Generation Mortgage: Why younger Australians face a very different retirement

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A very different retirement awaits

For generations of Australians, owning the family home outright by retirement was almost taken for granted.

You bought a house during your working years, gradually paid down the mortgage and ideally entered retirement debt-free, with superannuation and the Age Pension available to help fund your lifestyle (or, if you were fortunate, an employer-sponsored defined benefit pension).

For many younger Australians, that same path is becoming increasingly difficult.

Research reveals a generation expecting to work longer, carry substantially more housing debt into retirement and need considerably more income once they get there.

Nearly half of Gen Z Australians (48%) surveyed expect to still have a mortgage in retirement, alongside more than one in three Millennials (37%) surveyed, while others expect to remain renters throughout retirement.

Self-assessed likelihood of retiring with a mortgage

Source: Vanguard’s How Australia Retires 2026 survey of more than 1,800 Australians. Results are based on survey responses and are intended for illustrative and informational purposes only.

Using super to pay off the mortgage

These shifts could fundamentally change how younger cohorts eventually fund their retirement. Of those expecting to retire with a mortgage:

  • 39% are considering using some of their super to pay off their debt

  • 16% expect to sell their property

  • 45% plan to continue making mortgage repayments during retirement.

Daniel Shrimski, Vanguard’s Managing Director, Asia Pacific, says the findings demonstrate how much the path to retirement is changing.

“Australians are facing a tougher road to retirement than previous generations. Higher housing costs, bigger debts and cost-of-living pressures are changing what retirement looks like and what it will take to fund it,” he said.

Whether using superannuation savings to repay debt is appropriate will depend on individual circumstances and may impact retirement income. Individuals should consider seeking professional advice.

Younger Australians expect to retire later

Housing isn’t the only thing changing.

The research, based on a nationally representative survey of more than 1,800 Australian adults, found most working-age Australians now expect to retire at age 66 or 67.

By comparison, Australians who are already retired reported leaving the workforce at an average age of 63. 

Working-age Australians’ estimates of their ideal and realistic ages at retirement

Source: Vanguard’s How Australia Retires Report 2026 (page 28).

Working an additional three or four years can have significant financial implications. It provides additional years of employment income and super contributions while delaying the point at which someone needs to begin relying on their retirement savings.

But for some Australians, working longer may increasingly be a necessity rather than a choice.

The research suggests housing security is emerging as an important factor in retirement confidence, with younger generations facing the prospect of simultaneously funding their retirement lifestyle and continuing to meet housing costs.

The $90,000 retirement

Despite these pressures, Australians continue to have high expectations for life after work.

The research found Australians aspire to an active retirement that includes remaining in their own home, travelling regularly and spending money on hobbies and their health.

But younger Australians believe funding that lifestyle will require substantially more money.

Australians under 45 estimate they will need over $90,000 a year in retirement. By comparison, Australians aged 65 and over report needing around $60,000 a year.1

Some of that difference may reflect the longer time younger Australians have before retirement and expectations that inflation will push up the cost of living.

But it also illustrates the challenge ahead: younger Australians expect retirement to cost more while simultaneously anticipating entering it with greater housing expenses.

Planning remains a major gap

While retirement expectations are changing, one of the biggest opportunities identified by the research is surprisingly simple: having a plan.

Despite compulsory superannuation, many Australians still don’t have a retirement plan.

“While 45% of working-age Australians have no retirement plan, our research shows that people who have started planning for retirement are significantly more confident about their future,” Shrimski says.

The chart below shows how retirement confidence varies depending on the level of planning.

Retirement confidence by level of retirement planning

Source: Vanguard’s How Australia Retires Report 2026 (page 23).

It doesn’t need to be complicated

A retirement plan doesn’t necessarily need to be complicated. It can start with a few basic questions, whether you’re thinking them through yourself or discussing them with your partner, family or friends:

  • When would you like to retire?

  • Where would you like to live?

  • What sort of lifestyle do you want?

  • How much super do you currently have?

  • Will you still have a mortgage?

  • How much income might you need?

Answering those questions may help identify the gap between where you are today and where you would like to be.

Small steps can make a difference

The good news is that retirement planning doesn’t need to happen all at once.

The research highlights several practical actions Australians can take to become more engaged with their financial future:

  1. Build a retirement plan. Think about your future goals and the steps that could help you achieve them.

  2. Understand how the retirement system works. Learn about superannuation and the role it can play alongside the Age Pension.

  3. Improve your financial literacy. Build your understanding of basic financial concepts through reading, research and conversations.

  4. Consider additional super contributions. Where your circumstances allow, extra contributions may help strengthen your retirement savings.

  5. Check your super regularly. Aim to review your balance, contributions and investment options at least every six months.

As Shrimski puts it: “Our research shows that small actions taken consistently over time can build confidence and help Australians prepare for the retirement they want.”

For younger Australians facing higher housing costs, larger mortgages and potentially longer working lives, the retirement journey may look very different to the generations before them.

But the basic principle remains the same: the earlier you understand where you stand and where you want to go, the more options you may have to shape the retirement you ultimately experience.

