3 retirement income options to be aware of

Understanding the income options available to you in retirement can be a great way to get your retirement planning started and boost your confidence.

Research into retirement confidence carried out by AustralianSuper and Monash University1 has found that there are 4 key factors contributing to people’s retirement confidence in Australia:

  • financial awareness and skills – knowing the basics, and who to turn to for help
  • health and wellbeing- being physically and mentally well
  • social factors – feeling connected
  • retirement awareness and planning – knowing what you want in retirement, setting goals and having a plan to achieve them.

So, while the idea of not having a regular salary going into your bank account may be daunting, there are options to help you manage your finance, and maximise your retirement savings.


Financial planning in retirement

AustralianSuper retirement expert Louise Aracas says that goal setting and financial planning can be a good place to start for anyone approaching retirement, or who has recently retired:

‘Understanding your unique goals and needs is important when thinking about how much income you’ll need to support your retirement lifestyle over the long term,’ she says.

‘Set an income target, thinking about how much income you’ll need to live your ideal retirement, and over what timeframe, and then work out a strategy to help you achieve it. A financial adviser can help with this.’ she explains.

Aracas suggests that people focus on the long term: ‘Many members start by looking at the risk level they think they’re comfortable with, rather than focusing on the return they’ll need. This can make it hard to achieve goals, as you’re approaching it from a risk minimisation view, rather than long-term growth perspective.’



3 retirement income options to be aware of

There are 3 main retirement income sources:

  • the Government Age Pension
  • your super
  • and your personal savings and assets.

The mix is different for everyone.


1. The Government Age Pension

The Government Age Pension is a key pillar of Australia's retirement income system. For many retirees, it provides an income foundation that works alongside their super savings. Eligibility depends on several factors, including a review of your assets and income.

70 per cent of Australians over the age of 65 receive income support from the government.2 Be sure to check your eligibility.



2. Super and account based pensions

An account based pension is a retirement income option which allows you to draw a regular income stream from your super. This means you don’t have to take your super as a lump sum.

Your retirement savings are maximised because your money stays invested, and you continue to benefit from any potential returns your fund may make. You have the flexibility to choose your investment option, and how often money is paid into your bank account.3 You can also make extra withdrawals when needed, for example, if you want to have a holiday or renovate your home.

AustralianSuper’s account based pension is called Choice Income and it provides a simple and convenient way to manage your money. If you have an account balance of $50,000 or over, then you could be eligible.




Smart Default – simple account management

When you open an AustralianSuper Choice Income account, you can choose the Smart Default option. This means our in-house experts take care of your investment and payment options. This option makes managing your retirement income even easier. Smart Default sets you up with a regular income payment of 6% of your super balance (while you’re under age 80)3.

Aracas believes the Smart Default option is the easiest way to open an account based pension because your investment and payment types have been developed by a team of in-house experts.

'It offers you a sense of comfort, as it allows you to become more aware of your spending patterns. You can then adjust your income if needed, to suit your lifestyle.' she says.

Bucketing your super

A 'bucketing' approach is another key component of Smart Default. Bucketing is a concept that involves splitting your money into sections, or 'buckets'. For example, Smart Default invests 12% of your balance in cash and the remainder in the higher-growth Balanced option.

The Balanced option aims to outperform the rate of inflation by more than 4% a year over the medium to long-term.4 Your regular income payments are withdrawn from the cash bucket, meaning the Balanced option has up to 2 years to recover if a market downturn strikes at the beginning of your retirement.



3. Personal savings and assets

Personal savings and assets, such as property and shares, can also make up part of your income in retirement. How you manage your assets is based on many factors – what they are, what they are worth and when you need to free up the cash invested in them. One question that sits above it all is: how long will I be in retirement?

There’s no firm answer to that question. But most retirees will need retirement income to last about 2 decades, and financial needs will change over time. Financial planning isn’t a set-and-forget exercise. It’s more like getting your car serviced – regular maintenance is part of keeping it reliable.

'Knowing that there are options available to suit your individual needs can help reduce worry and uncertainty in retirement. And the right account will put you in control of your finances and on the path to an enjoyable retirement,' says Aracas.



If you need help navigating your retirement income options and managing your assets consider speaking to a financial adviser.




AustralianSuper Members

AustralianSuper members have access to professional financial advice on a fee-for-service basis. Find an adviser online or call us on 1300 300 273 (8am to 8pm AEST/AEDT weekdays) to make an appointment with an adviser near you.



  1. AustralianSuper Monash University Retirement Confidence Index 2019.
  2. AustralianSuper data insights, January 2020. Planning your retirement booklet.
  3. Conditions apply. Refer to the Choice Income PDS for more information.
  4. Figure relates to Dec 2019 data and is subject to change.

Investment returns are not guaranteed. Past performance is not a reliable indicator of future returns.

This information is 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. AustralianSuper Pty Ltd ABN 94 006 457 987, AFSL 233788, Trustee of AustralianSuper ABN 65 714 394 898.

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