk through the common approaches and their trade-offs.

Repeat the check once a year. A plan that looked comfortable at 67 may need adjusting at 75, and catching a gap early gives you far more options.

The Age Pension safety net

Your super doesn’t have to do the whole job alone. Under the means tests, Age Pension entitlements increase as your assessable assets and income fall, so many retirees who start with a part pension, or none at all, receive more support as their savings run down.

That matters for the “will it last?” question, because your savings don’t need to fund your full income for life. They need to cover the gap between the income you want and the support you’ll receive.

If your check suggests the numbers are tight, or you’d simply like more of a buffer, these strategies can help stretch your savings further.

Investing your super

1. Choose an investment option with more growth potential

A simple way to help make your super last longer is to change your investment strategy.

Selecting a less conservative investment option means allocating more of your account balance to growth-oriented assets and less to defensive assets (such as cash and fixed interest).

Investing more of your savings in growth assets (such as shares and property) could help boost your super savings as these assets generally provide higher average returns in the long run.

Remember that the end of employment is not the end of the line for investing your super. It needs to last you for life, so growth assets still have an important role for most people throughout retirement. Don’t make the mistake of investing too conservatively when low returns can mean less income for you to live on or running out of savings before your time.

2. Start using a bucket strategy

Once you retire and begin drawing income from your super, you need to balance competing requirements. You need both capital growth to ensure your savings last the distance, and access to liquid assets for regular withdrawals.

One way to stretch your savings a bit further in an account-based pension is to use a bucket strategy that establishes different pools (or buckets) of money with different objectives and different investment strategies.

Your short-term bucket contains liquid investments (such as cash and term deposits) for regular pension payments, while the medium-term bucket aims for some capital growth to top up the short-term bucket.

The long-term bucket is invested to create long-term capital growth and reduce the risk that your retirement savings will run out.

If you have previously set up investment buckets but have not reviewed your position for a while, it may be time for a rebalance to ensure your short-term bucket doesn’t run dry.

3. Beware of investment fees

Unlike administration fees that are deducted directly from your account balance, investment fees in super can be less obvious and escape your notice. Investment fees cover the work of the fund’s asset management team who select the investments as well as the transaction costs associated with buying and selling assets.

These fees are usually considered before the investment return is calculated, so you don’t see any transactions coming out of your account. Instead, the fees reduce the investment return you receive.

You can check the fees for each of your fund’s investment options in their Product Disclosure Statement (PDS). There may also be a separate investment guide or fees and costs guide to refer to. If you have any difficulty finding the fees for all options, give your fund a call to find out where to look.

Investment fees can vary substantially, so shop around a few low-fee industry funds to make sure your chosen option is not too expensive in comparison to low-fee options with a similar asset allocation.

A simple way to minimise investment fees is to choose an indexed option. Rather than employing investment managers to select assets and try to ‘beat the market’, indexed options contain a representative sample of the entire index they are targeting. For example, an Australian share indexed option would usually represent the ASX 200 or ASX 300 index. Many super funds also offer diversified indexed options that cover indices for Australian and international shares as well as listed property.

4. Take investing to the next level with member-directed choices

If you’re comfortable with investing and have built your knowledge, you could investigate taking more control over your super assets.

Many large super funds give you the option to choose your own mix of shares, exchange traded funds (ETFs) and term deposits. These options have various names depending on the fund but are usually called something like ‘member direct’ or ‘direct investment’.

This can be an accessible way to make your own investment decisions without the need to establish and run a self-managed super fund (SMSF).

As a bonus, you can transfer your assets from the accumulation phase to the tax-free retirement phase without any transaction costs or capital gains tax to pay.

To do this, you start a pension (income stream) for retirement, keeping the same investments with the same fund. Then, when you sell assets later to fund your withdrawals or just to select a new investment mix after starting your pension the capital gains are tax free.

Looking after your super account

5. Make sure you’re with a great fund, and be prepared to switch if you can

Sub-par performance and high fees can eat into your balance and leave you with less to live on. Regularly checking how your fund compares is important, but it is a task that many retirees overlook, particularly after starting a pension with their super savings.