1. How Australia Retires 2026, (page 31).
Important information:
Source: Vanguard How Australia Retires 2026 research. Nationally representative survey of 1,800+ Australian adults aged 18 years and over in February 2026. The full methodology is available on page 62 of the report.
Note: Survey findings and examples are based on Vanguard’s How Australia Retires 2026 research and reflect respondents’ opinions, expectations and intentions at the time of the survey. They should not be taken as forecasts or predictions of individual retirement outcomes.
Vanguard Super Pty Ltd (ABN 73 643 614 386 / AFS Licence 526270) (the Trustee) is the trustee of Vanguard Super (ABN 27923449966) and the issuer of Vanguard Super products. The Trustee has contracted Vanguard Investments Australia Ltd (ABN 72 072 881 086 / AFS Licence 227263) (VIA) to provide some services to members of Vanguard Super. Any general advice is provided by VIA. The Trustee and VIA are both wholly owned subsidiaries of The Vanguard Group, Inc. (collectively, “Vanguard”).
Source: Vanguard
Reproduced with permission of Vanguard Investments Australia Ltd Vanguard Investments Australia Ltd (ABN 72 072 881 086 / AFS Licence 227263) is the product issuer. We have not taken yours and your clients’ circumstances into account when preparing this material so it may not be applicable to the particular situation you are considering. You should consider your circumstances and our Product Disclosure Statement (PDS) or Prospectus before making any investment decision. You can access our PDS or Prospectus online or by calling us. This material was prepared in good faith and we accept no liability for any errors or omissions. Past performance is not an indication of future performance. © 2026 Vanguard Investments Australia Ltd. All rights reserved. Important: Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business nor our Licensee takes any responsibility for any action or any service provided by the author. Any links have been provided with permission for information purposes only and will take you to external websites, which are not connected to our company in any way. Note: Our company does not endorse and is not responsible for the accuracy of the contents/information contained within the linked site(s) accessible from this page.

How to dispose of shares

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How to dispose of shares

You can dispose of your shares in the following ways:

  • selling them

  • giving them away (gifting shares)

  • transferring them to a spouse as the result of a breakdown in your marriage or relationship

  • through share buy-backs

  • through mergers, takeovers and demergers

  • because the company goes into liquidation.

It’s important you keep records of acquiring and disposing of shares.

Capital gains and losses when disposing of shares

You are likely to make either a capital gain or capital loss when you dispose of your shares. You must report the total current year capital gains, net capital losses carried forward to later income years and the net capital gain in the tax return for the income year you dispose of the shares.

You make a capital gain when your capital proceeds are more than your cost base (costs of acquiring, owning and disposing of shares). Your capital proceeds are either the:

  • money you receive when you sell your shares

  • value of the shares when you gift your shares.

You may be able to reduce your capital gain if you either:

  • owned your shares for at least 12 months

  • gifted them to a deductible gift recipient, provided both

  • they are valued at less than $5,000

  • you acquired them at least 12 months earlier.

If the capital proceeds are less than the cost base, you will need to work out the reduced cost base first. Then, if the reduced cost base is:

  • more than the capital proceeds, the difference is a capital loss

  • less than the capital proceeds, there is neither a capital gain nor a capital loss.

You also make a capital loss on your shareholding when an administrator or liquidator makes a written declaration that a company’s shares are worthless.

You are entitled to reduce your capital gains by capital losses, including any carry forward capital losses, including any carry forward capital losses (apart from capital losses made in respect of personal use assets and collectables).

If you are carrying on a business of share trading and have losses on shares when you dispose of them, you may be able to claim the loss as a deduction in your tax return.

To see how to enter your capital gains or losses in myTax when you’ve disposed of shares, watch this video How to complete myTax when you have disposed of shares.

For a summary fact sheet about how capital gains tax applies to the sale of shares, go to the ATO Publication Ordering Service to download Capital gains tax on the sale of shares or units.

Shares you received as a gift

If you dispose of shares you received as a gift, you must use the shares’ market value on the day that you received them as the first element of your cost base when working out your capital gain or loss.

Shares you give as a gift

If you give shares away as a gift, treat the shares as if you disposed of them at their market value on the day you gave this gift. This means a capital gains tax (CGT event) occurs and you must include any capital gain or loss in your tax return for the income year you gave away the shares.

Example: gifting shares

On 4 January 2026, Mark bought shares at a cost of $45,000, including brokerage.

On 18 June 2026, Mark gifts all of these shares to his wife. The shares have a market value of $50,000 on 18 June 2026.

Since this gift is a CGT event, Mark needs to calculate his capital gain or capital loss for the 2025–26 income year. He must use $45,000 as the cost base of the shares and $50,000 (the market value of the shares on the day he gifted them) as the capital proceeds. Therefore, Mark makes a capital gain of $5,000. Since he didn’t own these shares for at least 12 months, he doesn’t qualify for a CGT discount of 50%. That is, Mark can’t reduce his capital gain of $5,000 by $2,500.

As he has no other CGT event, and no capital losses (in, or carried forward to, 2025–26), Mark enters the following at the capital gains question in his tax return:

  • $5,000 at Total current year capital gains

  • $5,000 at Net capital gain, this means $5,000 of net capital gain gets added to his assessable income.

However, if Mark had owned the shares for at least 12 months before gifting them, he would have been allowed (to his advantage) to reduce his capital gain by 50%. Therefore, he would have entered the following at the capital gains question in his tax return:

  • $5,000 at Total current year capital gains

  • $2,500 at Net capital gain, this means $2,500 of net capital gain gets added to his assessable income.

End of example

If you donate shares with a value of $5,000 or less to a deductible gift recipient (DGR), you may be able to claim a deduction.

Bonus shares

If you dispose of bonus shares you received on or after 20 September 1985, you may:

  • make a capital gain

  • have to modify your existing shares’ cost base and reduced cost base in the company.

Pre-CGT shares

If you acquired your shares before 20 September 1985, they are currently exempt from CGT. This means you don’t need to calculate a capital gain or loss, and the disposal doesn’t affect your tax.

You include the sale or disposal of pre-CGT shares in your tax return. At CGT exemptions and rollovers, select Capital gains disregarded as a result of the sale of a pre-CGT asset.

Include the sale or disposal of pre-CGT shares in your tax return. At question Have you applied an exemption, rollover or additional discount, select the type code Capital gains disregarded as a result of the sale of a pre-CGT asset.

