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Planning retirement

How to feel more confident about your balance leading up to retirement

A fear of running out of money may see people unnecessarily tighten their belts in retirement, and spend less than they’re actually able to. Here are a few important things to consider that may help you feel more confident about your balance leading up to, and in, retirement.

After spending so long building up your super balance through your working life, it can take some time to get comfortable with the idea of starting to spend it.

For some of us, this is because it’s hard to picture how the balance you have on the day you retire is going to last you two or three decades through retirement. After all, the ASFA Retirement Standard figures needed to live to a comfortable retirement – $590,000 for singles and $690,000 for couples* who retire at 67 – don’t seem like a lot of money for 20 or 30 years.

But a fear of running out of money may see people unnecessarily tighten their belts in retirement, and spend less than they’re actually able to.

Here are a few important things to consider that may help you feel more confident about your income in retirement:

*Assumes the retiree/s own their own home and will eventually receive the Age Pension.

How your balance can stay invested and keep earning for you

While the basics of growing your super balance are relatively easy to understand, there’s often less known about how to access super in retirement.

This could be because the super industry has spent a long time focused on helping members learn about accumulating, or building, their super balance. This has led some people to think that the figure you’ve got on the day you retire is the be all and end all of your retirement savings, but that couldn’t be further than the truth.

However, the way that you choose to access your super could impact the balance you need to live out your retirement dream.

While you can generally withdraw your balance from your super account when you retire and keep it in your bank account, for example, the super system has been designed to help you keep your balance invested through retirement.

In fact, those ASFA Retirement Standard figures we often refer to assume that the funds will stay invested in the super system through retirement, for example through an income account. Returns in an income account are also tax-free.

This means that your balance can keep generating investment returns (which can be positive or negative) as you draw down from it.

How you’ll be drawing down your balance

Going hand in hand with your balance staying invested is how you’ll actually be drawing down your balance. Here, it helps to see your balance over time as a visual – after all, it’s one thing to be told that $590,000 is enough for a single person to live comfortably in retirement, but it’s another thing to actually see it.

Using MoneySmart’s account-based pension calculator, we can see an illustration of how a pension balance is impacted by retirement income and investment performance.

Assuming you have a super balance of $590,000 at retirement invested in a default option that returns 6.5% per year, and a desired retirement income of $29,500 per year, you will have an estimated remaining balance of $35,860 remaining at age 95 (shown below).

Meanwhile, drawing down $40,000 per year will leave a balance of $14,511 at age 85.

Both these scenarios will likely provide income for the average Australian through their retirement: according to the Australian Bureau of Statistics, life expectancy at birth in 2020 to 2022 was 81.2 years for males and 85.3 years for females.

How to set up your retirement budget

By the time they get to retirement, many people have their budget down to an art, so rethinking everything after work can be a challenge.

Unlike our work lives, where most of us will have our incomes – and pay schedule – decided by an employer, how much you get paid and how often is in your control in retirement. As can often be the case, however, too much choice can lead to indecision.

To help you get started, the government has put in place minimum drawdown rates for income accounts – this is a rule that dictates the minimum amount that members with an income account must draw down, or take as an income, a minimum amount each financial year. This amount is a percentage of a member’s account balance, with the percentage dependent on age.

Age Drawdown rate
Under 65 4%
65-74 5%
75-79 6%
80-84 7%
85-89 9%
90-94 11%
95 or more 14%


For example, a member who starts their income stream at age 65 with a balance of $500,000 must initially receive a minimum of $25,000 in income payments for the financial year. By using this rate as a base, you can then tailor the income stream you need from your income account to your budget – it’s important to remember however that this is the minimum amount that you must draw down as a retirement member (there is no maximum, which means you aren’t bound to these figures).

The government’s MoneySmart website explains that, if you own your own home, you can generally expect that you’ll need two-thirds, or 67 percent, of your pre-retirement income to maintain the same standard of living in retirement.

Once you have your minimum drawdown rate as a baseline, a Qantas Super Income Account allows you to set up your payments to suit your schedule and budget. You can choose to receive regular payments direct to your bank account on a weekly, fortnightly, monthly, quarterly, or yearly basis. If you ever need some extra cash for a holiday, car, or other big expense, you can make additional withdrawals whenever you like.

Whether you’ll receive the Age Pension

Depending on your situation, your super may not be your only source of income during retirement.

While compulsory superannuation was introduced to help reduce reliance on the Age Pension, Australia’s retirement income system is designed to operate via three key pillars:

  • A means-tested Age Pension
  • Compulsory superannuation savings; and
  • Voluntary private savings, both inside and outside the super system

The idea is that, rather than Australians relying solely on the Age Pension, the three pillars can work together to help people live out a comfortable retirement. That means that you may be eligible to receive the Age Pension to supplement the income you receive from your super.

In fact, the ASFA Retirement Standard figures assume that the retirees will draw down all their super capital and eventually receive a part Age Pension.

How to calculate your income needs in retirement

As we often say in super, everyone’s financial situation is different – and so it is here. Everyone’s needs in, and dreams for, retirement are different. You can estimate your income in retirement with our Retirement Income Simulator.

This tool allows you to make adjustments for factors like your personal desired annual income, one-off purchases like a car, the Age Pension, and any other investments or income you may have from other sources, to show you how long your super will last. The tool also allows you to factor homeownership and marital status.

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If you want to learn more or need help with making a decision about your super, you can get simple advice over the phone or face-to-face. It's included as a part your membership so there's no extra cost.
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