Thousands of Australian retirees could be paying unnecessary taxes by keeping their super in accumulation accounts instead of switching to the tax-free retirement phase. According to the Super Members Council (SMC), around 700,000 Australians over 65 still hold $90 billion in these accounts, even though they’re no longer working full-time.
This oversight can be costly. On average, retirees may pay an extra $650 annually in taxes. For someone with $100,000 in an accumulation account, this could add up to $4,500 over retirement. For those with $200,000, the amount doubles to $9,000.
Why are so many retirees missing this opportunity? Research shows that many are disengaged or unsure of what to do. A survey found that 6 in 10 retirees with low balances (less than $100,000) kept inactive accounts because they hadn’t decided what to do or didn’t know how.
Super Members Council CEO Misha Schubert says upcoming financial advice reforms could help. “Simple, affordable advice is a missing piece of the retirement puzzle,” she said. The reforms aim to make quality guidance more accessible, particularly for the 2.5 million Australians nearing retirement. They would allow super funds to offer personalized prompts and enable new advisers to provide straightforward advice on regulated products.
Currently, only 17% of Australians—and just 26% of retirees—seek financial advice from their super fund. Many others need advice but can’t afford it.For retirees with low balances, simple guidance could prevent unnecessary tax payments. With legislative changes on the horizon, now is the time for retirees to act—and for policymakers to ensure affordable advice reaches those who need it most.