How income and investing work together to support your retirement

If you’re approaching retirement, you might be wondering what actually happens to your super once you stop working.

You’re not alone – AMP research shows that one in two Australians don’t feel financially confident about retirement¹. Much of that uncertainty comes down to not fully understanding how your money works once you stop earning a salary.

It’s easy to assume retirement means pulling your money out of investments and slowly using it up. But for many Australians, their money keeps working quietly in the background, helping to support their income over time.

Here, we break down how income and investing work together during retirement, so you can better understand how your money supports you and feel more confident about what comes next.

Do you stop investing when you retire?

No – for many people, their super stays invested even after they start a retirement income stream.

When you move into retirement, your super doesn’t stop being invested – unless you withdraw it as a lump sum. If you make the decision to take up a retirement income stream, it stays invested within a retirement income account, where your balance continues to generate investment earnings even while you receive regular payments.

In simple terms, retirement income isn’t just about drawing down from a savings account. Your money can stay invested, so it can keep growing over the long term and help your savings last longer. This matters because retirement can last a long time - typically 25-30 years for most Australians according to the Australian Bureau of Statistics². Over that time, if your investments perform well, the earnings can fund a meaningful part of your income and slow how quickly your balance runs down. Keeping some money invested means your savings can keep working in the background, rather than relying only on money that’s sitting in your bank account.

It’s important to note that like all investments, returns may vary and could be negative in some years.

How income and investing work together in practice

In practice, many people move some or all of their super into a retirement income account, where their money stays invested while paying them a regular income.

For example, one common approach in Australia is a Flexible Retirement Income Stream (sometimes referred to as an Allocated Pension). At AMP, this is offered through the AMP Flexible Retirement Income. This lets you receive regular payments from your super while the remaining balance stays invested in the investment options you select and continues to generate investment earnings.

Rather than relying only on what you withdraw each year, your income is often supported by a combination of:

• planned withdrawals from your balance

• investment earnings generated over time

This means your super is doing two jobs at once – helping fund your current income, while continuing to work in the background to grow.

In reality, many people don’t take a single approach. They often: 

• move part of their super into a lifetime retirement income stream (a product designed to provide guaranteed income for life, sometimes referred to as an annuity or innovative retirement income stream

• keep another portion available for flexibility, such as lump sums or unexpected expenses – while continuing to receive some regular payments

•  and combine these different income options depending on their needs

Because your balance remains invested, how your investments perform over time can influence both your income and how long your savings last. 

As AMP’s Head of Retirement Solutions Estelle Liu explains, staying invested is a critical part of how super works over time:

“Superannuation has a long investment horizon … even in retirement, super often needs to last another 30+ years. That long runway is what allows compounding to do the heavy lifting.”

Are there tax benefits to this approach? 

Yes – one of the key advantages of receiving income from super in retirement is that both your income and your investment earnings are often taxed more favourably, or not taxed at all. This will depend on your individual circumstances and applicable super and tax laws. 

Once you move your super into a retirement income account and meet certain conditions, the money inside that account can continue to generate investment earnings without being taxed, and the regular income payments you receive are often tax-free from age 60. 

This means, if you’re 60 and you leave $100,000 in your super account instead of moving it into a tax-free retirement income account, you could miss out on more than $30,000 by the time you turn 75³. 

Because your money remains invested, these tax settings don’t just apply once – they continue year after year, helping support your income over time rather than relying only on what you’ve already saved. 

How Lifetime Retirement Income Streams can fit into this approach 

Alongside Flexible Retirement Income Streams, some people choose to include a Lifetime Retirement Income Stream, a retirement product designed to provide “income for life” (sometimes also known as a Lifetime Pension). 

At AMP, this is offered through the AMP Lifetime Retirement Income, and this also keeps your super invested at the same time as receiving an income that will never run out (although investment returns are not guaranteed). 

A Lifetime Retirement Income Stream works differently to a Flexible Retirement Income Stream. Rather than relying on a balance that is drawn down over time, it is designed to pay a regular monthly income that continues for as long as you live. At the same time, other parts of your super can remain invested in more flexible accounts to support additional income and access to money if needed. 

For some people, combining these options can help create the best possible retirement. A Lifetime Retirement Income Stream can provide a regular income for everyday living, while the rest of their super offers both income payments and can support flexibility and future needs. Both income streams stay invested to deliver adequate income over a long retirement.  

“By pairing a Lifetime Retirement Income Stream – which pays an income for life – with a flexible income from a Flexible Retirement Income Stream for both regular and discretionary spending, and lump-sum access, members can create a more balanced retirement income. This can provide greater confidence, knowing part of their income will continue no matter how long they live,” says Estelle. 

Learn more about AMP’s Lifetime Retirement Income here. 

Does staying invested mean taking on more risk? 

Not necessarily – in retirement, the key investment challenge is balancing long-term adequacy with managing short-term ups and downs.  

As people move into retirement, investments are often adjusted to reflect different priorities. The focus tends to shift towards supporting a dependable income rather than growing a balance. 

Staying invested doesn’t mean ignoring risk. It recognises that retirement can last decades, and that avoiding investment exposure altogether can create a different risk: your money may not last as long as you need it to. By keeping your money invested, you help support long‑term income and confidence, while riding through short-term market ups and downs. 

AMP Super Lifetime Retirement Income Account adds an extra layer of stability. Your income is paid monthly and does not change within the year, except for an annual adjustment which could be up or down. This helps smooth income over time and support you through day-to-day market movements.  

Can you still access money if you need it? 

Yes – while a Lifetime Retirement Income Stream is designed to provide a regular income for as long as you live, some but not all can still offer flexibility if your circumstances change. If you decide later that it’s no longer right for you, or if you pass away unexpectedly, some Lifetime Retirement Income Streams allow you to close the product and a “money‑back amount” may be paid up to the legislated maximum (which may be less than your original balance). 

Many people combine regular income for life with flexible access to funds. In retirement, people want access to money for things like medical expenses, home repairs or helping family. That’s why retirement income is often set up using a mix of income streams and more flexible options. 

This approach allows part of your income to feel steady and dependable, while keeping access to money when life calls for it. 

Is a retirement income approach right for you? 

There isn’t a single right approach, and retirement income doesn’t look the same for everyone. 

Some people choose to convert their super into a regular income for life. Others prefer the flexibility to take part of their super as a lump sum – for example, to clear debt, renovate or take a long‑planned trip – and then decide what to do next. Many people do a mix of both to enable the best possible retirement. 

You might also decide that getting some guidance would help. Speaking with a financial adviser can help you understand how different options might work together, based on what matters most to you. 

At this stage, the goal isn’t to choose a product. It’s to understand the options available, so you can make decisions with more confidence when you’re ready. 

What should I do next? 

A helpful next step is to get tailored guidance on how your super could support your retirement. 

If you’d like to explore your options at your own pace, AMP Super members have access to Digital Financial Advice for no extra fees, which can help you see how different income and investment choices might work together. If you prefer talking things through, you can also speak with AMP’s experienced financial advisers, who can help explain your options and answer your questions. 

Whether you start with tools, a conversation or just learning more, taking one small step can make retirement feel clearer and more manageable – and help you feel more confident about what comes next.