Superannuation: how to make your savings last

How long your super will last is a major retirement concern.

older man calculating if his super will last

Making the best decision on how to use your superannuation to help pay for your future lifestyle is critical.

There may be a temptation to simply withdraw your balance as a lump sum to fund your retirement. Through clever investment and savvy saving you may be able to make the most of this money, but ask yourself, ‘what happens if it runs out or your investments don’t quite perform as you had hoped’?

Many will consider the Government Age Pension as a reliable back-up plan.  While this may seem possible today, legislation changes in the future could make you ineligible or left with much less to live on than you had anticipated.

For a growing number of Australians, super will be the cornerstone of their income in retirement. Opting for an income stream from your super, potentially combined with Age Pension payments, may be the way to make your savings last longer.

Increasingly, retirees are transferring their super savings into income stream products. These include account–based pensions that convert your super into regular payments, providing a steady income in retirement. Not only do account-based pensions give you flexibility to access your savings when you need a little extra money, but your balance continues to be invested by experts, and the earnings added to your account, which can help extend your savings.

If your financial circumstances allow, you may also be able to claim a part Age Pension to supplement income from your super. For an estimate of how much you could receive, simply enter a few details into AustralianSuper’s Income Calculator

One other product that can offer a regular income in retirement is an annuity, which pays a guaranteed income for a defined period of time at a fixed rate of return. This option can give peace of mind that your money won’t run out or be impacted by market forces. However, annuities can lack flexibility. Unlike account-based pensions, there are limitations on withdrawing money. Should your circumstances change, this may not be ideal, particularly when at times when you need access to a larger sum of money. There is also a risk that your payments may not keep up with inflation as the rate of interest is fixed at the outset.

Possibly the most important decision to make about retirement is how you will fund it, and make your hard-earned savings last as long as you do. Getting advice on the best way to use your super is an essential step to help you weigh up your options and ensure that you’ve got the right strategy in place so that you can enjoy your post-work years.

This article has been sponsored by AustralianSuper Pty Ltd ABN 94 006 457 987, AFSL 233788, the Trustee of AustralianSuper ABN 65 714 394 898. The views expressed are those of YourLifeChoices and not necessarily the views of AustralianSuper. The article contains general information and you should consider your personal financial situation before making a decision.  





    COMMENTS

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    6th Sep 2016
    11:31am
    It's probably a good idea to steer clear of any sponsored article telling you how to save as a return is always expected for their "sound advice".
    Anonymous
    6th Sep 2016
    12:07pm
    I agree Fast Eddie and you might note that the article tends to lean towards the need to have lots of money and playing down the ability to combine a smaller super and the age pension. The suggestion that the age pension may not be there in the future is pure scare tactics. The only honest answer on super can be given only when the exact date of death of a pensioner is known.
    Rosret
    6th Sep 2016
    1:31pm
    Old Man, both political parties are working towards everyone relying on self funded retirement hence raising the retirement age, the percentage contribution etc etc. However last I heard the average super fund was under $100K so I can't see that happening for awhile yet.
    Anonymous
    6th Sep 2016
    1:40pm
    No Rosret and you won't hear about the full scheme until everyone in the workforce has worked their whole life with compulsory super. Any comments in the interim period are not allowing for the full picture.
    Circum
    6th Sep 2016
    4:04pm
    I also agree Fast Eddie.A super fund is mainly interested in how much money it can attract from fees.Including industry super funds.If there wasn't money to be made then there wouldn't be the large amount of money poured into advertising TV etc.As a member I wonder why are they spending my money on advertising.

    Historically annuities have performed badly.A poorly designed product with poor returns.

