The State of Retirement Report from Aware Super has found that a majority of Australians do not understand that by keeping their super invested, they can draw a flexible income and potentially benefit from a concessional tax rate, which can significantly enhance their financial security in later years.
In addition, over a quarter of people aged 45 and over didn’t realise that superannuation could become a tax-free source of income in retirement.
Deanne Stewart, chief executive of Aware Super, said the findings highlighted the need for more accessible advice to ensure that people could get the most out of their retirement savings.
“The research revealed that too many people planning for retirement and entering the next phase feel the process is overwhelming and confusing – and it doesn’t have to be. The State of Retirement research also tells us that too many people don’t understand their options or how to make the most of their superannuation in retirement,” Stewart said.
“What’s great is that there is a growing understanding about how super can work for you, for example, most people over 45 now realise that when you retire, as much as half of your super balance is made up of investment returns. But there are clearly still big gaps in knowledge, and getting advice at the right time makes an enormous difference.”
The research also found 63 per cent of Australians aged 45 and over were concerned or anxious about retirement, with almost nine in 10 worried they would run out of money.
One in 10 people retired later than expected, with 55 per cent citing financial necessity as the reason. Of those who retired, one in five returned to work either part-time or full-time, with around a quarter of those saying it was for financial reasons.
The research also found that the majority (91 per cent) of Australians aged 45 and over believe that their super is for their own use during retirement and not necessarily to leave to their children or grandchildren.
“This evolving mindset reflects a broader shift in how Australians approach retirement – not just as a time for financial security, but as a phase of life defined by purpose, wellbeing, and connection,” Stewart said.
