Compulsory superannuation contributions have led to most Australians having a large sum in their super when they retire. I’m often asked, ‘what should I do with my super when I retire?’ These funds are intended to provide income in retirement and once you have met a condition of release, you have a number of options.

The simplest option is to withdraw your super in a lump sum. There are two main situations where this is appropriate; for one-off large expenses such as renovations and new cars, or to repay any outstanding debts. We don’t recommend taking out a lump sum with the view to this being used to provide ongoing income. This is due to the tax ramifications; all income earnt within the super system in retirement (once in pension phase) is tax free, income outside super is taxed at marginal tax rates.

There is a common situation that many of my clients go through when, all of a sudden, things aren’t as financially comfortable as they once were. No longer are you able to save, in fact, you might see your savings decline, you find yourself foregoing small luxuries and you feel like you are treading water or even going backwards financially.

The period I’m talking about is the life stage when you start a family. Financially, this is one of the hardest parts of your life. In most cases one partner has a period where they don’t work and quite often this is followed by a period of reduced work. This obviously leads to reduced income, often for an extended amount of time.