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Retirement Savings Account

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Written by , updated on July 28th, 2023

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Compare retirement savings accounts

Everyone’s plans are different once they retire. Whether they include caravanning across the country or simply hitting the golf course a bit more, you’ll still need to make sure you have the funds to cover it.

A retirement savings account is a fuss-free place to save money ahead of your transition to retirement. You can put money away while you’re still working and access it the day you finish work. Learn how to compare accounts to find the best deals for your savings right here.

What is a retirement savings account and how does it work?

In the years before superannuation, you would open a retirement savings account as a way to squirrel money away for your golden years. These accounts are essentially a hybrid of a savings account and a super fund and give you a low-cost place to save with access to your money the day you retire or reach preservation age. They also have very similar rules and regulations as super funds.

These accounts become harder to find upon the introduction of the superannuation guarantee in 1992. Though they were squeezed out of the market in favour of high-yielding super funds, a handful of credit unions and major banks still offer retirement savings accounts.

How do these accounts compare to superannuation funds?

Availability

Superannuation is the standard method of saving for retirement nowadays. The industry is worth trillions of dollars and, according to a 2019 ABS survey, the average Australian aged over 75 has more than $350,000 in their fund. By comparison, retirement savings accounts are now only offered by eight financial institutions around the country and some are only available to existing customers, rather than new ones.

Performance

Investing in a superannuation fund can get you up to a 20% return on your money every year. By comparison, your return on a retirement savings account will be calculated on a much lower interest rate. You can use Savvy’s savings goal calculator to plot how long it will take to reach your savings target at different interest rates.

Contributions

Employee and personal contributions are allowed across both superannuation and retirement savings accounts. A spouse is also able to deposit money into both types of accounts. Using Savvy’s calculator, you can work out how much to regularly deposit to achieve your savings goal.

Accessibility

Super funds and savings accounts have the same withdrawal rules. You'll only be able to withdraw funds if you’re retired or have reached preservation age, which is between 55 and 60 depending on when you were born. In both cases, you’ll only be able to apply for early release on medical or compassionate grounds. These can include suffering financial hardship, poor health, a terminal medical condition or if you’re temporarily or permanently incapacitated.

Protection

The key difference between these two retirement options is the protection you get over your money. Your retirement savings accounts won’t be knocked around by the performance of the market, meaning the value of your savings won’t drop no matter the economic climate. The federal government’s Financial Claims Scheme adds another layer of protection by protecting balances up to $250,000 if your financial institution collapses.

Fees

These costs will vary depending on who you choose to invest with. Super funds come with fees for such functions as administration, management and advice and are capped at 3% of your balance. By comparison, retirement funds generally have fewer fees. Some smaller institutions have no fees for opening an account, but larger banks may still levy an annual admin fee of up to $35.

Tax advantages

You’ll largely get the same tax benefits under both saving methods as they come under the same government superannuation guidelines. However, you’ll be able to earn interest on your full balance, not just your tax-free portion, with a retirement savings account.

What are my account options once I hit retirement?

A pensioner savings account is a common method of banking for those who’ve hit retirement age. These flexible accounts work similarly to standard savings accounts, except you can have unlimited withdrawals without it impacting your interest rate. Calculated daily, your interest is tiered based on your account balance. For example, if you have a balance under $50,000, a bank may offer you a rate of 0.05% but if your balance is more than $250,000 you could have a higher rate of 0.25%. You can calculate how much you can earn using Savvy’s savings calculator.

Generally, you have to be over 55 and earning a government pension from Centrelink or the Department of Veteran’s Affairs to qualify. If you don't receive a government pension and are over 65 years of age, though, you could opt to open a standard savings account or a free everyday account tailored to self-funded retirees. You can compare all of your options in one place with Savvy today before opening your account to ensure you set yourself up for the best return.

Types of savings account

Online accounts

Your account doesn't have to be with a bricks-and-mortar bank. By opening an account with an online institution, you can manage your funds via online banking and apps.

High interest accounts

When it comes to growing your savings, the higher the interest, the better. High interest accounts can either come with higher base rates or steep bonus rates.

Kids' accounts

Opening an account for your child can be a great way to give them a head-start with their savings and help teach them about the responsibility of managing their money.

Student accounts

Keeping track of your funds and growing them is important as a student. Some providers offer special accounts with high interest and no fees to help you boost your savings.

Joint accounts

There are many reasons why you may need a joint account, such as if you're combining funds with your partner or managing your parents' money with your siblings.

Business accounts

Businesses have different needs when it comes to their savings, so many banks and other financial institutions offer specialist products designed to offer flexibility.

Bonus interest accounts

Many savings accounts offer bonus interest, which can offer a much higher rate if certain conditions are met, such as a set number of deposits or linked transactions.

Why compare savings accounts with Savvy?

