Question 1

My husband and I are both 65. I no longer work but he still wants to work until age 67, when we can both get the age pension.

Our combined super is $500,000, so my question is how much would we need to live on for the next two years before we qualify for age pension, if he was to give up work now instead of continuing?

We would be drawing from our super as we don’t have any savings for the next two years. Then whatever is left from our super when we get to 67, we would have to use it to top up our pension.

The question is how much would we have to take from our super every year to last us for 20 years.

Super funds and the government’s Moneysmart website have some great calculators that can provide some high-level modelling on this.

If you need detailed modelling and/or advice, then it’s best to speak to a financial adviser.

However, according to Moneysmart’s retirement planner, you could live off about $75,000 a year (indexed to inflation), with your money running out at age 92.

This would mean drawing $75,000 out of your super each year for the first two years (say $37,500 each). After that the age pension would kick in and you could reduce your super drawdowns.

You might like

In Depth

One Nation surfs wave as Labor struggles with budget backwash

In Depth

Are budget changes really an ‘assault on aspiration’?

For example, in year three, at age 67, you may receive nearly $50,000 in combined age pension payments. You then only need to draw down $25,000 from your combined supers.

As you draw down on your super each year, you then may receive higher age pension payments as you age.

This is just a guide, and you would need to review regularly.

A good place to start is your super fund. They can normally provide you with a retirement health check (or similar) and provide some modelling.

You might like

In Depth

One Nation surfs wave as Labor struggles with budget backwash

In Depth

Are budget changes really an ‘assault on aspiration’?

Question 2 

My husband and I are pensioners. We have money in term deposits and receive only part pensions because of the proceeds from these. 

Would it be sensible to put some of the money into super and draw down an income from it, as well as retaining some in term deposits? Would this mix likely benefit us?

First, from an age pensioner perspective, this will make no difference.

Once you reach age pension age, all superannuation, term deposits, bank accounts etc, are counted the same way.

Under the assets test, the account balance is used. Under the income test, the actual income earned or received is NOT used, rather they are “deemed” (assumed) to earn a certain interest rate.

For tax, it would make a difference only if you were paying income tax. Interest earned from term deposits and age pension payments are taxable.

However, you end up paying tax only if your taxable income is above about $31,000 (age pensioner, part of a couple for 2025/26).

If you are in this position, then contributing funds to super, if you are under 75, could improve your tax position as superannuation payments are then tax free.

Finally, whether to keep money in term deposits or super is a personal decision.

Superannuation normally provides a large selection of investments and some people enjoy having all their retirement money together, paying them a regular payment.

Others like the traditional term deposit that pays them guaranteed interest.

Question 3 

Hello, I have just retired at the age of 72 and have super valued at around $1.6 milion.

If I transfer the whole amount to a pension phase, 5 per cent withdrawals will be more than I need to live on as I have another source of income.

Would the option to leave part of my super in an accumulation account be reasonable do at this stage, even if I have to pay tax on earnings? Thank you.

Yes, it could be a reasonable option.

However, it’s worth comparing that to what would happen if the unused funds paid out from your pension built up in high-yielding bank accounts.

Now that you have retired, will you have significant investment (and any other income) that creates an income tax liability?

For 2025/26, a single “senior” Australian can earn $35,813 before paying any income tax (superannuation payments are not counted in this figure).

Depending on your situation, you could look at the following:

• Move of the bulk of your funds in a pension account;
• Keep a small amount in a superannuation account;
• Have investments in your personal name, knowing that income up to $35,813 is tax free;
• Up until age 75 you can re-contribute excess income from pension back into super.

On a separate note – from this week I am taking an extended break and will be back early in the new financial year. Thanks for all your support.

Craig

Craig Sankey is a licensed financial adviser and head of Technical Services and Advice Enablement at Industry Fund Services.

Disclaimer: The responses provided are general in nature, and while they are prompted by the questions asked, they have been prepared without taking into consideration all your objectives, financial situation or needs.

Before relying on any of the information, please ensure that you consider the appropriateness of the information for your objectives, financial situation or needs. To the extent that it is permitted by law, no responsibility for errors or omissions is accepted by IFS and its representatives.