Spending patterns in retirement

Superannuation considerations

Superannuation savings are part of your retirement nest egg. While you may have other savings, assets and investments to draw income from in retirement, your super is different.

What is superannuation?

Superannuation – or super – is money you save over your working life to live on when you retire. For most working Australians, the majority of their savings come from the Super Guarantee (SG). SG payments are mandatory contributions from your employer usually into a super fund of your choice and the amount paid into your super is a percentage of your salary. You can also choose to make your own voluntary contributions into your super fund to boost the savings and income you’ll have access to in retirement.

When can I access my super?

To access your superannuation, you generally need to have reached your preservation age (55-60 depending on your date of birth) and be retired, or when you reach age 65. You could also access your super under a transition to retirement (TTR) arrangement, where you could access up to 10% of your super in a financial year upon reaching your preservation age.
 
You may also be eligible to access your super early if you meet other conditions such as disability, severe financial hardship and compassionate grounds.

More information is available from this ATO webpage.

How is superannuation different to the Age Pension?

Superannuation savings are generally private funds held by you as an individual to provide you with income when you are no longer working.

The Age Pension is a payment from Centrelink you can access once you have reached Age Pension age. Eligibility for the Age Pension is based upon a number of factors and subject to both an assets and an income test. You may be eligible for a full or part Age Pension, depending on the outcome of these tests and it is the test resulting in the lowest rate that will apply.

Find out more about asset and income test thresholds and payment rates for the Age Pension.

Does superannuation count towards the assets or income tests for the Age Pension?

If you haven’t reached the age that you can access the Age Pension, then usually, your super is not counted under the assets or income tests.
 
If you have reached the qualifying age for Age Pension, then usually your super balance is counted under the assets test and subject to deeming under the income test.
 
If you convert your super to an income stream, it is assessed based on the type of income stream.

What are deeming rates?

For income you earn from superannuation and other investments you hold in retirement, there are rules applied to how this income is calculated for the purposes of the income test. Centrelink use deeming rates to assess income earned from your financial assets. They assume these assets earn a set rate of income, no matter what they actually earn. Even if your income from assets is actually higher than the deeming rate calculation, it won’t count towards the total for your income test.

Visit the Services Australia website to find out more about deeming rates.

How are account based pensions treated towards the assets or income tests for the Age Pension?

Account based pension balances are treated as an assessable asset. Under the income test, the balance is subject to deeming (different rules could apply if you started the account based pension prior to 1 January 2015 and were in continuous receipt of a social security payment since 1 January 2015).

How are lifetime income streams treated towards the assets or income tests for the Age Pension?

Lifetime income streams are different to many other investment assets, such as bank accounts, account-based pensions and investment properties, where generally 100% of the asset is assessable. Under the assets test for the Age Pension, 60% of the purchase price of certain lifetime annuities will count as an asset through to age 84, or for a minimum of five years. From then, only 30% of the purchase price counts as an asset. 

Visit the Services Australia website for more information about which assets are assessed for the assets test.

When you transfer superannuation to a lifetime annuity or lifetime income stream, 60% of any payment you receive is assessable for the income test. 
 
Visit the Services Australia website for more information about assessable income.


Are withdrawals from super included in my taxable income? 

Generally, payments (lump sum or regular income) you receive from a taxed super fund (such as a retail, industry, corporate or a SMSF) are not included in your taxable income if you are 60 or over. 
 
However, payments you receive from an untaxed super fund (such as certain public sector super schemes) may be included in your taxable income.


Can I withdraw my super and keep working? 

Generally, you need to be retired to access super. There may be situations where you can access super but continue to work. Common situations where you can do this are:

  • accessing super at age 65 and continuing to work
  • terminating an employment arrangement on or after age 60 which meets the definition of retirement and continuing to work in a new arrangement
  • retiring but then having a change of intention in the future where you start working

Can I keep adding to my super once I’m retired?

There are age based restrictions on contributing to superannuation. Generally, you can contribute within allowable limits before you turn 67. Once you turn 67, you can usually contribute to superannuation up to age 75 as long as you satisfy the ‘work test’ which is defined as 40 hours of work, including self-employment, over a consecutive 30-day period. 

Alternatively, you may be eligible to use a one-off work test exemption if your total super balance is less than $300,000 and you retired in the previous financial year. 