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The pros and cons of opening a retirement savings account

PROS

Less volatility

Market shocks are unlikely to affect the health of your retirement fund, with your balance determined by interest earned not share prices. That means your bank balance will continue to rise and remain healthy, even if the stock market is on the slide.

Government-backed protection

The federal government backs your balance, giving you peace of mind in the rare event your bank collapses. This capital guarantee is capped at $250,000.

Low fees

Unlike a super fund which can take up to 3% of your balance in fees every year, these accounts often come with fewer additional costs depending on where you choose to open an account.

CONS

Low risk, low return

By opting for a low-risk option, you’ll generate less of a return on your money by opening a retirement savings account compared to a superannuation fund.

Hard to find

Retirement funds are rare these days, with as few as eight institutions still offering them to customers. Some institutions will also only offer these accounts to existing customers, limiting your access even further.

Fewer benefits

You miss out on the added benefits and flexibility of being a super fund member, such as low-cost financial advice.

Some common retirement savings accounts questions

Who can apply for a retirement savings account?

If you are living in Australia with a local address and phone number and are 18 years or older, you can open an account. You can be under 18 years old, but you’ll need a parent or carer to sign documents on your behalf.

Can I take out insurance on my retirement savings accounts?

Yes – but this is dependent on who you bank with. Larger financial institutions offer life insurance through this type of account which covers you in the event of your death or permanent disability. Credit unions and building societies are unlikely to offer this, but it’s worth considering you’ll always have the federal government’s bank guarantee as a backup.

Why do people choose to open these types of accounts?

These accounts suit risk-averse savers who are willing to forgo higher returns in exchange for greater assurance over their savings.

Can I manage my account online?

Yes – most financial institutions allow you to check your contributions, account balance and interest earned using a 24/7 online banking portal. You can also use this to manage your funds once you have reached preservation age.

Do these types of accounts have minimum deposits?

No – opening an account like this doesn’t hinge on you making a hefty upfront deposit. In some cases, though, an institution may require you to have $1,000 deposited in your account within the first six months of opening it. They may even close the account if there is less than this amount in the account at this time.

Can I consolidate my super funds into this one account?

Yes – rolling multiple super funds into your one retirement account can make it easier to track your savings and reduce your fees. Simply request a rollover from your existing fund, complete a transfer authority form and email it to your desired financial institution. However, you’ll receive a higher return if you consolidate your multiple super accounts into one single super fund

Our savings calculators

Savings calculator

Use our savings calculator to help you calculate how much you could save over a set timeframe based on different deposit sizes and frequencies.

Compound interest calculator

Your savings can put in work for you. Crunch the numbers to see how much interest you could earn on top of your interest by compounding daily, monthly and annually.

Budget planner

It's crucial to have a clear idea of your monthly household budget to see where your money is going and where it could potentially be better spent.

Income annualisation calculator

If you're applying for a loan or need to know what your salary is for your tax return, you can use our annualisation calculator to work out what you'll earn this financial year.

How much to deposit

Setting savings goals is important. With this tool, you can work out how much you'll need to deposit to reach your financial aims over a set timeframe.

How long to save

Just as important as knowing how much to deposit is working out how long it'll take to reach your goals. This savings goal calculator can help you do just that.

Helpful guides on savings accounts

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Quantum Savvy Pty Ltd (ABN 78 660 493 194) trades as Savvy and operates as an Authorised Credit Representative 541339 of Australian Credit Licence 414426 (AFAS Group Pty Ltd, ABN 12 134 138 686). We are one of Australia’s leading financial comparison sites and have been helping Australians make savvy decisions when it comes to their money for over a decade.

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For more information about us and how we conduct our business, you can read our privacy policy and terms of use.

© Copyright 2024 Quantum Savvy Pty Ltd T/as Savvy. All Rights Reserved.

© Copyright 2024 Quantum Savvy Pty Ltd T/as Savvy. All Rights Reserved.

1300 974 066

Sign up to our newsletter

Disclaimer and important things you should know

Quantum Savvy Pty Ltd (ABN 78 660 493 194) trades as Savvy and operates as an Authorised Credit Representative 541339 of Australian Credit Licence 414426 (AFAS Group Pty Ltd, ABN 12 134 138 686). We are one of Australia’s leading financial comparison sites and have been helping Australians make savvy decisions when it comes to their money for over a decade.

We’re partnered with lenders, insurers and other financial institutions who compensate us for business initiated through our website. We earn a commission each time a customer chooses or buys a product advertised on our site, which you can find out more about here, as well as in our credit guide for asset finance. It’s also crucial to read the terms and conditions, Product Disclosure Statement (PDS) or credit guide of our partners before signing up for your chosen product. However, the compensation we receive doesn’t impact the content written and published on our website, as our writing team exercises full editorial independence.

For more information about us and how we conduct our business, you can read our privacy policy and terms of use.