    Of course retirees are transferring their super into income stream products as the returns are tax free VS 15% tax by not transferring.From the super funds point of view they will continue to receive their fees as long as people don't exit the funds.
    Rosret
    7th Sep 2016
    7:36am
    Superfund corporations don't only make money from fees. They invest your money and you get a portion of their gains.
    Bow Maker
    6th Sep 2016
    11:47am
    What dose invested by experts mean.
    Anonymous
    6th Sep 2016
    1:41pm
    I'm not sure, but get some penicillin if you catch a dose.
    Old Geezer
    6th Sep 2016
    3:58pm
    They all get a cut and you get what's left if anything. May even have to pay them.
    Rosret
    6th Sep 2016
    1:27pm
    His reason is exactly the rationale I used back when I was making the decision between topping up super or investing in real estate. I stood in the wrong queue!
    Yes, the superannuation fund investors are the experts. However they are not investing for us they are investing for themselves. They are in a win-win situation regardless of the good and bad years.
    From hindsight I would now recommend to my children to find their own method of topping up their retirement fund. Real estate, gold, the stock market, anything other than letting some else be in control of your excess money. In other words you need non inflationary damaging equity that you can use to fund your retirement years
    Greg
    6th Sep 2016
    2:02pm
    I don't agree, the funds try to do their best for us so their ranking/performance improves so they get more people investing with them and they improve their profits by more fees.

    Remember the super funds have many different options to invest in (mine has 154 funds) and they are predominantly invested in shares, real estate, gold.....hang on that's what you would do.

    Plenty of people have/do well with their super funds, you just need to study them and choose the right company AND fund.
    Old Geezer
    6th Sep 2016
    4:01pm
    All I can think of with all those funds is someone else getting their cut of your super money.

    I invest my super myself and beat the so called experts every year by a mile.
    MICK
    6th Sep 2016
    2:08pm
    How to make super last? SImple. Live within your means.
    Greg
    6th Sep 2016
    2:41pm
    Exactly
    Old Geezer
    6th Sep 2016
    4:02pm
    I'm thinking my super is going to out live me. So I wonder what their solution to this problem is?
    Circum
    6th Sep 2016
    4:10pm
    Maybe OG you should update to drinking Grange as a solution.
    Anonymous
    6th Sep 2016
    4:12pm
    I agree Mick. (Either I have mellowed or Mick has learnt to say nice things but either way, I have agreed with Mick twice today)
    Old Geezer
    6th Sep 2016
    4:47pm
    No Grange for me as I don't drink such poisons. No way I would be the age I am if I have indulged in such vices. Good clean healthy living for me.
    Anonymous
    6th Sep 2016
    5:30pm
    Old Geezer, I have read a lot of your posts and I thank the Lord that I don't know you. You are such a pious, righteous living person, blessed with good health, rich as Croesus and, in my opinion, boring as batshit. I really don't know why you bother to mix with the hoi polloi like me as we obviously don't mix in your exalted circles.
    Old Geezer
    6th Sep 2016
    7:29pm
    No I none of those things. Just a taxpayer who wants value for money from the tax I pay. That is not what I am getting with people getting to OAP when they don't need it just so they can be heros after they die and leave the money they should be using to their heirs.
    Rae
    7th Sep 2016
    9:20am
    I consider the tax concessions you get on you super a form of welfare OG that needs to be reined in.

    You can obviously afford to pay your taxes as you are not spending down your super.

    I managed quite nicely without welfare or tax concessions as a form of bribery to save.

    I am not getting any value these day for the taxes I pay as too many have their hand out including the billions going into superannuation accounts instead of the country's revenue base.

    So I agree with you OG but not just OAP but those addicted to tax concessions as well.
    Mez
    9th Sep 2016
    11:20am
    With salary sacrificing and Work Bonus, my tax is almost nonexistent!
    Living within your means is definitely the golden rule for EVERYBODY, young AND old although there could be exceptions to the rule if one has a death sentence placed around your neck when told of some incurable disease like myeloma or MSA then one has every right to splurge before one's last breath.
    Never mind leaving inheritances; that is supposed to be incidental not expected because one is supposed to spend one's OWN EARNED money as I did from scratch because my parents came here from Europe as war refugees and I was born in a refugee camp here.
    Anonymous
    9th Sep 2016
    5:48pm
    Old Man, I agree completely with your assessment of OG. But I would add ''totally selfish and self-serving and completely lacking any capacity for empathy or understanding''. Quite nasty, in fact!

    Yes, Rae, we are all paying for those huge handouts to the rich to fund their NOT ''self-funded'' retirement, including those of us who never have drawn and who have no hope of ever drawing anything from the public purse (the folk OG loves to bash, whose taxes built her fat retirement nest egg!).