Once you turn 75, generally you can’t make voluntary contributions to superannuation. However you can continue to receive the Superannuation Guarantee or other compulsory contributions from your employer.

You may also be eligible to contribute up to $300,000 upon selling your home after age 65 and meeting further conditions. 

More information is available from this ATO webpage

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Frequently asked questions about superannuation

You may be able to claim a tax deduction for personal contributions that you make to a super fund, upon meeting certain conditions. You must provide a Notice of Intent form which could be obtained from the Australian Taxation Office (ATO) or your super fund within the required timeframe and receive an acknowledgement from your fund.

More information is available from this ATO webpage.

There are aged based restrictions on contributing to superannuation. Generally, you can contribute within allowable limits before you turn 67. Once you turn 67, you can usually contribute to superannuation before you turn 75 as long as you satisfy the ‘work test’ which is defined as 40 hours of work, including self-employment over a consecutive 30-day period.

Alternatively, you may be eligible to use a one-off work test exemption if your total super balance is less than $300,000 and retired in the previous financial year.

Once you turn 75, generally, you can’t make voluntary contributions to superannuation, however you can continue to receive Superannuation Guarantee or other compulsory contributions from your employer.

You may also be eligible to contribute up to $300,000 upon selling your home after age 65 and meeting further conditions.

More information is available from this ATO webpage.


Non-concessional contributions are usually made to your super fund from savings outside of superannuation. These are contributions for which you don’t claim a tax deduction and are not taxed when they are contributed into the fund.

More information is available from this ATO webpage.

There are limits in terms of how much you can contribute to superannuation without paying additional tax. These limits depend on your age, your total super balance and the type of contribution you make.

Currently, the limit on concessional contributions, which includes salary sacrifice, contributions for which you claim a tax deduction and any other employer contribution is $25,000 per annum. You may be eligible for a higher concessional contributions cap if you  haven’t used the concessional contributions cap in full starting from 1 July 2018 and your total super balance is less than $500,000.

Currently, the limit on non-concessional contributions is $100,000 on an annual basis. These are usually made from your savings outside of superannuation. You may be eligible to contribute three times the annual non-concessional contribution limit in one year, referred to as bring-forward arrangement, if you meet certain conditions.

More information is available from this ATO webpage.

To access your superannuation, you generally need to have reached a minimum age referred to as preservation age (55-60 depending on your date of birth) and be retired or reach age 65. You could also access your super under a transition to retirement arrangement, where you could access up to 10% of your super in a financial year upon reaching your preservation age.

You may also be eligible to access your super early if you meet certain other conditions such as disability, severe financial hardship and compassionate grounds.

More information is available from this ATO webpage.

Generally, you need to be retired to access super. There may be situations where you can access super but continue to work. Common situations where you can access your super and continue to work are:

  • Accessing super at age 65 and continuing to work
  • Terminating an employment arrangement on or after age 60 which meets the definition of retirement and continuing to work in a new arrangement
  • Retiring but then having a change of intention in the future where you start working

As long as you are eligible to withdraw your super (generally on retirement after preservation age), you can generally then use those funds for whatever purpose you desire, including starting a new business.

The earnings of your super fund are not included in your taxable income.

Generally, payments (lump sum or regular income) you receive from a taxed super fund (such as a retail, industry, corporate or a SMSF) are not included in your taxable income if you are 60 or over.

However, payments you receive from an untaxed super fund (such as certain public sector super schemes) may be included in your taxable income.

As long as you are eligible to withdraw your super (generally on retirement after preservation age), you can generally then use those funds for whatever purpose you desire, including paying off debt.

You can usually leave your superannuation to your dependents such as spouse, child of any age, anyone who is financially dependent on you or anyone with whom you are considered to be living in an interdependency relationship. You can do this by nominating these beneficiaries directly through your super fund.

You can also leave your superannuation to your estate and making provisions in your will regarding who you want to benefit from your superannuation.

More information is available from this ATO webpage.

Super generally belongs to the owner of the account and cannot be ordinarily transferred to your spouse. However, there are two common situations where you could transfer to your spouse:

  • By withdrawing from your super when eligible and contributing the withdrawn amount to your spouse as long as they are eligible to receive the amount
  • If you have made concessional contributions to your super, you may be able to split 85% of those contributions to your spouse

For more information on contribution splitting, please refer to this ATO webpage.