Source: ATO
Important: This provides general information and hasn’t taken your circumstances into account. It’s important to consider your particular circumstances before deciding what’s right for you. Although the information is from sources considered reliable, we do not guarantee that it is accurate or complete. You should not rely upon it and should seek qualified advice before making any investment decision. Except where liability under any statute cannot be excluded, we do not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person.
Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business nor our Licensee takes any responsibility for any action or any service provided by the author. Any links have been provided with permission for information purposes only and will take you to external websites, which are not connected to our company in any way. Note: Our company does not endorse and is not responsible for the accuracy of the contents/information contained within the linked site(s) accessible from this page.

Tax loss carry back law now passed

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Eligible corporate tax entities can claim a refundable tax offset in 2026–27 tax returns to help with their cashflow.

The reintroduction of the loss carry back tax offset that was announced by the Australian Government in the 2026–27 Budget is now law. If you’re a corporate tax entity, that is not a significant global entity, you:

  • will be able to carry back a tax loss and offset it against tax you’ve paid in either or both the 2 previous income years

  • may be able to carry forward unutilised tax losses to a later income year.

A corporate tax entity is one that’s taxed as a company. This includes companies, limited trusts and some partnerships.

The law change is intended to help with cashflow and resilience. So, if you’ve paid tax during profitable years and then make a loss, you may be able to claim some of that tax back. Instead of waiting to use the loss against future profits, you may receive a refundable tax offset.

The changes apply to income years starting on or after 1 July 2026. If you’re eligible, you’ll first be able to claim the refundable tax offset in your 2026–27 tax return.

To be eligible, you must meet all the following conditions:

  • be a corporate tax entity

  • not be a significant global entity

  • have a tax loss (revenue in nature) in the current income year

  • have paid tax in one or both previous 2 income years

  • have lodged, or not been required to lodge, tax returns for the previous 5 income years 

  • have a franking account balance at the end of the current income year

  • choose to carry back the loss in your company tax return.

There are limits on the amount that you can claim. The loss carry back tax offset is limited by:

  • amount worked out under the loss carry back rules

  • balance of your franking account at the end of the current year.

If you’re considering using this tax offset, ensure you meet the eligibility requirements and keep appropriate records ready for when you lodge your tax return.

Talk to us if you have any questions about your tax.

Source: ATO
Reproduced with the permission of the Australian Tax Office. This article was originally published on https://www.ato.gov.au/businesses-and-organisations/business-bulletins-newsroom/tax-loss-carry-back-law-now-passed
Important: This provides general information and hasn’t taken your circumstances into account.  It’s important to consider your particular circumstances before deciding what’s right for you. Although the information is from sources considered reliable, we do not guarantee that it is accurate or complete. You should not rely upon it and should seek qualified advice before making any investment decision. Except where liability under any statute cannot be excluded, we do not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person. 
Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business nor our Licensee takes any responsibility for any action or any service provided by the author. Any links have been provided with permission for information purposes only and will take you to external websites, which are not connected to our company in any way. Note: Our company does not endorse and is not responsible for the accuracy of the contents/information contained within the linked site(s) accessible from this page.

Should you sell or rent out your home before buying again?

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Sell vs. rent: at a glance

Selling your home before you buy may suit you if:

  • You want a bigger deposit for your next purchase

  • You prefer simpler finances with one mortgage

  • You do not want landlord responsibilities

Renting out your home may suit you if:

  • You want to keep the property as an investment

  • You can manage two mortgages

  • You want flexibility if the market is not ideal for selling

How selling or renting affects buying your next home

Your choice can shape what you can afford next.

  • Selling first may increase your deposit and reduce how much you need to borrow.

  • Renting out means lenders assess both mortgages and your expected rental income.

  • Rental income is usually not counted in full, which can affect borrowing power.

  • This may influence your price range, timing, or loan structure when buying your next home.

Option 1: Selling your home to buy again

Selling your current home is often the most straightforward option when upgrading. It allows you to reset your finances before moving on to your next purchase.

Pros of selling

  • Unlock equity for a bigger deposit: Selling can free up value you have built in your home, after costs, which may help reduce how much you need to borrow next.

  • Simpler finances: You usually move from one home loan to another, rather than managing two loans at the same time.

  • No landlord responsibilities: You avoid managing tenants, maintenance, or rental compliance.

Cons of selling

Miss out on potential future growth: If property prices rise after you sell, you no longer benefit from that growth.

Selling costs apply: These can include agent fees, marketing, and legal costs.

Timing matters: If the market is softer when you sell, your home may take longer to sell or achieve a lower price.

Option 2: Renting out your home and buying another

Renting out your current home means turning it into an investment property while purchasing your next place to live.

Pros of renting out

Rental income can help: Rent may help cover part of your new mortgage, although it may not cover all costs.

Exposure to future growth: You keep ownership of both properties, which may support long-term wealth building.

Flexibility: Renting can be a short or long-term option if selling does not feel right now.

Cons of renting out

Two mortgages to manage: This can increase financial pressure if income changes or costs rise.

Vacancy and maintenance risks: The property may not always have a tenant, and repairs are your responsibility.

Ongoing landlord obligations: Even with a property manager, you remain responsible for the property.

Key financial things to think about

Before deciding whether to rent or sell, it helps to pressure-test your finances. 

  • Can you afford two mortgages if rent drops or stops?

  • Do you have enough equity to buy again without selling?

  • How comfortable are you managing higher repayments if rates change?

Tax considerations 

Renting out or selling a property can affect your tax situation in different ways. Outcomes depend on individual circumstances, and rules can change over time. Understanding that tax may be impacted is an important part of deciding whether to sell or rent out your home.

Get help deciding your next move

Choosing between renting out vs selling your home can feel complex, especially when you are also planning to buy your next place. A home loan specialist can help you understand:

  • How each option affects your borrowing power

  • What your deposit options may look like

  • Your possible next steps based on your situation

We’re here to help if you have any questions.

