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Bec Wilson<\/a>Money contributor<\/p>\nAugust 8, 2026 \u2014 5:02am<\/p>\n
August 8, 2026 \u2014 5:02am<\/p>\n
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Remove items from your saved list<\/a> to add more.<\/p>\n AAA<\/p>\n I was asked a simple question on social media this week, one that most people in the retirement and superannuation industry think people already know the answer to. But to my surprise, it sparked an enormous conversation.<\/p>\n The question was \u201cIf I\u2019m retired why wouldn\u2019t I just take all my money out of super and put it in the bank?\u201d Apparently, many people are unaware of the benefits of keeping their money in super, and don\u2019t know about the really juicy upside of moving your superannuation into a retirement phase account so you can enjoy tax-free income when you\u2019re retired.<\/p>\n So today we\u2019re going back to basics \u2013 to what actually happens to your money the day you retire and why that decision, more than almost any other that you\u2019ll make determines how far your retirement savings might stretch.<\/p>\n While you\u2019re working, your super sits in what\u2019s called the accumulation phase. Most people reach retirement today with a reasonable or even large balance in their accumulation phase account, unable to access it until they meet two key conditions: reaching the official superannuation access age of 60, and ceasing just one job\/employment relationship (even if they go back to work elsewhere afterwards) or, or simply turning 65 at which point you can access your super unconditionally, whether you\u2019re working or not.<\/p>\n During your working phase of your life, you contribute to your superannuation account chiefly from your employer contributions, which are taxed at up to 15 per cent on the way in up to the concessional contribution cap of $32,500.<\/p>\n And once the money is inside super investment earnings are taxed at 15 per cent and capital gains at up to 10 per cent because superannuation still gets a one-third discount on assets held longer than 12 months.<\/p>\n Why on earth does the bank feel more compelling? I think it comes down to familiarity.<\/p>\n But from the day you retire you\u2019re allowed to move some or all of that money, up to $2.1 million, into a retirement phase account, sometimes labelled a retirement pension, account-based pension or income stream, depending on your fund.<\/p>\n And the minute your money lands in this account, you benefit because the earnings on that money becomes completely tax-free. There\u2019s no income tax payable and no tax on the capital gains. And moreover, you can draw money out at any time either as a lump sum or as a regular income stream that can feel much like a pay cheque, though funds do require you to draw down a minimum amount each year, once you\u2019re in the retirement phase, starting at 4 per cent of your balance if you\u2019re under 65, and rising as you get older.<\/p>\n That means every single dollar your investments earn inside your retirement account is yours to keep, and if your investments are growing, you can let them compound even more strongly than they might have in an accumulation account where the taxman would take 15 per cent out in tax on earnings each year.<\/p>\n Editor’s pick When you move your money from an accumulation account into a retirement account, it stays invested \u2013 and you still have choices around how it\u2019s invested and how much risk you want exposure to. But if you stayed invested in the same things, and just switched accounts, the returns for the retirement phase would be higher, simply because of the tax.<\/p>\n Now compare that to the bank account that my community member was tempted by. Every dollar of interest you earn from a bank account gets added to your taxable income and taxed at your full marginal rate.<\/p>\n If you\u2019ve still got a part-time wage coming in or any other income sources kicking along outside super that could mean handing 30, 37 or even 45\u00a2 in every dollar to the tax office. Inside a retirement account, that growth will cost you nothing.<\/p>\n Let\u2019s compare the latest returns on superannuation funds in both the accumulation and retirement phase, which Chant West released just over a week ago, with how someone who\u2019d put all their retirement savings into a bank account.<\/p>\n<\/p>\n Chant West\u2019s own data shows exactly what that tax difference is worth to someone\u2019s hip pocket. Take the Hostplus Balanced fund. Held in an ordinary accumulation phase account it returned 8.9 per cent a year over the 10 years to June 2026. Held in the retirement phase, the same investment strategy, same fund, same underlying assets returned 10.1 per cent a year.<\/p>\n That\u2019s a gap of more than a full percentage point every single year purely because of tax. Compound that over a 25 or 30 year retirement, and it\u2019s the difference between having enough or rationing your money carefully to make it through the last decade.<\/p>\n To bring this picture to life, I asked Chant West\u2019s Ian Fryer to run the numbers for someone retiring at 65 with $500,000 in their super, drawing the minimum required 5 per cent a year for the next 10 years, using the returns from mid-2016 to mid-2026.<\/p>\n If that $500,000 had gone into term deposits instead, drawing the same 5 per cent out every single year, the retiree would have ended their decade with about $404,000. On the surface that looks OK, but once you strip out the inflation rate, that $404,000 is really only worth about $299,000. In real terms their savings had gone backwards by more than a third.<\/p>\n Now, let\u2019s compare that with the same $500,000 left in a typical balanced retirement account inside super, invested with around half in growth assets and drawing the same 5 per cent a year.<\/p>\n Based purely on that those funds were targeted to earn, which is usually CPI + 2.75 per cent, they\u2019d already have finished the decade ahead, at around $521,000. And because balanced super funds have actually beaten their own targets over the last 10 years, the real-world median returns leaves that retiree, 10 years later, with $579,000, which is worth about $427,000 once you adjust for inflation.<\/p>\n Stop and think about it. That\u2019s the same starting balance, and the same amount drawn from super every year for 10 years. The only thing that changed was where the money sat \u2013 either in a term deposit at the bank or inside a retirement phase superannuation account.<\/p>\n The gap between the two is $174,000 in nominal terms, or roughly $129,000 once you account for inflation. That\u2019s tax-free compounding in action.<\/p>\n Editor’s pick So why on earth does the bank feel more compelling? I think it comes down to familiarity. People understand bank accounts and term deposits – they\u2019ve had them their whole life. They can log in, see their money sitting there and sleep at night without the markets moving around while they sleep.<\/p>\n Super, by comparison can feel like a bit of a black box, run by someone you don\u2019t know as well, invested in things you\u2019ve never really understood. And the balance can move around in ways that make you uncomfortable.<\/p>\n And then there\u2019s the fear of the government tinkering with it, something that is increasingly coming to the fore in every education session I run. If you feel that way, you\u2019re clearly not alone \u2013 thousands of people on Facebook felt the same this week.<\/p>\n But there\u2019s more to learn about super as you approach retirement because in the retirement phase it does something exceptional \u2013 it grows, completely tax-free. And that might be more valuable than you\u2019d ever contemplated.<\/p>\n Bec Wilson is author of the bestseller How to Have an Epic Retirement and the newly released Prime Time: 27 Lessons for the New Midlife<\/a>. She writes a weekly newsletter at epicretirement.net<\/a> and hosts the Prime Time<\/a> podcast.<\/p>\n Advice given in this article is general in nature and is not intended to influence readers\u2019 decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.<\/p>\n Expert tips on how to save, invest and make the most of your money delivered to your inbox every Sunday. Sign up for our Real Money newsletter<\/a>.<\/p>\n Save<\/p>\n You have reached your maximum number of saved items.<\/p>\n Remove items from your saved list<\/a> to add more.<\/p>\n![\"A](\"https:\/\/www.newsbeep.com\/au\/wp-content\/uploads\/2026\/08\/32addb989231fbda3e0af57c77d45e2cb731dec4.jpeg\")
A question of super.Simon Letch<\/p>\n![\"Banks](\"https:\/\/www.newsbeep.com\/au\/wp-content\/uploads\/2026\/08\/1786152735_608_fb1a1f08b925e6a9c3b87ff3e6a51bfeb0b3e600.jpeg\")
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