Today, Australians are living longer and staying more active in retirement than ever before. That's good news. But it also means you have to plan ahead if you're going to enjoy the retirement lifestyle you've been looking forward to.

While you may already have put a lot of work into building your super savings, you may not have thought about the best way to access your money when you retire. That's where retirement income streams come in.

A retirement income stream is a managed investment that provides a stable, regular income once you've retired. There are two main choices: pensions and annuities. Both have their pros and cons, depending on your needs.


Pensions are generally paid from the balance of your superannuation fund as a regular income stream, until all your money and investment returns run out.

The pros

  • With a pension, you can access extra funds if you need them.
  • Once your superannuation starts getting paid as a pension, any growth your fund receives is tax-free.
  • You can choose to receive your payments monthly, quarterly, every six months or annually.
  • If you need more money suddenly - for example, to pay for an overseas holiday or renovate your home - you can withdraw a lump sum from your fund.
  • You decide who will receive your benefits when you die, and how much they'll receive.

The cons

  • Your investment returns can affect your income stream, so you can't guarantee your income level, or that you'll have enough money for all of your retirement.
  • The amount of money you can withdraw each year is restricted.
  • Allocated pensions must undergo an assets test if you need to receive social security benefits.


Life insurance companies generally pay annuities. They work like this: you pay the insurance company an upfront lump sum, which they then pay you as a regular, constant income stream for the rest of your life, or a fixed term, such as 10 or 20 years. You can arrange the payments so that you use all your money by the end of the fixed term. Or, your life insurance company can pay back some of your money when your term is finished.

The pros

  • Peace of mind, knowing that you'll receive the same amount of income, regardless of how your investments are performing.
  • You can choose an indexed annuity, so your income rises with inflation.
  • If you buy a lifetime annuity, you may be able to agree on a minimum fixed term of payments. This way, if you die early, your money would be paid to your spouse or other beneficiaries.


  • Usually, you can't access your lump sum.
  • Annuities can be more expensive than an account-based pension.

Get the right advice

If you're not sure about the best retirement income stream for you, talk to a financial planner. They'll be able to help you assess your retirement goals and work out which income stream will help you reach them.

Next steps

View top performing pension funds.

Start saving now

It only takes minutes to switch your existing pension funds or life insurance policy to InvestSMART, but you can enjoy the savings year after year:

  1. Fill in our fast online form (for managed funds)
    Download our Broker form (for insurance)
  2. Print the form, then sign it and send it by:
    1300 880 260
    InvestSMART Financial Services
    Reply Paid 4477
    Sydney NSW 2001

  3. You'll start saving straight away. And once every year, on the anniversary of when you switched to InvestSMART, you'll receive your trail commission rebate, either as a cheque or via electronic fund transfer (EFT).
  4. To receive your TrailCap payments via electronic fund transfer (EFT) to an Australian bank account - just complete the EFT section in the online application form.
    If you have already nominated InvestSMART as your fund broker and have been receiving TrailCap cheques from us but would rather your money is deposited directly into your bank account, you can let us know your EFT details in the InvestSMART EFT payments form.