Super fund or bank account – what to choose in retirement

Choosing how to manage your super nest egg in retirement is an important choice. Explore 2 common options and see which one could suit your retirement needs.

When you reach retirement age and gain access to your super you have several options to manage your money. These include working with a financial planner, investing your money, putting it in the bank, and opening an account based pension. An account-based pension keeps your money invested by your fund, but lets you access it as needed.1

In this article we’ll look at 2 of these options — putting your money in the bank and opening an account based pension. Explore some of the benefits and drawbacks of both.


Option 1: Withdrawing your super as a lump sum into your bank account

Choosing to withdraw your super as a lump sum and putting it in your bank account could seem like one big pay day. But, the reality is you then have to manage that lump sum for your entire retirement, which could be 25 years or longer.



A bank account is a familiar option. If you transfer your super to a bank account, you won’t see your balance fall if there are fluctuations in the investment market. This can be a comfort to some people. After all, when you’re relying on your super to support your retirement, it can be scary to see those savings go up and down on a regular basis. Knowing your balance will remain steady can also offer a sense of financial control. This is a key factor to feeling confident in retirement, as shown in the AustralianSuper Monash University Retirement Confidence Index.


Possible drawbacks

Over the course of your retirement the cost of living is likely to rise. For the best chance of maintaining your lifestyle through retirement, your super needs to grow too.

At the time of publication (28 October 2020), interest rates on savings accounts and term deposits are at an all-time low2. The Reserve Bank of Australia (RBA) predicts that record low interest rates are likely to stay in place for at least 3 years 3. Meaning, the interest earned on savings in a bank account – including the lump sum of your super – could potentially be negligible. Over time, the rising costs, due to inflation devalue your savings if you’re not invested for growth.

Another factor to consider is that you’ll need to manage a lump sum. To suddenly see a large amount in your bank account can be overwhelming, especially if you’ve received a regular salary in your working life. You’ll need to feel confident being able to budget over a long period of time. And understand that money in the bank won’t grow like it could if invested.

Your super savings are meant to give you the financial freedom to live the lifestyle you want. So choosing an income option that’s easy to manage is an important step in planning your retirement.


Option 2: Keeping your money invested with your super fund in an account-based pension

Making sure your savings grow in your retirement is not something people always think about. But yearly inflation and the rising cost of living over time is expected. When you were working, your salary may have increased over time to balance this out. In retirement, your super needs to do the same.

The Reserve Bank of Australia (RBA) has set an inflation target of 2-3% on average, over time. This means, for example, if prices rise in line with this target, your $4 cup of coffee could cost over $8 in 30 years’ time.

An account based pension, invested in a diversified mix of asset classes, could help your balance grow and keep up with those costs.



An account based pension offers you a range of investment options. These are aimed to grow your savings over the course of your retirement by keeping them invested in a range of assets. By being invested in a diverse mix of assets, you can potentially benefit from investment returns and boost your balance. While invested in an account based pension these returns are tax free.

With AustralianSuper’s account based pension, Choice Income, you can choose from a range of investment options. Many of these are designed to stay ahead of the consumer price index (CPI) - a key indicator of inflation. Understanding each option can help you select one which meets your personal financial needs, such as a short, mid or long-term investment goal.

For example, the Balanced investment option invests in a variety of asset classes and aims to beat the CPI by 4% over the medium to long term. So, by choosing the Balanced investment option for your account based pension, you may achieve a return that outpaces inflation and grows your balance, even in retirement. Of course, you can’t predict investment returns, but AustralianSuper has a strong performance history4 and an experienced investment team dedicated to improving your retirement outcome.

Choosing an option that aims to grow your retirement balance and beat inflation is one way to put yourself in the best position to make sure your retirement funds last. When making a selection, you should always consider how you feel about investment risk, your investment time horizon and your financial situation.


Possible drawbacks

Choosing investment options that provide the best opportunities for growth also carry some risk. This means you may see your balance fluctuate over time. Investment markets move in cycles, so periods of growth, plateauing and declines, can be expected. As with any long-term investment strategy, you may need to weather the storm of a declining cycle and give your balance time to recover, before taking out a large portion of your savings.