Source: NAB
Reproduced with permission of National Australia Bank (‘NAB’). This article was originally published at https://www.nab.com.au/personal/life-moments/home-property/buy-next-home/renting-out-vs-selling
National Australia Bank Limited. ABN 12 004 044 937 AFSL and Australian Credit Licence 230686. The information contained in this article is intended to be of a general nature only. Any advice contained in this article has been prepared without taking into account your objectives, financial situation or needs. Before acting on any advice on this website, NAB recommends that you consider whether it is appropriate for your circumstances.
© 2026 National Australia Bank Limited (“NAB”). All rights reserved.
Important: Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business nor our Licensee takes any responsibility for any action or any service provided by the author. Any links have been provided with permission for information purposes only and will take you to external websites, which are not connected to our company in any way. Note: Our company does not endorse and is not responsible for the accuracy of the contents/information contained within the linked site(s) accessible from this page.

Should I rent or own a place in a retirement village?

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In Australia, there are both ownership and rental opportunities to choose from when deciding on the best retirement living option for you.

Key points:

  • There are varying tenure types that can impact your rights over a property in a village

  • Make sure to understand all the costs and fees that are associated with taking a placement in a retirement village

  • Legislation and regulations differ depending on the State or Territory you live in

Generally, the deciding factor of whether you rent or buy is subject to your current financial situation.

However, you should also consider the retirement lifestyle you want to lead and whether ownership or renting will best assist in reaching those wishes and desires.

Retirement villages can be a really attractive option after you retire, encompassing a safe environment with a close-knit community of older people with similar interests and hobbies, and active social groups.

In most cases, moving into a retirement village is a great way to start downsizing your possessions and assets.

Ownership and legalities

There are different pros and cons when it comes to owning or renting a home in a retirement village.

For instance, if you rent a home, it can be less expensive depending on how long you live there. Whereas, if you buy, you don’t have to worry about any rental issues and have greater control over your home.

Either way, a retirement home will cut into your superannuation, along with additional costs and fees associated with living in a village.

Property ownership in retirement villages comes under slightly different legislation to normal homeownership.

They have different forms of legal title and occupancy rights, and other costs such as stamp duty may or may not apply.

Types of tenure

The various forms of occupation or ownership rights of retirement villages are referred to as ‘tenure’. They will include provisions for resident consultation about the management of the community and the use of the village facilities.

The legal forms of tenure for buying into retirement villages are:

Leasehold estates: The owner/developer continues to own the property, however, you pay the market value of the unit in exchange for a period of time (49 – 199 year lease). This is generally the most common form of tenure used by ‘for profit’ developers.

Licences to occupy: The village developer or owner gives you a licence to occupy your unit which means you are permitted to stay under certain conditions such as not altering the property or surrounding gardens. This form of tenure is generally the most common used by ‘not-for-profit’ developers.

Company share arrangement: The village is still owned by the retirement village developer. They will sell you shares which entitles you to live in your unit. Although some retirement villages use this tenure, it’s not a common form of tenure.

Strata title ownership: Similar to regular strata-title schemes where the property is divided into units, this operates as a direct ownership structure. You pay the agreed purchase price, are registered on the title deed and become a member of the owners’ corporation. However, unlike regular strata, the retirement village operator may have to approve you as a resident and you sign a management contract with the village owner.

This is not a common form of tenure for retirement villages.

Community title ownership: This is a very rare form of tenure for retirement villages and operates on a direct ownership structure similar to strata, except in community title, the land is divided into ‘Lots’.

Ongoing costs

Even though you have paid the market value for your property under the different tenures, you will still have ongoing costs and fees to pay in addition to your regular utility bills and in some villages, council tax.

These additional costs are sometimes known as service or maintenance fees and cover costs for the village management and maintenance.

Be across all the costs and fees that are involved with living in a village before you move in so you are not surprised by any unexpected fees.

Always read the resident’s handbook and take legal and financial advice so you fully understand what you are buying into and what your responsibilities are.

Rental units

Some residential villages do offer accommodation rental units, sometimes known as periodic tenancy, but these are generally reserved for people with limited financial resources and are usually income assessed.

Because of this, rental units are often in high demand and you may have difficulty finding one.

Where do I find a rental unit?

Rental units come in all shapes and sizes, and can be found in both small and large villages or retirement living complexes.

The main providers of rental accommodation for seniors are non-profit organisations such as religious, charitable and other benevolent organisations and local councils. However, the private sector is beginning to develop more purpose–built rental accommodation for seniors.

How much is the rent?

You will generally be charged a rental that is a percentage of the age pension plus maximum rent assistance available from Centrelink (regardless of whether you are receiving the age pension or rent assistance).

What services do rental developments offer?

Rental developments may offer the following services:

  • Self-contained units with quality fittings

  • The provision of all meals

  • Laundry services

  • Communal facilities

  • Social activities

  • Secure environment

  • Independent lifestyle

Government legislation

There is legislation to protect the rights of retirement village residents, but this is regulated by the individual States and Territories.

The legislation for each State and Territory Retirement Acts can be found by clicking on the following links:

ACT: Retirement Villages Act 2012 and Regulations

NSW: Retirement Villages Act 1999 and Regulations

NT: Retirement Villages Act 1995 and Regulations

QLD: Retirement Villages Act 1999 and Regulations

SA: Retirement Villages Act 2016 and Regulations

TAS: Retirement Villages Act 2004 and Regulations

VIC: Retirement Villages Act 1986 and Regulations

WA: Retirement Villages Act 1992 and Regulations

Some states and territories also have Resident Associations who can help with advocacy, legal aspects and also promote the rights of residents to all levels of government.