    Only the most arrogant ASSes would claim the ability to judge who does or doesn't NEED a part OAP, because need is very personal and circumstance-based. But while the greedy rich get handouts they don't need and those who spend up big, gift generously before turning 60, or invest in lavish houses are able to draw pensions, nobody has the right to condemn a battling part pensioner on a tiny income for objecting to being deprived just because they saved aggressively, never expecting investment returns to collapse so badly that they would be forced to put their hands out for a little help.

    The hypocrisy of the selfish is mind-boggling!
    floss
    6th Sep 2016
    3:10pm
    How to make your super last longer easy, tell our stupid B federal Government to keep their hands off it,super I mean.
    Mez
    9th Sep 2016
    11:24am
    Agree wholeheartedly because mine is mostly comprised of my inheritance as my previous super was needed to pay off debts incurred via mortgages, loans, divorce and a lot on my children.

    6th Sep 2016
    4:46pm
    I am still working and super is still accruing but not sure where to put funds when I finish working. I am 68 so will work another year. I find it a stupid situ that I have to pay tax within the fund for the super my employer puts in. My super is small compared to others is only $53,000 where do I invest this when I finally retire?
    Rosret
    6th Sep 2016
    7:29pm
    You won't have to pay any tax on $53K. When you do access your money you will draw down 4% per annum into a deeming account and receive a pension top up. The tax only kicks in when you contribute more than the government set base amount.
    You will need that $53K so I think it would be wise to get some financial advice.
    Mez
    9th Sep 2016
    11:32am
    Read my reply further down for suggestions.
    Old Geezer
    6th Sep 2016
    7:49pm
    The power of money and bullshit.





    I TOLD MY SON, "YOU WILL MARRY THE GIRL I CHOOSE."

    HE SAID, "NO."



    I TOLD HIM, "SHE IS BILL GATES DAUGHTER."

    HE SAID, "YES."



    I CALLED BILL GATES AND SAID, "I WANT YOUR DAUGHTER TO MARRY MY SON,"



    BILL GATES SAID, "NO"



    I TOLD BILL GATES, "MY SON IS THE C.E.O. OF WORLD BANK."



    BILL GATES SAID, "OK"



    I CALLED THE PRESIDENT OF WORLD BANK AND ASKED HIM TO MAKE MY SON THE C.E.O.



    HE SAID, "NO"



    I TOLD HIM, "MY SON IS BILL GATES SON-IN-LAW"



    HE SAID, "OK"



    THIS IS EXACTLY HOW POLITICS WORKS.
    Rae
    7th Sep 2016
    9:27am
    LOL It has always been about who you know and what you know hasn't it?
    Mez
    9th Sep 2016
    11:30am
    It is the Rothschild family that owns the World Bank AND started the banking system as we know it in the Western world.
    However, it is the BIS (Bank of International Statements) that oversees the World Bank and which is based in Basel, Switzerland.
    Our Reserve bank is part of the World Bank.
    Macca
    7th Sep 2016
    12:18am
    I Have said before that until that they stop changing super conditions that the system won't work.You are better off buying property or investing in shares that are fully franked paying your tax and gaining the tax benefits. If you get the old age benefits thats a bonus.My dad when alive said if I get the pension but still paying tax then I'm still in front and helping the country.Never wanted nothing for nothing! It's sad that now honest people have to use the system to survive???Macca
    ex PS
    7th Sep 2016
    12:20pm
    When I retired at 55 I was quite certain that we would have enough to last without relying on any help from the government. After all of the interference and the confusion caused by this government with their illogical changes to Super and the Pension, I have decided to just go with the flow, I will not waste my money but I will not scrimp in order to remain self reliant. If I run out of money I run out of money, I'll just go on the Pension that I will be entitled to and I will feel no worse for doing so. Alternatively I will run down my own funds and apply for a part pension that I will be entitled to, either way, it is a situation caused by an incompetent government trying to fix a problem that did not need fixing.
    Mez
    9th Sep 2016
    11:08am
    I agree with your line of reasoning also your justification
    Anonymous
    9th Sep 2016
    5:17pm
    Agree totally, ex PS. The only problem is that I'm sure the OAP will keep reducing relative to living costs because the stupid incompetent government with their idiotic policies will drive continuing increases in the number of eligible pensioners and the proportion of pension part pensioners are claiming.

