Retirees could unlock an extra $25K a year by making better use of their super 

Deanne Stewart

Australians are on track to retire with significantly larger super balances than previous generations, but many risk missing out on the retirement they’ve worked hard for if they’re too afraid to spend their savings.

As the Intergenerational Report projects, median super balances will more than double from around $200,000 in 2024 to almost $450,000 in the next decade^[1], new modelling from Aware Super shows retirees could be spending an extra $24,700 in their first year of retirement.^[2]

Aware Super’s modelling found a couple retiring in 2036 with median super balances and owning their home outright could increase their first-year retirement income from $63,700 to $88,400 a year (in today’s dollars) by adopting a “maximised to last” retirement income strategy.

This strategy shows you how much you can comfortably spend each year while giving you confidence your money will last throughout retirement.

Aware Super CEO Deanne Stewart said the modelling showed how understanding how much you can spend and how long your super could last would support better retirement outcomes for Australians.

“For decades, Australians have been taught the importance of saving, now we need to help them feel confident to spend those savings in a way that supports the retirement they worked so hard for,” Ms Stewart said.

“That means focusing on providing our members with the right guidance, tools and solutions to use those savings well, throughout their retired years.”

Ms Stewart said “fear of running out” of money or FORO was still a major impediment to Australians enjoying their retirement, with Aware Super data showing almost half of new retirees planning to draw down only the legislated minimum income.

“Digital tools like Aware Super’s Retirement Manager help our members create a personalised income and spending plan, and are already giving them the confidence to draw down more of their savings in retirement without the fear of running out,” Ms Stewart said.

While 54 per cent of members who opened an Aware Super retirement income account typically chose to draw down more than the minimum income amount, this increased to 63 per cent for those members who used Retirement Manager.

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Notes:
[1] $450,000 balance was deflated to today’s dollars using CPI at 2.5% p.a. over 10 years
[2] Shown in today’s dollars, deflated using CPI at 2.5% p.a. $63,700 is based on minimum drawdown rates and $88,400 is based on “Maximised to last” drawdown strategy where retirement account is projected to deplete at age 95. Projection incorporates Age Pension (September 2026 rates) based on a homeowner couple, with the member and their partner both aged 67, the partner assumed to hold the same Retirement Income account balance as the member and combined personal assets of $50,000. Percentage admin fee is 0.16% and Fixed fee is assumed to be $52 p.a., increasing in line with assumed price inflation of 2.5% p.a. Investment returns are assumed to be CPI + 3.25% p.a., with CPI assumed to be 2.5% p.a. This example is for illustrative purposes only and is not intended to provide a guarantee on outcome. It is a broad illustration of the steps a member could take, but the actions appropriate for an individual will vary depending on their personal circumstances. Based on current regulatory requirements and laws, including tax rates, which may be subject to change. Retirement income and investment earnings are not guaranteed. Payments will cease once the account balance is depleted.