What income can I expect in retirement?

We often hear that we’ll need a million dollars in super before we’re able to think about retiring comfortably. And while it’s a lovely round number, it can also be completely wrong. There’s certainly no one-size-fits-all when it comes to knowing how much you’ll need in retirement, and there’s some thought involved in working out how much you need.

How much you need will depend on a few factors, such as whether you’ll receive an Age Pension (and if so, how much), when you want to retire, and your relationship status. Your superannuation can play a significant role in funding your retirement, and there are a few options available for how you receive these funds.

So, what’s available to you?

Making withdrawals

At 65, you can access your super and seeing as it’s your money, there’s no limit on how much you can take out once you’re fully retired and have reached that age. If you want to access your super before then, you’ll need to meet a condition of release. Consider obtaining your own personal financial advice to see if this is appropriate for you and your circumstances.

The Age Pension is available to you from age 65.5 to 67 (depending on your date of birth) – but that could be years after you retire. Your super could be used to help bridge that gap before your government benefits kick in.

Account-based pension

An account-based pension uses the money you have accumulated in super to pay you a regular income. You choose the amount and frequency of payments from your super into your bank account, and while there is a minimum set by the government that you need to take each year, there’s no maximum. If you’re receiving payments and you’re over 60, these payments are tax-free, and, because you have retired, your investment returns are tax free too! An easy and convenient way to manage an income in retirement.

Leave your funds in your accumulation

Not sure whether you’ll need a regular payment? You can leave your funds in your accumulation account and simply take out lump sums as you need them. If you’ve met a condition of release, there’s no restriction on how much you can take out – but one thing to remember is that your investment returns are not tax free as they would be in an account-based pension.

The Age Pension

The rules surrounding how to access the Age Pension are entirely different. The Age Pension is a government benefit and is available to anyone who meets certain requirements. The amount you receive depends on a range of factors like your total assets and other sources of income. Accessing these benefits also depends on your birthday, with most people now being able to access the Age Pension at age 67.

The maximum Age Pension, including supplements, is currently $952.70 a fortnight for a single person and $1,436.20 a fortnight for a couple1. When you think about this amount compared with your current fortnightly expenses, will it be enough, or will you need your super to get you over the line?

So what’s best for me?

Of course, there is much more to the Age Pension and super payments than can be described in such few words, and it all depends on your individual circumstances. Vision Super has a range of resources available to you like the calculators, which can help you estimate how much super you may end up with, how long your super may last, and how extra contributions may make a difference. Once you’ve tried the handy calculators and you want to give your super a boost then there are some strategies that may help:

  • Consolidate your super into one account*
  • Increase your super contributions
  • Change investment options (we recommend seeking advice before you do this)

Otherwise, we can offer personal financial advice and explain the options that are available to you.

1 Department of Human Services – Age Pension (How much can you get) 

* Before consolidating your superannuation accounts, you should consider any benefit entitlements (for example, insurance cover) you may have with other funds and whether they may cease. You should also consider whether any fees will be charged by your other fund.

Already a Vision Super member?

The great news is you can now open your pension account online through the secure site.

Not a Vision Super member?

You’ll just need to open a Vision Personal account first and then you can transfer across to a Vision Super pension.