What’s involved in turning your super into income?
Written and accurate as at: Aug 12, 2026 Current Stats & Facts
Once you reach retirement, the super you've spent decades building stops being just a number on a statement. It's now the money that will help pay for holidays, hobbies and all the other moments that will make this next stage of life worthwhile.
But retirees will generally have a few options when it comes to turning their super into income, and each one comes with its own benefits and trade-offs. We'll take a closer look at the main ones below.
Account-Based pension
An Account-Based Pension is one of the most common ways retirees access their super. Once you've reached your preservation age and met a condition of release, you can transfer some or all of your super into a pension account. You'll then receive regular payments while the remainder of your balance stays invested.
Many people like the sense of familiarity that comes with this arrangement. You've spent years receiving regular income from your employer and an Account-Based Pension can create a similar rhythm in retirement.
The other attractive element is that your money doesn't stop working just because you have. Because the assets inside your pension account remain invested, they have the potential to keep growing over time.
Most funds let you decide how much to withdraw each year, provided you meet the minimum drawdown requirements. The flexibility can be useful because retirement spending isn't always consistent. You might have higher expenses in the early years as you’re generally still active, and lower expenses as you age and embrace a quieter lifestyle.
The trade-offs
- Withdraw too much and you may find yourself running low on savings later in life.
- Withdraw too little and you might miss opportunities to enjoy the retirement you've worked so hard to create.
- Since your balance remains invested, it can go up or down in line with market performance.
Transition to Retirement income stream
Not everyone wants to move straight from full-time work to full-time retirement. For some people, the ideal transition happens gradually, with a reduction in working days giving way to a better work-life balance. If that appeals to you, a Transition to Retirement (TTR) income stream could help make that possible.
Once you've reached your preservation age, you may be able to access part of your super while continuing to work. The income from your super can help supplement your reduced salary and provide greater flexibility as you adjust to a different routine.
Setting up a TTR strategy usually involves moving part of your balance into a separate account from which regular payments are made. The rest of your balance will remain in your existing super account, where your employer will continue to make contributions.
The trade-offs
- The earlier you access your savings to draw down an income, the sooner your savings may run out.
- Generally, you can only withdraw up to 10% of your TTR account balance each financial year. Depending on your circumstances, this may not be enough to support a significant reduction in working hours.
- Because you'll generally maintain both your existing super account and a separate TTR account, you may end up paying additional administration and investment fees.
Annuities
No one can predict what investment markets will do over the next decade, how long they'll live or what unexpected expenses might pop up. Some retirees prefer to reduce a little of that uncertainty by including a lifetime income stream, such as annuity, in their retirement plan.
An annuity allows you to exchange a lump sum for a series of regular payments. Depending on the type of product you choose, those payments may continue for a fixed period or for the rest of your life. This can be particularly reassuring during periods of market volatility, when the value of other investments may be falling.
The trade-offs
- May offer less flexibility compared to an Account-Based Pension.
- Access to your capital may be limited and features can vary considerably between providers, so it's worth understanding exactly how the product works before making a decision
The bottom line
Spending habits change as our priorities and circumstances evolve over time. That's one reason many Australians choose to combine different retirement income strategies.
For example, some people use an Account-Based Pension to provide flexibility while using an annuity to help cover essential expenses. Others rely on the government Age Pension or opt to withdraw their super as a lump sum and find other ways to generate income with it.
Whatever approach you take, the aim remains the same: creating an income stream that supports the lifestyle you've worked so hard to build. As with any big financial change, every individual circumstance is different and we recommend getting advice specific to your situation.