Source: Aged Care Guide
Reproduced with permission of Care & Co Media. This article was originally published on https://www.agedcareguide.com.au/information/renting-or-owning
Important: This provides general information and hasn’t taken your circumstances into account. It’s important to consider your particular circumstances before deciding what’s right for you. Although the information is from sources considered reliable, we do not guarantee that it is accurate or complete. You should not rely upon it and should seek qualified advice before making any investment decision. Except where liability under any statute cannot be excluded, we do not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person. 
Any information provided by the author detailed above is separate and external to our business. Our business does not take any responsibility for any action or any service provided by the author. Any links have been provided with permission for information purposes only and will take you to external websites, which are not connected to our company in any way. Note: Our company does not endorse and is not responsible for the accuracy of the contents/information contained within the linked site(s) accessible from this page.

Defined benefit super explained

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Learn how defined benefit super works and what it could mean for retirement. 

What is defined benefit super?

Defined benefit super is a type of super account that works differently from most other super accounts.

Most defined benefit super accounts were set up by an employer. The employer’s rules help determine what you’ll get when you retire.

Defined benefit super accounts are less common and only accept certain workers or no longer take new members.

Most super accounts have a balance that rises and falls over time, based on how much money you and your employer put in and how you invest it. This affects what you’ll get when you retire.

With a defined benefit account, your super fund uses a formula to work out what you’ll get instead.

 If you’re thinking about leaving a defined benefit fund, talk to your super fund, or speak to us first. Some funds offer benefits that you may lose if you leave, and you generally can’t rejoin.

How a defined benefit account works

The formula your fund uses to work out what you’ll get when you retire may differ from what other defined benefit funds use.

It may consider:

  • the money your employer puts in, and any contributions you make (if your fund allows them)

  • your average salary before retirement

  • how long you worked for your employer

  • your age when you retire.

For example, a retirement benefit calculation might look like this.

A fund uses the following formula to work out your benefit (i.e. how much you’ll get) at retirement:

Average salary for the last 3 years × total years of service with the employer who sponsors the defined benefit account × benefit factor.

If a member:

  • had an average salary of $100,000

  • worked for 20 years at the employer, and

  • has a benefit factor of 0.15

their estimated retirement benefit would be:

$100,000 × 20 × 0.15 = $300,000

Example only
This example is simplified to show how a defined benefit account may work. Every defined benefit fund uses its own formula. Your fund may use different factors when calculating your benefit.

Are defined benefit funds still available?

Most defined benefit funds no longer accept new members. Many were offered by government employers, public sector organisations, universities and large employers.

If you’re already a member, you can usually stay in the fund while you’re eligible.

What happens when you retire?

When you retire, your defined benefit fund may offer:

  • a regular income stream

  • a lump sum, or

  • a combination of both.

Your options depend on your fund. 

What is a defined benefit income stream?

A defined benefit income stream pays you a regular income from a defined benefit super scheme.

Your fund works out how much you receive.

Unlike an account-based pension, payments do not usually depend on an account balance or investment returns.

Payments, tax and death benefits can vary between funds.

Understand how different retirement income options can work together to fund your retirement including account-based pensions and lifetime income streams. 

Before making changes to your defined benefit super

Defined benefit accounts can offer benefits that other super accounts don’t.

Making changes may affect:

  • your future retirement income

  • your access to pension benefits

  • the tax you’ll pay

  • benefits for your partner or dependants.

Before you decide, contact your fund and consider speaking to us for financial advice.

High-pressure sales tactics are putting your super savings at risk. Be on red alert for phone calls, click bait advertising and promises of unrealistic returns to encourage you to put your super into risky investments. Stop, think carefully, and check the claims first.

Questions to ask your fund

Every defined benefit fund works differently. Your fund can explain how your account works.

You may want to ask:

  • how your benefit is calculated

  • what options you have at retirement

  • whether you can receive a pension, lump sum or both

  • how your benefit may be taxed

  • what happens if you leave the fund or transfer your benefits.

Source: Moneysmart
Reproduced with the permission of ASIC’s MoneySmart Team. This article was originally published at https://moneysmart.gov.au/how-super-works/defined-benefit-super-explained
Important note: This provides general information and hasn’t taken your circumstances into account.  It’s important to consider your particular circumstances before deciding what’s right for you. Although the information is from sources considered reliable, we do not guarantee that it is accurate or complete. You should not rely upon it and should seek qualified advice before making any investment decision. Except where liability under any statute cannot be excluded, we do not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person.  Past performance is not a reliable guide to future returns.
Important
Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business nor our Licensee takes any responsibility for any action or any service provided by the author. Any links have been provided with permission for information purposes only and will take you to external websites, which are not connected to our company in any way. Note: Our company does not endorse and is not responsible for the accuracy of the contents/information contained within the linked site(s) accessible from this page.

What is a managed fund

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A managed fund lets you hand investment decisions to a fund manager.

How a managed fund works

 

 

In a managed fund, money from many investors is pooled and invested to match the fund’s investment strategy. The strategies can range from lower-risk cash funds to higher-risk share and property funds. A managed fund can be a simple way to buy a mix of investments in one product.

A fund manager makes investment decisions. The company that legally operates the fund is called the responsible entity or fund operator.

When you invest in a managed fund, you don’t own the underlying investments directly. Instead, you own a stake in the fund. The value of the fund can go up or down. Some funds also pay you income, called distributions.

Some managed funds are bought and sold on an exchange like the ASX. These can include exchange-traded funds, or ETFs.

If you have super, it is likely you already invest in managed funds.

Smart Tip: Managed funds go by different names. You may see terms like unit trust, mutual fund, managed investment scheme, or Corporate Collective Investment Vehicle (CCIV).

Types of managed funds

What managed funds invest in

Single asset managed funds

These funds invest in one asset class. An asset class is a group of similar investments.

Cash funds – invest in very low-risk, short-term investments like bank deposits and short-term government bonds. They are low risk, but returns are usually lower too.

Fixed interest or bond funds – invest in loans to governments and companies. They can hold higher-risk loans that pay more interest.

Private credit funds – invest in loans that are not publicly traded. Risk and return depend on the borrowers and how the loans are structured. These can be higher risk.

