How super drawdown works in Australia
Once you turn 60 and meet a condition of release, your account-based pension can be drawn down completely tax-free — both the withdrawals you take and the earnings inside the pension. The trade-off is the minimum drawdown rule: the ATO requires you to take a minimum percentage of your balance each year, increasing with age (4% under 65, rising to 14% at 95+). This stops super being used as a tax-free inheritance shelter. There's no maximum — you can draw as much as you need.
The Age Pension
The Age Pension starts at age 67 (for anyone born from 1 January 1957). It is means-tested under both an income test and an assets test — whichever produces the lower entitlement applies. The 2025–26 maximum single rate is around A$30,628/year (couple combined ~A$46,158). A part pension can still apply up to roughly A$697,000 in assessable assets for a single homeowner. Many retirees model a partial Age Pension by entering an amount lower than the full single rate.
How the tax works for retirees
Super pension payments and lump sums from age 60 are not taxable income — they don't even appear on your return. The Age Pension and any other income (part-time work, investments outside super) are taxable, but the Seniors and Pensioners Tax Offset (SAPTO) typically eliminates tax up to around A$33,808 single / A$57,948 combined couple. Above that threshold, resident rates apply (16% to A$45,000, 30% to A$135,000, 37% to A$190,000, 45% above).
Sustainable drawdown
The "4% rule" originated in US research and assumes a 30-year horizon; in Australia, with the safety net of a part Age Pension, many retirees can sustain higher initial drawdown rates. The ATO's age-banded minimums broadly track average life expectancy, so drawing exactly the minimum tends to leave a residual balance at age 90+.
Frequently asked questions
How long will A$500,000 last in retirement?
It depends on your spending, investment returns and whether you receive the Age Pension. At a 5% drawdown rate (the minimum required from age 65–74 for an account-based pension) you'd draw A$25,000 in year one. Use the planner above to model your own numbers including Age Pension.
Are super withdrawals taxed in Australia?
From age 60, withdrawals from a taxed super fund — as a pension or a lump sum — are completely tax-free. Earnings inside an account-based pension are also tax-free. This calculator assumes you are 60 or over.
What is the minimum drawdown rate?
The ATO sets minimum percentages that increase with age: 4% under 65, 5% at 65–74, 6% at 75–79, 7% at 80–84, 9% at 85–89, 11% at 90–94, and 14% at 95+. Drawing the minimum preserves the most capital but may not meet your income needs.
Is the Age Pension means-tested?
Yes. The Age Pension starts at age 67 and is reduced by both an income test and an assets test. The 2025–26 full single rate is around A$30,628/year; a part pension may still be payable up to roughly A$697,000 in assessable assets (single homeowner). Adjust the Age Pension input to your expected entitlement.
Assumptions & methodology
The model runs your account-based pension year by year to your plan-to age. Each year the target net income rises with inflation; the Age Pension (if included) is uplifted the same way as a CPI proxy (real-world Age Pension indexation is the higher of CPI and PBLCI, twice a year). Super withdrawals are treated as tax-free; the Age Pension and any other income use resident tax brackets, with a SAPTO approximation eliminating tax for low-income retirees. We do not enforce the ATO minimum drawdown percentage — you might exceed it at your target income, but for lower targets the model could draw below the legal minimum, in which case the real minimum would apply instead. Figures use 2025–26 thresholds. Always check current figures on the ATO and Services Australia websites.