Retiring soon? Here are 3 super decisions you need to make
Written and accurate as at: Aug 14, 2025 Current Stats & Facts
The thought of putting your working years behind you can be exciting. But that giddy anticipation can give way to panic once all the practical considerations start piling up. Below, we address some of the more pressing questions soon-to-be retirees have, and what you can do to kick off your retirement on the right foot.
Decision #1: The level of risk you’re comfortable with
Market fluctuations are part and parcel of investing. But those ups and downs you might have brushed aside during your working years can seem much scarier as you approach retirement.
It’s around this time that many people consider playing things safe and switching their portfolio mix to cash.
It’s true that switching to cash can reduce your exposure to volatility, but there are some pretty large opportunity costs you’ll need to weigh up. For one, by selling your previous holdings you might be locking in losses that would have eventually recovered.
Remember, just because you’re about to retire doesn’t mean growth assets stop playing a role. Super is a long-term investment, and that includes the 25 years or so you’ll spend in retirement. For your money to keep pace with inflation over the long term, it needs to grow – and cash alone won’t be enough to meet that challenge.
Decision #2: How to receive your super
Another rather consequential decision you’ll have to make is whether you’ll be taking your super as an account-based pension, a lump sum, or a combination of both.
An account-based pension allows you to draw a regular income in retirement while keeping the majority of your super invested. This means your super balance can continue to grow, even as you begin accessing it.
There are additional benefits too – investment earnings within an account-based pension are tax-free, unlike during your working years. You’ll also have the flexibility to choose how much income you receive and how often, so long as you meet the minimum drawdown requirements.
A lump sum, on the other hand, gives you unfettered access to all or part of your money in one go. This can be convenient if you’re looking to clear some debts or treat yourself to a new car, kitchen or holiday. But you’ll also need to manage it carefully to make sure it lasts through your retirement.
Keep in mind that once that lump sum arrives in your hands, it stops being super and starts being just another pool of savings. That means:
- There are no guardrails against spending too much, too quickly
- Your money won’t be invested any longer, unless you invest it elsewhere
- Any interest your money goes on to generate will be subject to tax
Decision 3: Whether to transition into retirement gradually
Most people don’t know that once they reach preservation age (between 55 and 60, depending on date of birth), they can cut back their work hours while supplementing reduced income with part of their super. This is known as a Transition to Retirement (TTR) income stream.
This might appeal if you’re not totally ready to retire and would prefer to ease into it. If spending more time with the grandkids (or simply re-watching all your favourite shows) is on your wishlist, a TTR income stream could let you do that without suffering a dip in income.
To start a TTR income stream, you’ll need to instruct your super fund to move part of your super into a transition phase account-based pension. The rest of your funds will stay in your super account, where they’ll continue to be topped up by your employer and any voluntary contributions you make.
Of course, you’ll just need to think about the potential impact on your savings, as accessing your super through a TTR income stream might leave you with less super over the long-term. There might be some tax considerations too, so make sure you speak to a financial adviser to get clear on the details.