Join now
Log in
Home / Retirement planner / Preparing for retirement / Converting super into retirement income: What are your options? 

Converting super into retirement income: What are your options? 

Kate CrawfordKate Crawford

With a bit of luck, during your working life you will accumulate a tidy sum in super. When the time to retire arrives, those savings will help support you through your non-working years.

While you’ve had a long time to practice saving, converting those savings into retirement income is something you may only do once and it can be daunting. SuperGuide has put together this explainer to help you understand your options.

Note that if you are a member of a defined benefit fund your options at retirement may be different.

What are my options?

For super purposes, retirement means meeting a retirement condition of release. Once you do, there are no ‘cashing restrictions’ which means you can access any amount of your super in any way you choose.

The relevant conditions of release are retirement and reaching age 65. You can get your hands on all your super: 

  • When you turn 65 – including if you’re still working or have never worked
  • When you’re at least 60 and have permanently retired from work, or
  • When you leave a job after your 60th birthday – including if you’re returning to work.

Once you meet a retirement condition of release, or if you become permanently incapacitated before retirement age, there are four options available to you for your accumulated super balance. You can:

  1. Convert your super into a pension (also called a retirement income stream)
  2. Cash a lump sum
  3. Leave super in the accumulation phase (such as in your current super account)
  4. Combine two or all three above options.

Find out if you will need to lodge a tax return in retirement.

Pensions

Join SuperGuide to continue

Plan your retirement (without a financial adviser)

Join thousands of Australians making their retirement goals a reality
  • Step-by-step guides help you plan and take action
  • Simple changes can make a big difference to your super balance
  • Calculators, case studies and Q&As give you greater confidence
  • Make sure your super is performing and lasts longer

Find out more

About the author

Kate Crawford
Kate Crawford
Kate has worked in the superannuation sector since 2003. Her experience ranges from customer service to financial advice, member education, complaints management, trustee services, and learning and development. She currently develops content and facilitates learning sessions for super professionals with the Association of Superannuation Funds (ASFA) as well as writing for SuperGuide.
Related topics,

IMPORTANT: All information on SuperGuide is general in nature only and does not take into account your personal objectives, financial situation or needs. You should consider whether any information on SuperGuide is appropriate to you before acting on it. If SuperGuide refers to a financial product you should obtain the relevant product disclosure statement (PDS) or seek personal financial advice before making any investment decisions. Comments provided by readers that may include information relating to tax, superannuation or other rules cannot be relied upon as advice. SuperGuide does not verify the information provided within comments from readers. Learn more

© Copyright SuperGuide 2008-25. Copyright for this guide belongs to SuperGuide Pty Ltd, and cannot be reproduced without express and specific consent. Learn more

Responses

  1. rob stewart Avatar
    rob stewart

    Patricia (67) is single, and has just retired. She has no debt, a super balance of $500,000 and owns her home. Patricia wants to generate a regular income from her super, maximise her Age Pension and ensure her savings last so she is not forced to live exclusively on the Age Pension in her old age.

    According to TelstraSuper’s lifetime income calculator, if Patricia chooses to invest all her super in an account-based pension with a moderate investment (53% growth and 47% defensive assets) she can expect income of $52,000 a year until she is 93. After age 93, she may need to rely on Age Pension alone (around $30,000 per year in today’s dollars). is about a net return of 9% a year – that is not a conservative or even moderate risk return rate for someone who is retired when preservation of capital is at the forefront of most retirees mind’s when you can probably assume its less than likely the majority of retirees will need an income past their mid 80’s

    1. Kate Crawford Avatar
      Kate Crawford

      Hi Rob, the calculator is not modelling a simple investment return of 9% per year, but rather 1,000 possible sets of future investment returns and inflation over time and the impact this would have on the outcome. The sets are based on real past average returns and standard deviation of the option that is chosen.
      Patricia’s $52,000 income is made up not only of investment returns on her account-based pension but rather a combination of Age Pension plus drawdowns from her account based pension, which include both investment returns and withdrawals of the capital. By age 93, the balance of the account-based pension is modelled to have been completely exhausted by the drawdowns (i.e., the entire initial balance of $500,000 plus all the investment returns has been withdrawn). In the last year for example, her income would be made up of roughly $30,000 Age Pension and $22,000 from her account-based pension. The real dollar figures will be higher due to inflation, and the model is using an 80% certainty. This means that in 20% of cases the account-based pension balance would be exhausted before 93, and in 80% of cases it would last to at least this age (or beyond).
      All calculators use assumptions and none will predict an outcome with 100% accuracy since real results will vary.
      Many retirees will require income beyond their mid-80s. You may find the lifetime estimator calculator shared with our members by Optimium pensions useful.

      1. rob stewart Avatar
        rob stewart

        Hi Kate,

        thanks for the clarification, much appreciated.

Leave a Reply