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Make your money last in retirement

Thoughtful planning can make your savings go further

Page reading time: 5 minutes

Retirement can bring more freedom to enjoy life. But it is important to plan and make informed decisions to help make your money last the distance.

There is no one path that is right for everyone. People move in and out of work and savings levels vary. For those with less super, the Age Pension can provide an important safety net.

Thoughtful planning can make sure you feel confident that your money and, if you need it, government support will provide you security for as long as you need.

Decide what to do with your super

For many Australians, super is their main source of income in retirement. How and when you choose to access and use your super can make a big difference to how long it lasts.

There are different ways to draw down your super:

The government sets minimum drawdown rates if you choose to draw down your super through an account-based pension or transition to retirement pension. But you may decide that what you need to live comfortably is higher than the minimum recommended.

Spend some time understanding your needs and options to make an informed decision about what to do with your super.

Carolyn withdraws more from super

Carolyn has been retired for 5 years. When she retired, she moved her super balance into an account-based pension, and withdraws the minimum amount each year. But she’s starting to find it hard to cover her regular expenses. Using Moneysmart’s retirement planner, she works out that she can safely lift her overall drawdown rate and be in a good position to meet future expenses.

Make a budget

A budget will give you a plan for how you will spend your money in retirement.

Creating a budget helps you understand where your money is going and how much you need. It is the foundation of ensuring your money lasts.

Part of having a budget is ensuring you have some money set aside to cover urgent or unexpected costs. Having an emergency fund is important even if you can rely on a regular income from your super or the Age Pension.

Find out more about estimating how much retirement will cost.

Use the budget planner

Create a budget that fits your lifestyle

Claim government entitlements 

Government entitlements can help boost your income and reduce your costs in retirement.

You may be eligible for government benefits such as:

See Age Pension and government benefits.

Senior concession cards can give you discounts on things like public transport, prescriptions, health care, utility bills and insurance.

See concession cards for information on:

For money-saving tips, see simple ways to save money.

Keep working or return to work

Earning an income from work can help your retirement savings last longer.

It can reduce your need to draw down on your super and keep you engaged with the community.

If you want to keep working, either full- or part-time, consider the following:

Manage your health

Good health makes a big difference to your enjoyment and costs in retirement.

While illness can affect anyone, research shows maintaining your physical, mental and social wellbeing helps you get more out of life – whatever health challenges you may face.

Find out more about managing your health costs.

Downsizing and accessing home equity

If you own a home, it is likely to be one of your largest assets. For some retirees, downsizing or moving to a more affordable area is a way to free up your money. Others choose to rent out a room for extra income.

These are big decisions, and it’s important to weigh up the pros and cons.

Before going ahead, check the tax impact and whether it will affect your government benefits.

See downsizing in retirement and home equity release.

Help others without risking your finances

Helping family and friends can be rewarding but make sure your own financial stability isn’t at risk.

Before offering support, think about:

Be clear if the help you are offering is a loan or a gift. If you lend to your family or friends, consider preparing a written agreement setting out the term and repayment amounts. See more on relationships and money.

Be very careful about guaranteeing a loan for a friend or family member, and ensure you understand the risks involved.

Invest outside super

For most retirees, income streams from super, such as an account-based pension, are tax-free, making it one of the most effective ways to fund your retirement.

But if you have the means, investing outside super gives you access to more investment options and allows you to:

Investing always comes with the risk of losing money. Investments can fall in value or not perform how you expected. Some investments are riskier than others.

Learn more about developing an investment plan.

If you plan to leave money behind, you can use your will to better control what happens to your investments outside of super after you die.

Protect your assets

Maintaining an income in retirement means staying in control of your money.

That includes protecting your money from people you know – as well as from people you don’t know, like scammers.

Find out more about protecting your money from financial abuse and scams.

Consider also if you have the right insurances, such as home insurance or car insurance, and understand their coverage and cost.

Get help if you need it

If you find managing money in retirement confusing or are worried in any way, there are services available to help:

Key actions you can take