You can't access your superannuation until you reach preservation age, which is 60 years for those born on or after 1 July 1964.
At preservation age, you can retire and gain full access to your superannuation savings.
Alternatively, you can continue working and keep your superannuation in accumulation phase, or draw an income from it via a transition-to-retirement (TTR) income stream.
At age 65, you can access your super in full, whether retired or working.
Common choices once full superannuation access is gained
Once you gain full access to your super savings, there are two common options, according to superannuation provider, AustralianSuper.
The first choice is to withdraw your superannuation as a lump sum and pop it into a regular savings account.
AustralianSuper says the benefits of this option include the balance only changing if you spend money or earn interest. There's no chance of volatility, as there might be if you keep the money in superannuation. This can provide a feeling of control.
The drawbacks include your savings growth not matching or outpacing inflation, depending on interest rates, and having to manage a lump sum for the rest of your retirement, which may feel overwhelming. Plus, your interest earnings are taxable.
AustralianSuper says:
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 retirement savings need to grow too.
If you withdraw your super and deposit it into a savings account, it may see little to no growth over your retirement years. This will depend on your account type and balance of course.
In addition, the rising costs of common household goods and services – due to inflation – could mean any savings you have may not last as long as you planned.
The second choice is to transfer up to $2 million of your superannuation (the current transfer balance cap) into an account-based pension.
This keeps your money invested in your super fund and allows you to create an income stream to support you in retirement.
You decide the income amount paid (subject to annual minimums based on age), and it's tax-free, too, if you're over 60 years of age.
Plus, you can withdraw lump sums for big one-off expenses whenever you like, and they're also tax-free if you're over 60 years of age.
The earnings you receive from your superannuation investments are also tax-free.
AustralianSuper says:
By keeping your super invested with an account-based pension, you can leave that money in the hands of investment experts after you retire.
Or you can choose more hands-on investment options that give you more direct control.
What do other people do?
Hamish Landreth, Director of Financial Services at Prosperity Advisers Group, says most of his clients choose to keep their money in superannuation.
Landreth told The Fool:
Most commonly people will retain their money within superannuation, however if they want to benefit from tax-free earnings they will need to take the appropriate steps to commence an account-based pension.
This is also an ideal time to review the underlying investment strategy, particularly if the member wants to take less risk with their superannuation investments due to them becoming more reliant on the capital to fund their living costs after retirement.
Landreth said it was uncommon to see clients withdraw large lump sums for lifestyle reasons.
We don't typically see large withdrawals from superannuation as people have worked hard to build their savings and don't want to withdraw large amounts, particularly now that there are limits on how much superannuation can be held in tax-free pension phase.
More commonly individuals will fund lifestyle expenses or gifts from non-superannuation savings.
Some of his clients adopt a recontribution strategy, which is a way of ensuring non-dependent children receive a tax-free inheritance.
Landreth comments:
In some circumstances it can be beneficial to withdraw additional funds from superannuation and then recontribute them back again, particularly for reducing personal tax payable or for future estate planning considerations, however seeking advice is recommended as the eligibility and effectiveness of these strategies will depend on the individual's circumstances.
Average age of retirement
The average age of the 156,000 Australians who retired in FY25 was 63.8 years, according to the Australian Bureau of Statistics (ABS).
About a third of them said their main reason for retiring was reaching their superannuation preservation age or the pension age.
Australians become eligible for the age pension between the ages of 65 and 67, depending on their date of birth.
