An enduring myth is that a large proportion of Australian retirees rapidly spend their super savings and then rely on the age pension for all of their retirement income.

According to this myth, retirees have a strong preference for taking their super as a lump sum rather than a pension, or withdraw unsustainably large pensions each year for as long as their savings last.

It appears that the myth is based, in part, on a misinterpretation of government statistics of how fund members receive their super benefits upon retirement.

Another possible trigger for the myth is that there is no upper limit on the percent of superannuation pension assets that can be taken annually as a pension – although there is an age-based minimum.

Yet recent research suggests that retirees are typically concerned about outliving their savings and are cautious in their super drawdowns.

A recently-published research paper, How Australia Saves – a collaboration between Vanguard and Sunsuper – provides data that should further dispel the myth about free-spending retirees.

The research draws on the transactions and investment experiences of Sunsuper members, including the relatively small proportion who are currently in retirement.

Key findings regarding how Sunsuper members receive their retirement benefits include:

  • The median annual pension drawdown in 2015-16 was 6 per cent of a member’s pension assets.
  • Members who withdrew most or all of their super when eligible for retirement typically had extremely low balances. (The median drawdown of such members in 2015-16 was $10,000, representing 86 per cent of their super balances.)

The small percentage of Sunsuper members now receiving a retirement pension reflects its young member base; the median age being 36.

However, another 210,000 members are currently estimated to move into the retirement and pension phase over the next decade or so.




Written by Robin Bowerman, Head of Market Strategy and Communications at Vanguard.

Reproduced with permission of Vanguard Investments Australia Ltd

Vanguard Investments Australia Ltd (ABN 72 072 881 086 / AFS Licence 227263) is the product issuer. We have not taken yours and your clients’ circumstances into account when preparing this material so it may not be applicable to the particular situation you are considering. You should consider your circumstances and our Product Disclosure Statement (PDS) or Prospectus before making any investment decision. You can access our PDS or Prospectus online or by calling us. This material was prepared in good faith and we accept no liability for any errors or omissions. Past performance is not an indication of future performance.

© 2017 Vanguard Investments Australia Ltd. All rights reserved.

Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business, nor our Licensee take any responsibility for their action or any service they provide.

Any links have been provided with permission for information purposes only and will take you to external websites, which are not connected to our company in any way. Note: Our company does not endorse and is not responsible for the accuracy of the contents/information contained within the linked site(s) accessible from this page.