Navigating Superannuation Drawdowns in Retirement
For many Australians, superannuation is a key part of funding retirement. But once you stop working, the question becomes: how do you draw down your super in a way that supports your lifestyle, lasts the distance, and works well with the Age Pension?
Understanding how super drawdowns work — and the rules that go with them — can help you make smarter financial decisions that support your long-term security and comfort.
What Is a Superannuation Drawdown?
A drawdown simply means withdrawing money from your super fund once you retire. Typically, this is done through:
An account-based pension (allocated pension): This is the most common method. Your super remains invested, and you withdraw a set amount each year.
Lump sum withdrawals: You take out larger one-off amounts as needed.
Annuities: A fixed income stream you purchase using your super.
Minimum Drawdown Rates
The government sets minimum annual withdrawal rates for account-based pensions, based on your age. These ensure funds are used for retirement and not indefinitely preserved.
As of 2025, the standard rates are:
AgeMinimum % per year65–745.0%75–796.0%80–847.0%85–899.0%90–9411.0%95+14.0%
Your super fund will typically calculate and process this for you automatically once you set up a pension account.
How Super Drawdowns Affect the Age Pension
Withdrawals from super are not directly assessed, but the value of your superannuation is included in the assets and income tests used to calculate your Age Pension eligibility. Here’s how:
Before Age Pension age: Super is exempt from Centrelink's tests if it's in the accumulation phase and you're under Age Pension age.
After Age Pension age: Both superannuation and income from drawdowns are assessed.
This means:
Higher super balances or high drawdowns may reduce your pension payments.
Low drawdowns and careful asset management can help you remain eligible for part or full Age Pension.
Strategies to Manage Your Drawdowns Wisely
✅ 1. Set a Sustainable Withdrawal Rate
Avoid drawing too much too soon. Many financial advisers recommend a withdrawal rate of 4–6% per year to help your funds last 25+ years.
✅ 2. Combine Super with the Age Pension
Use the Age Pension as a base income and draw down super as a supplement. This can help stretch your funds while staying under the assets test threshold.
✅ 3. Review Investments Regularly
Make sure your super is invested in line with your risk tolerance. A good balance between income and capital preservation is key in retirement.
✅ 4. Take Advantage of Concessions
There may be tax benefits and Centrelink concessions based on how you draw your super, especially when combined with pensioner entitlements (like the Commonwealth Seniors Health Card).
✅ 5. Seek Financial Advice
A retirement or Centrelink specialist adviser can help you structure drawdowns in a way that maximises your income while preserving Age Pension eligibility.
Final Thoughts
Your superannuation is there to support you — but drawing it down too quickly or inefficiently could impact your lifestyle or access to government support.
By understanding the rules, reviewing your financial needs, and seeking advice when needed, you can make your super go further — and enjoy retirement with more peace of mind. Contact us today should you want peace of mind.