Hardworking super in retirement

During your working years, regular contributions and investment returns help grow your superannuation. Once you retire, the challenge is converting those savings into an income that supports your lifestyle.

For many of us, this involves establishing an account-based pension. Rather than withdrawing all your superannuation at once, your savings remain invested while you receive regular payments. This approach provides flexibility, allowing you to adjust withdrawals according to your circumstances, subject to minimum annual withdrawal requirements.

Your remaining superannuation balance continues to participate in investment markets, creating opportunities for further growth while remaining exposed to market fluctuations.

An important retirement planning decision is understanding how much income you can sustainably withdraw each year. Account-based pensions have minimum annual withdrawal requirements that vary with your age. For example, retirees aged 65–74 generally need to withdraw at least 5% of their account balance annually. However, minimum withdrawals do not necessarily reflect your individual income requirements.

In most scenarios, people require additional income during their early retirement years. This is used to fund travel, renovations or other lifestyle activities. Later, spending priorities might shift towards healthcare, family support or aged care.

The objective is to establish a withdrawal strategy that balances goals today with tomorrow’s financial needs. Speaking with an experienced financial adviser is highly recommended. They use sophisticated and accurate financial modelling that clearly illustrates what you’ll need and build evidence-based financial strategies that ensure you have the financial resources to meet your aging demands.

Retirement doesn’t mean your investment strategy needs to hit the lag button. With Australians potentially spending 25 to 30 years in retirement, maintaining exposure to growth investments can help protect purchasing power against inflation. There is a caveat: relying too heavily on growth assets may create difficulties during periods of market volatility, particularly when regular withdrawals are required.

This is a major reason a diversified investment strategy is recommended for managing these competing priorities. For example, holding sufficient cash and defensive investments to meet near-term income requirements can reduce the need to sell growth assets during market downturns.

Meanwhile, maintaining an appropriate allocation to shares and other growth investments provides opportunities for longer-term capital appreciation. The right balance depends on your financial position, investment timeframe, income requirements and tolerance for risk.

The way your retirement income is structured will influence your overall financial position. For eligible Australians aged 60 and over, payments from a taxed superannuation fund are generally tax-free. Investment earnings supporting an eligible retirement-phase pension are also generally exempt from tax, subject to applicable rules and limits.

Other investments held outside superannuation may have different tax implications. Your superannuation balance, other assets and income can also affect Age Pension eligibility.

Understanding how these elements interact will help you make informed decisions about where to draw income and how to structure your investments to ensure you are maximising your eligibility across tax and the Age Pension.

Retirement income planning is not a set-and-forget strategy, as 2026 has highlighted. Investment markets change, inflation influences purchasing power, government regulatory policy often shifts, and personal circumstances are never static.

Regular reviews are an essential part of a retirement plan. They allow you to assess whether your withdrawal strategy remains sustainable, your investments are appropriately structured, and your income can support your lifestyle. They are an opportunity to adjust your strategy before small financial issues become larger problems.

At First Financial, we are not tied to one financial institution. This means we have the scope to recommend financial products that fit individual circumstances. This is an important distinction between us and other financial services providers, who may be restricted to offering a narrow range of options and lack the flexibility to pivot when appropriate.

While financial advice and retirement planning can feel complicated, our goal is simple: to ensure the wealth you’ve worked hard to build continues to work for you throughout retirement.

If you’re approaching retirement or already drawing on your superannuation, speak with the First Financial team about reviewing your retirement income strategy.

The team at First Financial comprises financial experts who help hundreds of Australians retire well and make informed, intelligent financial decisions. We cover everything from retirement and financial advice, investment and wealth management, superannuation and SMSF, insurance, tax, aged care, legal and lending services.

Contact us for holistic, well-rounded financial management strategies.