Mortgage funds – invest in property loans. They can pay income so long as their borrowers keep paying. They can fall in value if borrowers default.

Property funds – invest in property or property-related assets. Some are higher risk.

Share (equity) funds – invest in shares in Australian or overseas companies. They can offer higher returns. Their value can also swing more sharply.

Alternative investment funds – include hedge funds, private equity, derivatives and commodities. These can be higher risk and more complex.

Mixed asset or multi-sector managed funds

These funds invest across more than one asset class. They are usually labelled by how much of the fund is held in growth assets like shares and property, and defensive assets like cash and bonds.

Growth – around 85% growth assets, the rest defensive.

Balanced – around 70% growth assets, the rest defensive.

Conservative – around 30% growth assets, the rest defensive.

Cash – 100% cash or cash-equivalents such as short-term deposits and bank bills.

How managed fund investments are chosen

Active funds rely on a fund manager to make ongoing decisions about investments. Some aim to beat a market index. Others aim to produce steady income or protect against loss. Some active funds use an absolute return strategy that aims for positive returns regardless of what markets are doing.

Passive funds – also called index funds – try to match a market index rather than beat it. There is less day-to-day decision-making, so fees are usually lower than active management fees.

Responsible, sustainable or ethical funds screen investments against environmental, social or governance criteria. These can be active or passive.

Benefits of managed funds

Managed funds can make investing easier for people who do not want to choose every investment themselves.

Benefits include:

  • access to a range of investments in one product

  • professional management

  • easier diversification, which means spreading your money across different investments

Risks of managed funds

Managed funds are not risk-free. The value of your investment can fall, and you may get back less than you invested.

Risks can include:

  • market risk – the assets in the fund can fall in value because of events affecting the entire market

  • sector risk – a fund focused on one part of the economy can be hit harder when that sector does badly

  • liquidity risk – you may not be able to get your money out as quickly as expected, and funds can restrict, delay or stop withdrawals in some circumstances

  • currency risk – overseas investments can be affected by changes in exchange rates

  • inflation risk – your returns may not keep up with rising prices, so your money buys less over time

  • interest rate risk – changes in interest rates can affect the value of the fund’s investments, especially bonds and other loans

  • credit risk – a borrower that the fund has lent to may not repay the loan

  • concentration risk – holding a small number of investments means any single loss has a bigger impact on the fund

  • gearing risk – if the fund borrows to invest, both gains and losses are magnified

Not every managed fund will have all these risks. The main risks depend on what the fund invests in and how it is managed.

Mia buys a diversified managed fund

Mia has saved $8,000 and wants to start investing in shares. She does not feel confident choosing individual shares, so she looks at managed funds that invest in Australian shares and overseas shares. She reads the Product Disclosure Statement to check how the fund invests, the fees she will pay, and the level of risk. Mia sees that using a managed fund could help her access a diversified mix of investments to lower her risk. She buys units directly with the manager.

Deciding if managed funds are right for you

There are a lot of different ways you can invest your money – managed funds are just one option.

Managed funds might suit you if:

  • you want a simple way to invest

  • you want your money spread across a range of investments

  • you do not want to choose and manage each investment yourself

  • you are comfortable that the value can rise and fall

Managed funds may not suit you if:

  • you want full control over every investment choice

  • you need your money back at short notice

  • you do not want to pay ongoing fees

  • you are not comfortable with the risk of losses

Managed funds are not an appropriate investment for everyone. It’s important to consider your investing timeframe and risk tolerance.

Contact us if you have any questions.

Source: Moneysmart
Reproduced with the permission of ASIC’s MoneySmart Team. This article was originally published at https://moneysmart.gov.au/managed-funds-and-etfs/what-is-a-managed-fund
Important note: This provides general information and hasn’t taken your circumstances into account. It’s important to consider your particular circumstances before deciding what’s right for you. Although the information is from sources considered reliable, we do not guarantee that it is accurate or complete. You should not rely upon it and should seek qualified advice before making any investment decision. Except where liability under any statute cannot be excluded, we do not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person. Past performance is not a reliable guide to future returns.
Important
Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business nor our Licensee takes any responsibility for any action or any service provided by the author. Any links have been provided with permission for information purposes only and will take you to external websites, which are not connected to our company in any way. Note: Our company does not endorse and is not responsible for the accuracy of the contents/information contained within the linked site(s) accessible from this page.

Retirement planning for small business owners

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When you run your own business a good retirement plan can bring real peace of mind. Read more about your options – and why it’s never too early to start.

Planning your retirement

When you’re busy running your own business retiring could be the last thing on your mind. But planning your retirement well in advance can make it easier to enjoy the future you want.

Will you sell your business?

Many business owners plan to sell their business to fund their retirement – but it’s important to be realistic. It isn’t always easy to find a buyer who’s prepared to pay the price you want, particularly if you’re hoping for a quick sale. And, even if you intend to keep on working well beyond retirement age, unforeseen circumstances such as poor health or a change in market conditions could force your hand, so it’s important to be prepared.

Saving money for retirement

Personal superannuation isn’t compulsory for small business owners so you might be tempted to put investing in your business ahead of your savings. This can be risky as there’s no guarantee your business alone will provide enough money for you to live comfortably in retirement.

Building your business and your superannuation investment simultaneously can help to mitigate the risk. Many business owners choose a self-managed superannuation fund (SMSF) as this may provide benefits such as a lower tax rate, more investment options and flexibility when it comes to drawing an income. However, a SMSF isn’t right for everyone so you need to discuss your strategy with a professional adviser.

Planning to live longer

In general, Australians are living longer, which means you could spend decades in retirement. Ideally, you’ll have enough savings to cover your expenses well into your nineties.