Paying high fees or receiving lacklustre returns can really put a dampener on the growth of your account, so taking the time to compare and switching to a quality fund is worthwhile. Don’t fall into the trap of assuming a fund you’ve been with for decades is still right for you or that it’s too late to make a difference.

Accumulation accounts can be closed and rolled over to a new fund at any time.

If you have an account-based pension, you can still move your balance to a new super fund and start a new pension there. If your existing pension was started before 1 January 2015, take financial advice before choosing to close it. These older accounts are treated differently by Centrelink and aged care means tests. Closing your account could reduce your Age Pension or increase aged care fees.

Lifetime pensions and annuities generally can’t be moved to an alternative super fund or annuity provider, so if you’ve purchased a lifetime income stream you’re usually locked in.

If you have more than one account, getting everything into a single super fund is a priority unless you have a good reason to keep more than one. Having your savings together makes managing things simpler and can reduce costs.

Be sure to compare your current fund (or funds) with others and if you want to switch, join your preferred fund online or using a paper application form. Your chosen fund can help you to transfer the balance from your old account(s).

6. Review how your super is structured

Have you taken the opportunity to transfer your super to the retirement phase of super? Starting a pension or annuity means tax-free investment earnings and regular, convenient income payments.

You can also consider a product that guarantees income for life.

If you’ve been lucky enough to accumulate more than your transfer balance cap, you can consider keeping the excess in the accumulation phase or cashing a lump sum.

7. Add lifetime income to the mix

Using some of your super to invest in a lifetime income stream not only means you receive payments for life, but could also increase your Age Pension or make you eligible for it when you weren’t before.

You can choose between products that provide a guaranteed income indexed to inflation or a variable income linked to investment market performance.

The potential to improve your Age Pension comes from favourable Centrelink means testing for these products.

Adding to your super

Even after you retire, it may still be possible to add more money to your super and boost the savings supporting your retirement income.

Some retirees choose to move savings held outside super back into the tax-advantaged super environment by making a contribution to their accumulation account and then starting or increasing an account-based pension.

In other cases, people who continue working part-time may still be able to make additional super contributions, which can increase the amount available to fund their retirement.

Before doing this, it’s important to check the contribution rules and limits that apply to your situation.

8. Could you reduce tax and top up your super with a tax-deductible super contribution?

If you have savings outside super, you sell an investment, or you receive an inheritance and you’ll be paying income tax this financial year, a tax-deductible contribution is worth looking into.

To claim a tax deduction for personal super contributions you must be under age 67 or meet the work test if you are aged between 67 and 75. Some retirees return to work briefly to meet the work test and take advantage of this option.

Personal contributions you claim a tax deduction for are concessional. The annual cap for concessional contributions is $32,500 in 2026–27 and you may be eligible to contribute more using the carry forward rule if your total super balance was below $500,000 last 30 June.

A lump sum concessional contribution could reduce your income tax (including capital gains tax on the sale of an investment).

Once you turn 75, further personal contributions are not permitted unless they are downsizer amounts (see point 13 below).

9. Consider non-concessional (after tax) contributions

Thanks to changes to the law in 2022, it is now possible to make non-concessional (after-tax) contributions until you turn 75, even if you’re completely retired.

The cap for non-concessional amounts is four times the concessional cap ($130,000 in 2026–27) and you may be eligible to contribute even more using the bring-forward rule. A non-concessional contribution is not tax deductible but will help increase your super balance where investment returns are taxed at a maximum of 15% in the accumulation phase and zero in the retirement phase.

10. Selling your home? Boost your super with a downsizer contribution

If you are aged 55 and over and are ready to downsize – or simply want to put more into your super account and are willing to sell your current home – it could be worth considering a downsizer contribution.

These contributions allow singles to invest up to $300,000 and couples up to $600,000 ($300,000 each) from the sale proceeds of their family home into their super accounts.

Before deciding to downsize, don’t forget to check how much you are likely to end up with, as there are transaction fees and taxes to pay whenever you buy and sell property.

Look beyond your super too

Some of the biggest influences on how long your super lasts sit outside your super account. Reviewing your spending, working a little in retirement, drawing on the equity in your home and making sure you receive every government entitlement you are eligible for can all make a difference.