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Home Super & retirement Retirement Planning for retirement

Planning for retirement

Retirement might be three or 30 years away, but if you have big ideas of how you'll spend your time, we can help you understand how much money you need & how you can make a difference now.

Planning for retirement is a big topic that covers the key decisions you need to make when looking ahead to the lifestyle that you hope to have after you finish working. One of the first steps in making a successful transition to retirement is to have a plan, or at least start thinking about a plan.

When can I access my super?

You can retire, or semi-retire, and draw on your super once you have reached your preservation age. Preservation age ranges from 55 to 60 years depending on your date of birth as shown below: 

Date of birthPreservation age
Before 1 July 196055
1 July 1960 to 30 June 196156
1 July 1961 to 30 June 196257
1 July 1962 to 30 June 196358
1 July 1963 to 30 June 196459
1 July 1964 and onwards60

Super and the age pension

Many people assume that they can rely on the Age Pension when they retire. However, as part of your financial plan, it’s crucial to know if you qualify for it and how much you could receive.

To find out more about eligibility, and what you might qualify for, you can get more detailed information from the Department of Human Services website.

From 1 July 2017, the qualifying age for the Age Pension increased from 65 years to 65 years and six months. The qualifying age will increase by six months every two years, reaching 67 years by 1 July 2023. This is different to your superannuation preservation age. 

Your eligibility for the Age Pension may be impacted by how you access your super – whether as a lump sum or via an income stream.

How much do I need to retire?

Lifestyle is a very personal thing —luxury living for one person is a modest existence for someone else.  If you want a comfortable life in retirement, now is a good time to start thinking about what life will look like for you.

The purpose of this information is to give you an idea of the income you might expect in retirement and an overview of your most likely major expenses. This page uses information published in the ASFA Retirement Standard (June 2017 quarter), a quarterly benchmark of the annual budget needed by Australians to fund different standards of living in their retired years.

What is considered a modest, and a comfortable retirement lifestyle for retirees?

A modest retirement lifestyle is considered better than the Age Pension, but still only able to afford fairly basic activities. 

A comfortable retirement lifestyle enables an older, healthy retiree to be involved in a broad range of leisure and recreational activities and to have a good standard of living through the purchase of such things as; household goods, private health insurance, a reasonable car, good clothes, a range of electronic equipment, and domestic and occasionally international holiday travel.

Both budgets assume that the retirees own their own home outright and are relatively healthy.

Budgets for various households & living standards for those aged 65 - 85 (June quarter 2019, national)


Annual income in retirement$27,814$40,054$43,601$61,522
Super balance required at retirement$70,000$70,000$545,000$640,000

The figures in each case assume that the retiree(s) own their own home and relate to expenditure by the household. This can be greater than household income after income tax where there is a draw-down on capital over the period of retirement. The figures are in today's dollars using 2.75 AWE as a deflator and an assumed investment earning rate of 6 per cent. 

* The lump sums needed for a modest retirement lifestyle are relatively low due to the fact that the base rate of the Age Pension, plus various pension supplements, is sufficient to meet the expenditure required at this budget level.

More information on the calculation of Retirement Standards is available here.

Retirement forecaster

Our Retirement Forecaster is a helpful tool which can help you calculate how much super you might have in retirement based on your wage and savings, and how long it could last for. 

Transition to Retirement strategies

You may be able to pay less tax, get more super and keep the same take-home pay.
If you are still working when you reach ‘preservation’ age (the age when you can generally first access your super), consider using a ‘transition to retirement’ strategy to reduce your income tax and increase your super, while maintaining the same take-home pay. 

For those aged 60 or older, the amount you can save in tax and add to your super may be substantial. 

What is a ‘transition to retirement’ strategy? 

The strategy is simple: to receive a portion of your income from your superannuation, and to salary sacrifice back into super the before-tax equivalent of the income that you draw from your superannuation. This can save you money in two ways – you can pay less tax on money you pay into super, and if you are over 60, you pay no tax on payments you receive from your super. The tax that you are saving can then stay in your super as additional savings. The amount you can receive from your super using this strategy is restricted by an amount the Federal Government lets you withdraw from your super, which is up to 10% of your total super account balance per year.

Starting a ‘transition to retirement’ strategy 

  1. Withdraw an income from your super via a legalsuper Transition To Retirement Pension.
  2. Pay the before-tax equivalent of your Transition to Retirement Pension income back into your super via a salary sacrificing arrangement. (Salary sacrificing can be set up through your employer.)

More details on TTR accounts and strategies

Estate planning

Future planning goes beyond retirement. 

An estate plan includes your will and other documents that govern how you will be cared for, medically and financially, if you become unable to make your own decisions in the future. 

You should ask a legal professional to prepare your estate plan. A good estate plan does two things: 

  • it will minimise the tax paid by your heirs, and
  • it can offer peace of mind to you and your family. 

More on beneficiaries & estate planning

Downsizing and super

Many Australian retirees find they want a smaller home, or a home more suited to their empty-nest requirements. For some Australians, selling the family home can be great way to release built-up equity to pay for retirement living expenses or in-home support that will allow them to stay at home longer.

Homeowners aged 65 years or over can downsize their family home and invest the surplus into their super account. 

Since 1 July 2018, Australians aged 65 years or older can make a non-concessional (after-tax) contribution into their super account of up to $300,000 from the sale proceeds of their family home if they have owned the property for at least 10 years. The legislated rules indicate that the property sold must be the person’s home (main residence and be eligible for the main residence exemption for capital gains tax).