Financial security in retirement could underpin many of the decisions you make about your business so it’s important to think about the lifestyle you want. As a general rule, if you own your own home, you’ll need 70-80 per cent of your pre-retirement income to maintain the same standard of living. The age pension and other government supplements provide a safety net but, at the moment, these are set at about 28 per cent of the average wage, and this is very unlikely to increase.

The most successful retirement planning is long term. Your spending and your needs are sure to change as your retirement progresses so your plan must be adaptable enough to evolve. And it’s never too early to take action. Once you have your retirement goal in mind you can work out the steps that will help you take control of your retirement and enjoy the lifestyle you want.

Source: NAB
Reproduced with permission of National Australia Bank (‘NAB’). This article was originally published at https://www.nab.com.au/business/small-business/moments/future/planning
National Australia Bank Limited. ABN 12 004 044 937 AFSL and Australian Credit Licence 230686. The information contained in this article is intended to be of a general nature only. Any advice contained in this article has been prepared without taking into account your objectives, financial situation or needs. Before acting on any advice on this website, NAB recommends that you consider whether it is appropriate for your circumstances.
© 2026 National Australia Bank Limited (“NAB”). All rights reserved.
Important: Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business nor our Licensee takes any responsibility for any action or any service provided by the author. Any links have been provided with permission for information purposes only and will take you to external websites, which are not connected to our company in any way. Note: Our company does not endorse and is not responsible for the accuracy of the contents/information contained within the linked site(s) accessible from this page.

Finances feel tight? Check if your home loan is the right fit

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For many households, managing the cost-of-living has become an ongoing balancing act. Grocery bills, insurance premiums, utility costs and everyday expenses have all increased in recent years, placing pressure on household budgets.

If this sounds familiar, you’re not alone, 77 per cent of Australians currently feel extremely or somewhat stressed about their finances, according to a recent Finder poll.i, ii

For most homeowners, mortgage repayments are the largest item in the household budget and can be a large contributor to financial stress. More than 50 per cent of mortgage holders consider themselves to be suffering from mortgage stress.iii Despite this, many borrowers haven’t reviewed their loan in years, even with significant changes in their financial circumstances and the lending market.

That’s why refinancing can be worth considering.

Small changes can make a big difference

When household budgets are under pressure, even modest savings can have a meaningful impact.

Refinancing may help reduce your repayments, improve cash flow or provide access to loan features that better suit your current needs. While every situation is different, a home loan review can identify opportunities to ensure you’re not paying more than you need to.

The objective isn’t simply to switch lenders. It’s about making sure your mortgage is working as effectively as possible for your circumstances.

Your loan may no longer be the best fit

Many borrowers take out a home loan and leave it unchanged for years. During that time, however, a lot can happen.

Your property’s value may have increased, your income may have grown, or your credit profile may have strengthened. These changes can improve your position with lenders and potentially open the door to more competitive loan options.

At the same time, lenders are constantly updating their products and pricing. A loan that was highly competitive when you first took it out may no longer represent the best value available today.

That doesn’t necessarily mean changing lenders is the right move, but it does mean it’s worth understanding your options.

More than just a lower interest rate

While securing a competitive interest rate is often a key motivation for refinancing, there are other benefits that may be just as valuable.

Some borrowers are looking to improve cash flow and create more breathing room in the household budget. Others want access to features such as an offset account, additional repayment flexibility or redraw facilities that help them manage their finances more effectively.

Refinancing can also provide access to equity that has built up in a property over time. This may help fund renovations, support future investment plans or provide greater financial flexibility.

For some households, refinancing can also be an opportunity to consolidate higher-interest debts and simplify their finances into a more manageable structure.

Signs it may be time for a review

One of the clearest signs is if you haven’t reviewed your home loan for several years. The market may have changed considerably since your loan was established.

It can also be worthwhile reviewing your options if your fixed-rate period is coming to an end. Many fixed-rate loans revert to a lender’s standard variable rate when the fixed-term expires, which can result in a noticeable increase in repayments.

A review may also be worthwhile if your property has increased in value, your credit score has improved, you’re planning renovations, considering an investment purchase or simply looking for ways to improve your household cash flow.

The value of professional advice

With hundreds of loan products available and lenders continually adjusting their policies and pricing, comparing options can be overwhelming.

We can help assess your current loan, compare available alternatives and identify whether refinancing is likely to deliver a meaningful benefit. In some cases, the best outcome may be staying exactly where you are. The value comes from knowing you’ve explored your options and can move forward with confidence.

A refinance review won’t be the solution to every cost-of-living challenge, but it could help ensure you’re not paying more than necessary on one of your biggest financial commitments and possibly take some pressure off your finances. And that’s a worthwhile place to start.

If it has been a while since your last home loan review, we’d be happy to help you understand your options.

i,ii, iii Finder’s Cost of Living Pressure Gauge | Finder

The three phases of retirement: Key decisions at every stage

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Retirement starts long before your last day at work

There are certain moments in life that reshape not just your finances, but the way you live.

Starting a family, moving overseas for a job, changing careers – retirement belongs in that same category in terms of its significance.

Traditionally, retirement has been viewed as a single milestone celebrated on the day you stop working. But in reality, it’s one of the longest and most significant chapters of your life – one that’s being reshaped by longer life spans, evolving retirement rules and rising living costs. 

With Australians now living longer than ever, retirement can span decades, bringing new priorities, changing spending habits and different financial decisions along the way.1

That means retirement isn’t simply something to prepare for. It’s something you’ll need to navigate through.

Know what you’re aiming for

Before thinking about how you’ll fund retirement, however, it’s worth asking a simpler question: What kind of retirement do you actually want?

The Association of Superannuation Funds of Australia (ASFA) Retirement Standard provides a useful benchmark by estimating the annual income needed to support different retirement lifestyles.

There’s no right or wrong answer. Some Australians dream of travelling the world, while others are happiest spending more time with family, pursuing hobbies or enjoying a slower pace of life closer to home.