While it might be alarming to see your savings drop, you need to keep a long-term focus, even in retirement. Taking a large amount of your money out of your account, or choosing to switch investment options if the market falls, could lock-in losses and make it harder for your account to recover.



Since investment returns aren’t guaranteed it’s important to look at a Fund’s past performance, keep costs low, and understand how your super is invested. There’s a lot to understand, and several choices to make. Consider speaking to a qualified financial adviser or your Fund, to get the right advice for you.




The importance of growing your money in retirement

The costs of daily items such as bread, milk and public transport are all predicted to rise over the next 30 years. This means your day-to-day living costs will go up over the course of your 20-plus year retirement. To maintain your lifestyle, your retirement savings need to grow.

The projected costs of bread, coffee, milk and transport in 30 years’ time, in 2050 compared to 2020. A loaf of bread is expected to be $6.30 in 2049, and a bottle of milk $3.15 – both over 50% more than the average cost in 2019. 

The above examples assume an annual inflation rate of 2.5% each year.

As you can see, a loaf of bread is expected to be $6.30 in 2050, and a bottle of milk $3.15 – both over 50% more than the average cost in 2020. It’s important to factor this into your retirement planning.


AustralianSuper works to outpace inflation

AustralianSuper aims to grow your balance during your working life and in retirement. Members have a range of investment options for different needs and most have an objective to outperform inflation. These options are designed and managed by a team of over 170 investment experts working across the globe.

As an example of how different options work, we can look at 3 of the Fund’s diversified options, Balanced, Conservative Balanced and Stable, and view their return objectives and performance over 5 and 10 years, for Choice Income account holders.


3 Choice Income options designed to beat inflation
Investment option Balanced Conservative Balanced Stable
Investment aim CPI + 4% over the medium to longer term CPI + 2.5% over the medium term CPI + 1.5% over the medium term
Minimum suggested timeframe for investment At least 10 years At least 5 years At least 3 years
Performance (Choice Income) - As at 30 June 2021
3-years per annum 10.41% 8.49% 6.21%
5-years per annum 11.36% 9.03% 6.68%
10-years per annum 10.77% 9.12% 7.30%
Source: AustralianSuper returns to 30 June 2021. Investment returns are not guaranteed. Past performance is not a reliable indicator of future returns. View all investment options.

Long term is considered 20 years plus, medium term is 5 – 20 years, and short term is less than 5 years.

As you can see, the investment aim varies for each option, and so do the returns. You can pick an option which best fits your objectives, for example how much growth you want or how much stability you want, for your savings. When considering your options, it can help to talk to a financial adviser with experience in retirement planning.

The performance of the Balanced option is designed to outpace inflation by CPI + 4% over the medium to longer term, the Conservative Balanced option by CPI + 2.5% over the medium term, and the Stable option by CPI +1.5% the medium term. All 3 options have delivered Choice Income account holders a positive return over 3, 5 and 10 years.



Retirement planning advice

The decision of what to do with your super savings isn’t always easy. It can be helpful to seek financial advice from a retirement planning specialist. Asking important questions and receiving information tailored to your circumstances and financial goals can help you make informed decisions about staying invested in retirement.



Be in control of your money – Choice Income

Choice Income, AustralianSuper’s award-winning account based pension5, allows you to draw a regular income from your super while your balance stays invested.

Investing in potentially higher-returning growth assets is a way to help your money stay ahead of inflation and last through your retirement. A Choice Income account gives you the control to invest in multiple options that could grow your super – including the Balanced option.




  1. Some conditions apply, read the AustralianSuper Choice Income account based pension PDS for more information,
  2. RBA Cash rate October 2020, RBA rate 0.25%
  3. RBA – Media release
  4. Investment returns are not guaranteed. Past performance is not a reliable indicator of future returns.
  5. AustralianSuper received the Canstar 5-Star Rating for Outstanding Value Account Based Pension in 2019. Full methodology is available at

This information may be 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. A Target Market Determination (TMD) is a document that outlines the target market a product has been designed for. Find the TMDs at AustralianSuper Pty Ltd ABN 94 006 457 987, AFSL 233788, Trustee of AustralianSuper ABN 65 714 394 898.

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