Couples will be able to contribute up to $300,000 each, giving a total contribution per couple of up to $600,000.

Aged care

Anyone considering moving into an aged care facility should seek advice about the implications of combining the downsizing policy and moving into an aged care facility.

Downsizing and super

Contact us to learn more about downsizing and super.

Transfer Balance Cap

Understanding the transfer balance cap

The transfer balance cap applies from 1 July 2017.  The cap is a limit on the total amount of money that can be transferred in to what is known as the 'retirement phase' of superannuation. This refers to accounts (such as the legalsuper Pension) which receive the benefit of 0% tax on investment earnings.  You can continue to make multiple transfers into the retirement phase as long as you remain below the cap. All your account balances (in the retirement phase) contribute towards the cap. 

Note: Transition to Retirement income streams are not assessed against the transfer balance cap until the account holder reaches age 65, or notifies the fund that they have met the conditions of release. 

Exceeding the cap

You will need to ensure the balances of your income stream accounts do not exceed the transfer balance cap. Any excess amounts will need to be transferred back to an accumulation account or withdrawn from super entirely (where eligible). Minimum withdrawals are only required from your income stream account. If this amount does not meet your cash flow needs, you will need to consider how this income will be supplemented – this could be from sources outside super, from your accumulation balance or from increasing your withdrawals from an income stream account. Different options may impact on tax outcomes for you and your estate planning.


The transfer balance cap started at $1.6 million, this will be indexed periodically in $100,000 increments in line with CPI. The amount of indexation you will be entitled to will be calculated proportionally based on the amount of your available cap space. If, at any time, you meet or exceed your cap, you will not be entitled to indexation.

Frequently Asked Questions

For more information about the Transfer Balance Cap, read our FAQ

Self-Managed Super Funds - complexity, compliance and costs

What is a Self-Managed Super Fund (SMSF)?

An SMSF is a private superannuation fund, regulated by the Australian Taxation Office (ATO), that you manage yourself. An SMSF can have up to four members and all members must be trustees (or directors, if there is a corporate trustee) and are responsible for decisions made about the fund and compliance with relevant laws. Set up costs and annual running expenses can be high, so it's most cost-effective if you have a large balance. SMSFs operate under similar rules and restrictions as ordinary super funds.

Running your own super fund is a major commitment.
Managing your own super comes with a lot of responsibility and involves significant time and effort. An SMSF might be suitable if you have a lot of super and extensive knowledge of financial and legal matters. You must understand your legal responsibilities and the investments you make because, even if you employ professionals to help you, you still hold responsibility for the fund. 

 Some pros and cons of SMSFs

Means to hold your business premises
Some business owners can hold their business premises in their SMSFs for tax-effectiveness, asset-protection, succession planning (for family enterprises) and security of tenancy.
Even when using a professional SMSF administration service, operating your own SMSF is quite time-consuming.
Ability to quickly buy or sell assetsNeed for investment knowledge
Investment control
You have control over how and where your money is invested.
Penalties for non-compliance
The ATO regulates SMSFs. A non-complying fund faces penalties which could destroy much of the retirement savings of every member of an SMSF.  Trustees can face civil and criminal sanctions for serious breaches.
Invest differently
SMSFs can hold direct property, unlisted shares, artwork and other exotic or not-so-common investments.
Risk of poor diversity
Some SMSFs are established specifically to buy a single valuable asset such as business real estate. This means the fate of the fund depends on the performance of that asset.
Tax strategies
SMSFs offer the potential to use tax saving strategies such as managing CGT.
High costs for small balances
Before setting up an SMSF, members should compare its likely costs with those of an industry super fund.
Buy assets with your family you could not otherwise afford
The establishment of an SMSF allows up to four people – commonly family members – to pool their super savings to buy costly assets, such as direct property, that may otherwise be beyond their reach.
Risk of a dominant trustee & key person risk
Many SMSFs have one engaged/dominant trustee. This can mean investment decisions may be biased, passive members may not safeguard their interests, and they may be signing decisions they don’t understand, while retaining liability. If a dominant trustee passes away, the passive trustee may not know how to manage the fund.
Estate planning
SMSFs can give you certainty & peace of mind for your estate planning.
Tight control over investment practices
Although an SMSF can provide members with more investment freedom than large funds – much more in certain circumstances – there are stringent restrictions on their investments.

Aging members
There is a high risk that SMSF members become too frail or ill to adequately look after their SMSFs, particularly after their spouses die.

Not Eligible for Government Compensation Schemes
SMSFs are not eligible for compensation under superannuation laws if they suffer loss as a result of fraud or theft. Additional insurance should be factored in to costs.

Difficult and expensive to close
Once you set up an SMSF it can be complex and costly to undo your decision. Read more on getting out of an SMSF.

Have you considered other self-managed super options?

Many professionally managed super funds, including legalsuper, have DIY investment options which let you choose specific assets, such as shares, exchange traded funds and term deposits. This gives you some control over your investments without the legal and administrative responsibilities of running an SMSF.

Read more about our self–managed option, the Direct Investment option (DIO).

This is general information only and should not be considered to be personal advice. Members are encouraged to obtain personal advice from a licensed financial planner or other adviser before making decisions based on matters included on this website.