The important thing is having a destination in mind. After all, it’s difficult to know whether you’re saving enough – or investing appropriately – if you don’t know what you’re trying to fund.

With that in mind, here are the three broad phases of retirement and the financial considerations that tend to become most important in each.

Phase 1: Building your retirement runway

The five to ten years before retirement are a critical time for financial planning.

This is when many of the biggest financial decisions get made – when to retire, what sort of lifestyle you want, whether you’re saving enough and how to make the most of your remaining working years.

Having a clear retirement plan can make a meaningful difference. A recent report has shown Australians who understand the steps they need to take for retirement are significantly more confident about funding their desired lifestyle and more optimistic about their future than those without a plan.

It’s also the time to take stock of your financial position.

While seven-figure super balances often grab headlines, they’re far from the norm. Australians aged 60 to 64 have a median super balance of around $236,126 for men and $174,655 for women.2 

With many Australians approaching retirement with relatively modest super balances, making the most of available opportunities to contribute to super and strengthen retirement savings can be particularly valuable.

Here are several key questions to ask in the decade leading up to retirement: 

  • How much do I currently have in super and other investments, and will it support the lifestyle I want in retirement?

  • Are there any big-ticket experiences I want to budget for, such as a luxury cruise, overseas travel or helping my children financially?

  • Will I be in a position to pay off my mortgage before retirement?

  • Do I want to stop working completely, or gradually transition through part-time or consulting work?

  • Would downsizing or relocating improve my retirement lifestyle or financial position?

Phase 2: Putting your nest egg to work

Once retirement begins, your financial mindset will likely shift.

Instead of building wealth, the priority becomes generating an income that can support your lifestyle while ensuring your savings last for what could be another 20 or 30 years.

For many people, this can be an uncomfortable transition. After spending decades trying to grow your retirement savings, you’re now relying on them to fund your lifestyle 

Retirees also need to consider sequencing risk – the impact a market downturn can have if it occurs early in retirement while you’re simultaneously drawing an income from your portfolio.

As a result, some retirees choose to maintain exposure to growth assets alongside defensive investments and cash, depending on their circumstances, objectives and tolerance for risk.

While liquidity can help fund day-to-day spending and reduce the need to sell investments during volatile markets, growth remains important because inflation continues long after your working life ends.

Your retirement income may also come from multiple sources including investments held outside super and, depending on your circumstances, the Age Pension.

Here are several key questions to consider as you approach and enter retirement:

  1. Where will my retirement income come from – super, investments, rental income, the Age Pension or a combination of these?

  2. Is my investment portfolio still appropriate now that my focus has shifted from building wealth to drawing an income?

  3. Can my income keep pace with inflation?

  4. Do I have enough cash or liquidity to cover unexpected expenses or periods of market volatility?

  5. Am I reviewing my spending regularly to ensure my savings remain sustainable over the long term?

Phase 3: Planning your legacy

As retirement progresses, financial planning often becomes about much more than investment returns.

Many retirees begin thinking more carefully about how they’ll be cared for if their health changes, whether their current home still suits their needs and how they want their assets distributed to loved ones.

While these conversations aren’t always easy, planning ahead can provide greater flexibility, reduce stress for your family and ensure your wishes are understood well before important decisions need to be made.

At some stage during retirement, these are some of the conversations worth having:

  1. Is my will up to date, and have I reviewed my beneficiary nominations?

  2. Have I considered how I would fund aged care or additional healthcare needs if they arise?

  3. Does my current home still suit my needs, or would another living arrangement be more appropriate?

  4. Have I appointed the right people to make financial or medical decisions if I’m unable to do so?

  5. Does my estate plan reflect the legacy I want to leave for my family and loved ones?

Strategies to consider

Your retirement plan doesn’t need to be perfect. The important thing is to start early, review it regularly and adapt it as your circumstances change. 

Here are some practical strategies to consider. As always, it’s important to consider whether any strategy is appropriate for your personal circumstances and seek professional advice if needed.

  • Start small. Retirement planning doesn’t have to happen all at once. Start by discussing a few key questions with your partner (or you can contact us) such as when you’d like to retire and how much super you may need.

  • Review your super regularly. Make a habit of logging into your super account and checking your balance, investment options, fund performance and insurance cover.

  • Make the most of super contributions. If you’re still working, additional concessional (before-tax) contributions could help grow your retirement savings. 

  • Understand carry-forward contribution caps. If your total super balance is below $500,000 and you meet the eligibility requirements, you may be able to use unused concessional contribution caps from the previous five financial years.

  • Learn about downsizer contributions. If you’re 55 or over and meet the eligibility requirements, selling your home may allow you to contribute up to $300,000 each (or $600,000 per couple) into super.

Contact us if you have any questions.

1. ASFA Retirement Standard Budgets for various households and living standards for those aged 65-84 (March quarter 2026)
2. Median super balance, by age and sex, 2023–24 financial year – Australian Taxation Office

Source: Vanguard
Reproduced with permission of Vanguard Investments Australia Ltd
Vanguard Investments Australia Ltd (ABN 72 072 881 086 / AFS Licence 227263) is the product issuer. We have not taken yours and your clients’ circumstances into account when preparing this material so it may not be applicable to the particular situation you are considering. You should consider your circumstances and our Product Disclosure Statement (PDS) or Prospectus before making any investment decision. You can access our PDS or Prospectus online or by calling us. This material was prepared in good faith and we accept no liability for any errors or omissions. Past performance is not an indication of future performance.
© 2026 Vanguard Investments Australia Ltd. All rights reserved.
Important: Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business nor our Licensee takes any responsibility for any action or any service provided by the author. Any links have been provided with permission for information purposes only and will take you to external websites, which are not connected to our company in any way. Note: Our company does not endorse and is not responsible for the accuracy of the contents/information contained within the linked site(s) accessible from this page.