Income options in retirement

There are a number of income options available to you when you reach retirement.  It is important that you know what your options are and start to plan for your retirement.

Pensions in super

An allocated pension or account based pension is an income stream that you receive when you transfer your superannuation account to a pension account when you reach your preservation age and retire.

Allocated pensions are flexible – you can generally choose how your money is invested, the frequency of your payments and how much income you receive (the income you receive is subject to an aged based minimum annual payment).

Additional points on allocated pensions:

  • Income payments from an allocated pension are tax free if you are over 60.
  • Earnings on investments in an allocated pension are tax free.
  • You can use an allocated pension to supplement the government Age Pension if eligible.
  • Investments are market linked and will fluctuate over time.
  • Your savings may not last for your lifetime. Therefore, it’s important to understand how long your income payments will need to last during retirement.
  • There is a lifetime limit on the amount you can transfer into a pension account.

More information on investing in an allocated pension, including the pros and cons can be found on the moneysmart website.

Additionally, if you have reached your preservation age and you are still working, you may be able to transfer some of your superannuation to open a ‘transition to retirement’ (TTR) pension account.  This can allow you to access some of your superannuation while you keep working.

More information on investing in a transition to retirement pension, including the pros and cons can be found on the moneysmart website.


An annuity can provide you with a guaranteed income stream for either a fixed term or for life.

If you have reached your preservation age and met a condition of release, you can use your superannuation money to purchase an annuity.  In this situation, the regular income payments are tax free.

The income that you receive from an annuity is set when you buy the annuity and does not change over time.  For an extra fee, you can elect to have the annuity income indexed to inflation.  The payment frequency of your annuity income is flexible, with the ability to choose monthly, quarterly, half yearly or annually.

An annuity forms part of the calculation for the income and assets test to determine your eligibility for the Age Pension.

More information on investing in annuities, including the pros and cons can be found on the moneysmart website.

Age Pension

This is a government provided income stream that you can access if you meet the eligibility criteria.

To be eligible for the Age Pension, you must:

  • Be age 67 or over depending on when you were born
  • Be an Australian resident, and have lived in Australia for at least 10 years
  • Meet the income and assets test

The proportion of the population aged 65 and over receiving the Age Pension was 58% in March 2023[1].  Whilst this number has been declining in recent years, there is still a majority of Australians who receive government support in retirement.

The level of Age Pension that you receive depends on your assets and income test and whether you are single or a couple:

SingleCouple combined
Maximum Basic Rate (per fortnight)$1,002.50$1,511.40


The Age Pension payments are indexed twice a year in March and September.

The Age Pension can be received in conjunction with an income stream from your superannuation fund.

More information on the Age Pension can be found on the moneysmart website.

Income from investments

You can also receive an income in retirement from your personal savings and assets such as cash, shares or property.

Investing in shares can be simple and cost effective, but the price of the shares will fluctuate on a daily basis and can go backwards.  The dividends from shares can provide a tax effective income.

Property investment involves a large upfront outlay as well as significant ongoing costs for things such as maintenance and financing costs.  Property can provide positive benefits from a tax perspective and rental income.  There are considerations you will need to consider from this option such as if the property is not rented and there is no rental income being received.


With life expectancy in Australia over 80 years, many retirees will need retirement income to last around 2 decades.  In addition, as you age your lifestyle and income needs will change.  It is important to consider your retirement income needs, and the sooner you start planning for your retirement the better.

There are several options that you can consider to generate an income in retirement.  There is no one size fits all solution as to the best approach and in fact a mix and match approach is also something to consider.  For more information read our article on planning for your retirement. You may also wish to seek professional advice from a financial adviser.

Issued by Diversa Trustees Limited (ABN 49 006 421 638, AFSL No 235153).

This article is general advice only and does not take into consideration your personal objectives, financial situation or particular needs. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from a financial adviser.





[1] Australian Institute of Health and Welfare –