Retirement income account or bank account?

When you retire and want to access your super, you may be thinking of transferring it to a bank account. After all, you’ve done this your whole working life. But that’s not your only option.

First Super is not only a home for your retirement savings to grow, but we also offer a Retirement Income account. Also known as an allocated pension, income stream or account-based pension, our Retirement Income account can give you regular income payments, while the rest stays invested.

Here we outline the pros and cons of Retirement Income and bank accounts as options for accessing your money in retirement.

Type of account	Retirement Income account	Bank account
Pros	Receive regular, flexible income payments. You choose when you get paid. You can also withdraw additional amounts whenever you like on top of regular payments.   Your super continues to grow. The money you don’t withdraw stays invested, helping your retirement savings to last longer. And First Super has a track record of strong, long-term returns. Our Balanced Retirement option returned 9.71% in the 2023/24 financial year.1   Tax benefits. Pay no tax on your income payments or investment returns if you’re 60 or older.	Your balance will remain steady. It will only change if you spend money or earn interest.   Can be a good option if you want immediate access to all your money or have debts to pay off.   You can combine your super with other money in a bank account. It’s a familiar option.
Cons	You must transfer a minimum $10,000 to open an account.   There’s a minimum amount you must withdraw each year. But there’s no maximum limit for withdrawals.   You cannot contribute more super to your Retirement Income account. But you can add more money to a super (accumulation) account. Our Financial Advisers2 can help you with this strategy.   Investment returns aren’t guaranteed. Your balance may fluctuate as markets change. But we have a number of different investment options to consider, and our Financial Advisers2 can help you choose an option to suit your circumstances and risk appetite.	Your savings may not grow over time or keep up with the rate of inflation. This may mean you run out of money earlier than planned.   Once you take a lump sum out of your super, it is no longer considered to be super. If you invest the money, earnings on those investments are not taxed as super and may need to be declared in your tax return.   Managing a lump sum can be overwhelming.

Things to consider

Your retirement savings need to last potentially 20 or 30 years, so when thinking about managing your money in retirement it’s important to take a long-term view.

Our Financial Advice team can help you prepare for retirement with a Retirement Health Check at no additional cost for First Super members and their partners.³

Disclaimer

¹ Past returns are not an indicator of future returns.

² First Super financial planners are authorised representatives of Industry Fund Services Limited (ABN 54 007 016 195, AFSL 232514).

³ We charge a fee for advice outside of your First Super account (personal advice), but we’ll tell you upfront.

Issued by First Super Pty Limited (ABN 42 053 498 472, AFSL 223988) as Trustee of First Super (ABN 56 286 625 181). This article contains general advice which has been prepared without taking into account your objectives, financial situation or needs. You should consider whether the advice is appropriate for you and read the Product Disclosure Statement (PDS) before making any investment decisions. To obtain a copy of the PDS or Target Market Determination, please contact First Super on 1300 360 988 or visit firstsuper.com.au/pds.

Performance figures are correct as of 30 June 2024.