Australians worried about whether they are ahead or behind on their superannuation savings are being urged to look beyond headline figures, as new analysis highlights both how balances are built – and how they are ultimately used in retirement.
Financial experts say median balances, rather than averages, provide a clearer picture of how individuals compare with their peers. Unlike averages, which can be skewed by a small number of very large accounts, the median reflects the midpoint across the population.
Some of us use our balance as a scorecard for how well we are doing at life. But super balances are rarely about how ‘good’ you are with money. They are just a mirror of your working life.
That mirror reflects patterns of employment, including time spent working full-time, taking career breaks or moving between jobs. These factors play a critical role in shaping retirement outcomes – and can create disparities that persist into later life.
One of the clearest examples is the gender gap in super. While balances for men and women are relatively similar in their 20s, the gap widens significantly from the 30s onwards, as many women reduce working hours or take time out of the workforce for caring responsibilities.
Australia’s super system, designed around uninterrupted full-time work over decades, amplifies these effects.
In the super world, a dollar contributed at age 25 is worth far more than a dollar contributed at age 50, because it has more time to grow.
The compounding effect means missing contributions early in life does not just reduce balances in the short term, but can lead to decades of lost growth.
By the time Australians approach retirement, the gap is pronounced. Men aged 60 to 64 have a median super balance of $219,773, compared with $163,218 for women. In that same age group, 23% of women have no super at all, compared with 13% of men.
Mechanisms such as contribution splitting can help address this imbalance by allowing a working partner to transfer some super contributions to the other partner’s account.
Investment decisions also shape long-term outcomes. While most Australians remain in default “balanced” options combining shares, cash and bonds, experts warn that being overly conservative – particularly at a younger age – can limit future growth.
Retiring well involves a series of decisions about how to draw on super to fund life after work. A key first step is determining how much income is needed each week to meet both essential and discretionary expenses.
There are two main ways to use super in retirement: income streams and lump sums.
The most common income stream product is an account-based pension, held by around 80% of retired super fund members. These allow retirees to convert part or all of their super into a regular income while keeping the remaining balance invested.
Account-based pensions offer flexibility, enabling retirees to choose how much they withdraw – subject to minimum drawdown rules – and to maintain exposure to investment markets.
They can also be structured in multiple accounts with different investment strategies, allowing retirees to balance short-term income needs with longer-term growth.
A key advantage is tax treatment. Once fully retired, both the investment earnings and income drawn from an account-based pension within super are tax-free.
However, the products come with uncertainty. Investment returns are not guaranteed, and retirees do not know how long their savings will need to last. Minimum withdrawal requirements may also not align with personal preferences or market conditions.
An alternative is an annuity, which provides a more predictable income stream. These products can offer payments over a fixed period or for life, with some indexed to inflation.
Annuities provide certainty regardless of market performance, but come with trade-offs. They are less flexible, as funds committed cannot typically be accessed as a lump sum, and returns may be lower than market-linked options.
Despite these features, annuities remain relatively uncommon, accounting for fewer than 5% of super accounts. However, their use may increase as retirees seek more stable income streams.
They also receive favourable treatment under the age pension means test, with only 60% of a lifetime annuity’s value counted, compared with 100% of an account-based pension. This can increase eligibility for government support and extend the life of retirement savings.
For many retirees, a combination of both approaches may offer the best balance between flexibility and certainty.
In addition to income streams, many Australians access part of their super as a lump sum. This is typically available from age 60 once a person retires, or from age 65 regardless of employment status.
Lump sums are often used to pay down mortgages, fund home repairs, travel or provide financial support to family members. In 2025, the average lump sum withdrawn by newly retired members was around $58,000, with more than $71 billion paid out across 2.26 million accounts.
However, how these funds are used can affect eligibility for the age pension, which becomes available from age 67 subject to income and asset limits. More than 60% of retirees receive at least part of the pension, with around 40% relying on it as their main source of income.
There is also a cap on how much super can be transferred into the tax-free retirement phase, currently set at $2 million.
The combined picture shows that superannuation is shaped by a lifetime of decisions – and continues to require careful management in retirement.
Experts say that as retirement approaches, the focus should shift from accumulation to strategy, including how to coordinate super income streams with age pension entitlements.
Professional advice can play a key role, with financial advisers and super funds offering guidance, tools and calculators to help retirees maximise income while managing risk.
The overarching message is that there is no single right balance or withdrawal strategy. Instead, outcomes depend on individual circumstances – from career paths and family decisions to investment choices and retirement goals – across both the saving and spending phases of super.