The Retirement Journey: Accumulation to Pension Phase

Your super journey has two main phases: accumulation (while you're working and contributing) and pension/retirement phase (when you start drawing down your savings). Transition between them requires careful planning.

Transition to Retirement (TTR)

Once you reach preservation age (55–60 depending on birth year), you can start a Transition to Retirement Income Stream (TTR) without retiring:

Draw up to 10% of your super balance per year as regular income
Continue working — full-time, part-time, or casually
Earnings on TTR assets are tax-free if you're 60+
Can be combined with salary sacrifice (you can draw a TTR income and salary sacrifice at the same time)

Account-Based Pensions (Retirement Phase)

When you permanently retire and meet a condition of release, you can start an account-based pension (also called a super income stream):

Transfer your super from accumulation to pension phase
Set a minimum drawdown rate (2%–14% depending on age)
No maximum drawdown limit (unlike TTR)
All investment earnings on pension assets are tax-free
Withdrawals are tax-free for those aged 60+

Minimum Drawdown Rates (2025-26 and 2026-27)

Under 65: 4%
65–74: 5%
75–79: 6%
80–84: 7%
85–89: 9%
90–94: 11%
95+: 14%

Note: Temporary 50% reduction in minimum drawdown rates was in place during COVID but has since returned to standard rates.

Transfer Balance Cap

The Transfer Balance Cap (TBC) limits how much you can move from accumulation to pension phase:

General cap 2026-27: $2.1 million per person (it was $2.0 million in 2025-26)
If your total super is above the cap, the excess must stay in accumulation phase (taxed at 15%)
Indexed in $100,000 increments with CPI

The Age Pension

The Age Pension provides a safety net for retirees. As of 2025:

Full pension (single): ~$1,144 per fortnight (including supplements)
Full pension (couple each): ~$862 per fortnight
Income test: Pension reduces by $0.50 per dollar (single) or $0.25 per dollar (couple) of income over thresholds
Assets test: Pension reduces by a set rate per $1,000 of assets over thresholds
Age Pension age: 67 (for everyone born after 1 Jan 1957)

Retirement Planning Strategies

The ASFA Retirement Standard

The Association of Superannuation Funds of Australia (ASFA) estimates retirees need (per year, as of 2025):

Modest retirement (single): ~$32,600
Modest retirement (couple): ~$47,200
Comfortable retirement (single): ~$51,600
Comfortable retirement (couple): ~$73,300

Key Strategies

Maximise concessional contributions in the years before retirement (use carry-forward if eligible)
Consider a TTR strategy — reduce work hours while supplementing income from super
Plan pension phase transfer — keep some super in accumulation for flexibility if you're under the TBC
Manage Age Pension eligibility — strategic gifting, downsizing, or rebalancing assets
Downsizer contributions — add up to $300k per person from home sale proceeds at 55+
Review insurance needs — you may no longer need TPD or income protection in retirement

Common Mistakes to Avoid

Taking super as a lump sum and spending it too quickly
Not factoring in inflation (retirement may last 30+ years)
Starting a TTR without a strategy (wasting tax-free growth potential)
Forgetting the Age Pension means-test interaction
Having multiple small super accounts paying duplicate fees

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How Much You Need: ASFA Retirement Standard 2026

The Association of Superannuation Funds of Australia (ASFA) publishes the country's benchmark for retirement spending. For the March quarter 2026, a comfortable retirement costs about $55,923 a year for a single homeowner and $78,566 for a couple; a modest retirement costs about $36,434 for a single and $52,473 for a couple. To fund a comfortable retirement from age 67, ASFA estimates you need a lump sum of around $630,000 for a single person and $730,000 for a couple — assuming you also receive a part Age Pension, since these budgets assume some government support.

The Age Pension itself pays $1,200.90 per fortnight for a single person (from 20 March 2026), which is about $31,223 a year — close to the modest budget for a single homeowner. That is the key insight for planning: the Age Pension covers a modest lifestyle, and your super is what buys comfort on top of it.

Action Plan: Building Your Retirement Strategy

Estimate your annual retirement spending using the ASFA budgets as a guide, then subtract the Age Pension you expect to receive.
Calculate the gap and work backwards to the super balance you need — every $10,000 of income gap needs roughly $250,000–$300,000 of super, depending on your drawdown rate.
Use catch-up concessional contributions (if your TSB is under $500,000) to close the gap tax-effectively before retirement.
Plan the move to pension phase — stay under the $2.1 million transfer balance cap so the maximum amount enjoys tax-free earnings.
Review your plan with a licensed financial adviser at least two years before retirement — timing around the Age Pension means tests can be worth tens of thousands.