    You don't encourage kids to save by depriving them of pocket money if they put it in their money box and giving them more if they spend it on sweets. And you don't encourage people to save for old age by robbing those who saved and rewarding those who didn't. What astonishes me is that we are paying a king's ransom to idiots who can't grasp that simple concept!
    Mez
    9th Sep 2016
    11:05am
    I agree with Old Geezer in that YOU can make your industry super fund work for you by going online and regularly checking the performances of each asset class and change the percentage amount of money invested in each of them according to their gains and/or losses.
    It does help if you do a bit of homework reading beforehand so as to familiarise with what each class is about and its trends in performances and in doing so, one may do better than the experts in the fund's collective pool which I have now and then.
    Doing this is like an indirect way of playing the stock exchange only much safer.
    I check online every fortnight and make the necessary changes sometimes at the beginning of each month after the fund's figures are added to at the end of each month.
    These are facts one learn by calling them and asking lots of questions as well as reading up on it all.
    As a woman, I do not have much in my fund but I do get enough to allow for overseas trips and emergencies and extras besides the Work Bonus whilst I am physically able to as a nurse with osteoarthritis in my back and neck.
    So, if I can do it, so can other women who rent and have not worked in finance!
    Anonymous
    9th Sep 2016
    5:34pm
    ''So, if I can do it, so can other women who rent and have not worked in finance!''

    That's NOT a fair assumption, Mez. People's circumstances and abilities vary dramatically. You are lucky to be able to learn the skills you need to manage your investments. But it makes me very angry that when there is reference to the disadvantaged getting very low returns, arrogant people say they are ''lazy'' and need to ''get their money out of lazy investments''. It's not that simple for people who have been educationally deprived, suffered abuse, suffer certain kinds of ill-health, or have endured crisis, trauma or other hardship that has made them risk averse. Study PTSD, anxiety disorder, etc. These are REAL and very serious illnesses that can be totally disabling. Fear of loss can be utterly disabling, particularly for those who suffered real poverty and struggled hard to accrue savings.

    Many people are able, through whatever stroke of fortune, to rise above past hardship. I did. My partner has endured unbelievable deprivation and abuse, but copes very well, thankfully. But to condemn those who can't cope as well to suffering is cruel. I don't ever want to live in a ''survival of the fittest'' society - but what is really distressing is that in Australia today, it's not just ''survival of the fittest'', we have Robyn Hood in reverse. The bulk of obscene extravagances are to fund handouts to the well-to-do. And we have selfish folk like OG who complain about paying tax to fund pensions to battlers with minimal incomes, but seem to have no issue with fat handouts to wealthy taxpayer-subsidy-funded retirees with huge egos - folk who are wrongfully applauded as ''self-funded'' when in fact they are accrue wealth by stealing from and exploiting people far harder working and more deserving than them, but just not as lucky in the lottery of birth.

    We need a FAIR tax and welfare system - one that properly recognizes that those who exploit the nation's resources to accrue wealth should pay accordingly, and the exploited battlers DESERVE a very comfortable taxpayer-funded retirement, paid for by the well-heeled exploiters.
    Mez
    9th Sep 2016
    6:53pm
    Rainey.....you are jumping into incorrect conclusions.
    I suggest that you read more carefully in future because I AM ONE OF THOSE PEOPLE WHO WORKED FROM SCRATCH and yes I am very familiar with all those conditions as I too have gone through them and am a nurse as well as a secondary school teacher!
    On the other hand, you sound like one of those old fogeys who have held back women's promotions through negative criticisms instead of positive praises.
    Mez
    9th Sep 2016
    6:59pm
    Also, I have NOT condemned anyone nor have I cruelly criticised anyone in my comment but YOU HAVE AND YOU DO NOT APPEAR TO HAVE THE INSIGHT nor clarity of your cognitive processes to realise unfortunately because your topics are are very jumbled and some of it very irrelevant.
    Mez
    9th Sep 2016
    7:07pm
    My parents were very poor and not born into any lottery of life as you stated; they came as W.W.2 political refugees from Europe and I was born in a refugee camp here.
    And no, I do not have self funded super as it is not financially viable considering the current economic climate.
    Next time, I would appreciate it if you think things through before you act!