In this guide
The national conversation about retirement and retirement income tends to revolve around super. How much you’ve got and will it be enough.
Yet people retiring today have only had compulsory super contributions of 9% or higher for part of their working lives, leaving many with a gap between means and expectations. Or does it?
Today’s retirees are healthier and wealthier on average than previous generations, with overseas travel, touring Australia and an active social life all high on the wish list. As retiree lifestyles are changing, so too is the way retirement is funded.
Australia’s retirement income system is built around three pillars – superannuation, the Age Pension and voluntary savings inside and outside super. But that ignores other potential sources of income.
So, if you’re wondering how to fund your dream retirement, let’s count the ways.
1. Superannuation
For most Australians, super is fast becoming the biggest financial asset outside the family home and a major source of retirement income. At the very least, it will augment any Age Pension you might receive and help pay for a more comfortable lifestyle.
According to the latest figures from the Australian Taxation Office (ATO), in June 2024 median balances were $230,766 for men aged 65–69 and $207,187 for women the same age.
Median balances (where 50% of people have more and 50% have less) tend to be more realistic than averages, which can be distorted by individuals with very large balances. The average balance for men aged 65–69 was $466,600 in 2024, and $407,328 for women.
A nest egg this size is far bigger than previous generations enjoyed, but it won’t be enough on its own to fund 20 years or more of retirement. Most retirees still depend to some extent on the Age Pension.
The good news is that a decade from now, the median balance for retirees who have had meaningful compulsory super contributions their entire working lives should exceed $500,000. That will help close the retirement income gap but won’t close it entirely.
2. The Age Pension
Despite the focus on super, some argue that the Age Pension is still the central pillar of our retirement income system. For those eligible for a full Age Pension, this is likely to cover the basic essentials, while any income from super will help pay for additional comforts.
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Find out moreIn fact, Australian Bureau of Statistics (ABS) figures for 2024–25 show some form of government pension was still the main source of income for 42% of men and 41% of women.
However, these figures are gradually decreasing as retirement super balances rise.
Super was the main source of income for 35% of men and 23% of women in 2024–25. Women’s lower super balances at retirement are due in part to the gender wage gap and time out of the workforce to care for children and ageing parents, but also because women retire slightly earlier on average than their male partners.
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Find out more3. Investments held outside super
An often-overlooked source of retirement income is from investments held outside super. This can be a major source of income for discretionary spending in retirement, especially for wealthier retirees who exceed their transfer balance cap (the amount of super that can be transferred into retirement phase) or who intend to retire before they can access their super.
While 73% of household net wealth is held in property and super, according to the 2026 Finder Wealth Building Report, an earlier survey found most (51%) adult Australians do hold some investments outside super and the family home.
The 2024 Finder survey of Australian investing statistics found cash in the bank (32%) and term deposits (13%) were the biggest store of wealth outside super, followed by shares (12%), investment property (8%), ETFs (8%) and managed or index funds (6%).
Younger investors locked out of the property market are turning to listed investments such as ETFs (exchange-traded funds), which are low cost and easy to access on digital platforms, and they are doing so outside super because retirement is still a long way off. In fact, Finder found Millennials were the age group most likely to hold investments outside super (61%), ahead of Baby Boomers (49%), Gen X (40%) and Gen Z (55%). While these investments are not necessarily earmarked for retirement, they could provide the basis of a long-term investment portfolio.
Older investors are more likely to hold residential investment property, which can only be held inside super if you have a self-managed super fund (SMSF). As property is a long-term investment, it’s reasonable to assume many of these investors plan to use rental income to help fund their retirement.
If you plan to retire early, or you are forced out of the workforce due to illness or redundancy, you may need to rely on investment income from sources other than super. That’s because you can’t access your super until you turn 60, except on strict compassionate or hardship grounds.
4. Future inheritances
A mind-blowing $3.5 trillion in personal wealth is set to transfer from the older generation of Australians to their children and grandchildren over the next 20 years. That’s a lot of gravy heading down the tracks.
The average inheritance in Australia was $188,249 in the three years to 2022, according to the 2024 Household, Income and Labour Dynamics in Australia (HILDA) survey. The average recipient was around 55 years old, by which age the average inheritance was also higher, at $275,616. And of course, many people stand to receive more than that, especially if they inherit the family home or receive more than one inheritance.
Now that it’s possible to continue contributing to super until you turn 75, within your annual contribution caps, an inheritance can provide a welcome last-minute boost to your retirement savings. If you have already retired and moved your super into a retirement phase pension, you will need to put the proceeds of your inheritance into a new or existing accumulation account, which can be transferred into a pension account within your transfer balance cap limit.
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Find out moreThe difficulty in planning for an inheritance is not knowing when you will receive it. This is especially the case if you retire before it comes through or there’s some uncertainty about the amount you can expect to inherit.
Given the potentially large sums involved and planning issues, it is a good idea to seek independent financial advice for help in working out how to make the most of your inheritance.
5. Part-time or occasional work
Retirement is no longer viewed as an all-or-nothing decision. Whether out of necessity or because it fulfils a sense of purpose and social connection, many of today’s retirees want to continue doing some form of paid work.
This might be consulting or part-time work in a field of expertise, a side gig doing something completely different, or occasional work as an election scrutineer or exam supervisor. Whatever you choose to do, it can provide additional income for discretionary spending.
Age pensioners often worry they will lose some of their pension if they do paid work, but eligible pensioners can earn up to $11,800 per year without losing any pension using the work bonus scheme.
6. The family home
For many retirees, their greatest store of wealth is under their feet. And no, it’s not buried in the backyard.
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Australian retirees are among the wealthiest in the world. According to the 2025 HILDA survey, average total wealth for recent retirees who owned their home outright was $1.66 million, compared to $1.48 million for those with a mortgage, but more than $1.1 million and $872,668 of that, respectively, is tied up in the family home. While home-ownership rates are falling, and increasing numbers of retirees rent or still have a mortgage, around 78% of people over 65 own their home and 66% own it outright.
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Access clear, independent guidance and tools that make it easier to plan with confidence and take control of your future with a free SuperGuide account.
Find out moreGiven that today’s retirees often rely on the Age Pension, and many have relatively modest savings in super, more attention is being given to unlocking wealth stored in the family home. The three main options are:
- A reverse mortgage (sometimes called equity release), which provides regular income or a lump sum in return for giving up a portion of the value of your home when you sell or die
- The government’s Home Equity Access Scheme (HEAS), a type of reverse mortgage operated by Centrelink
- Downsizer contributions, allowing eligible individuals to contribute up to $300,000 into their super account (up to $600,000 for couples) from the proceeds of selling their home, perhaps to buy something smaller and more manageable.
The bottom line
There’s more than one way to skin a cat and more than one way to fund your retirement. So when you start planning your retirement income, don’t stop at your retirement super balance. Also include any Age Pension you may be entitled to receive, if not immediately then later in life, as well as income from investments outside super, ongoing work, your home and inheritances.
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