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It's usually possible to take your superannuation as a lump sum payment.
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How a super lump sum works
Depending on your fund's rules, you may be able to withdraw some or all of your superannuation (super) as a lump sum. If so, you can take all your super in one go, or as multiple lump sum payments over time.
Common uses for a super lump sum include:
- clearing debt (for example, paying off your mortgage)
- investing outside of super for your retirement
- paying for something you couldn't previously afford (such as home improvements)
Check when you can access super
You can get your super when you turn 60 and retire, or if you meet a condition of release. There are some situations where you can access some of your super early.
Check the Age Pension impact
What you do with your lump sum after you withdraw it from super may affect your eligibility for the Age Pension.
To find out how a lump sum could affect your entitlements, talk to a Services Australia Financial Information Service (FIS) officer.
Check tax and get advice
Get financial advice from your super fund or a licensed financial adviser before withdrawing your super.
The Australian Taxation Office (ATO) website has information about how your super payout is taxed.
Advantages and disadvantages of taking a lump sum
Consider the pros and cons to decide if taking a super lump sum is right for you.
Potential advantages
If you take a lump sum, you can:
- pay low or no tax on the lump sum if you are 60 or over
- reduce or clear debts which can save you money in the long run
- treat yourself to something that wasn't affordable before, such as home renovations, travel or a car
- withdraw money as you need it, in several lump sums. This could reduce the tax you pay and maximise your Age Pension, depending on your age
- invest the lump sum outside super
- have access to your money for your short to medium-term needs
Potential disadvantages
However, you may:
- pay more income tax, if you invest the lump sum and the investment provides an income
- pay capital gains tax, if you invest the lump sum and later sell the investment for a higher price
- have a lower future income if you spend a portion of your super now
- be tempted to splurge or overspend so your money runs out faster
If you invest a super lump sum
If you decide to invest a super lump sum, you need to consider your financial goals, investing time frame and risk tolerance.
See how to invest to explore your options.
Combine a lump sum with retirement income
You don't have to take an all or nothing approach with your retirement income.
Taking some of your super as a lump sum could give you access to money for planned activities. For example, paying for a holiday or medical expenses.
You could keep the rest in a retirement income stream, to give you a regular payment you can rely on. Income stream options include an account-based pension or annuity.
Alisha uses a mix of options
Alisha is 67 and is retiring with $330,000 in super. She decides to take out a $40,000 lump sum to pay for home improvements.
She transfers the rest of her super to an account-based pension. By investing $290,000 in an account-based pension, Alisha will receive regular income payments on top of the Age Pension.
She still has the flexibility to withdraw another lump sum in the future if she needs to.