Some people have a fixation about lump sums – a big chunk of money sitting in a bank account to provide them with “go to sleep” money.  It makes no sense, especially for retirees over 60.

For years Australians have had a big hangup about getting their money out of superannuation as a lump sum more often than not to pay off their mortgage.

If I have $80,000 (or even $800,000) in super on retirement why on earth would I want to draw it all out in cash and spend it?  If the original purpose was to look after my needs in retirement that goal cannot possibly be met if I then go and spend all my money.

The logical thing to do is leave all money in super and use this capital sum to provide an income for the rest of your days. As long as the money remains accessible for emergencies or planned capital expenditure then it should be left in the area where it receives the most favoured tax treatment, in super.

When superannuation is converted into providing a pension for a 60 year old, investment earnings are not taxed at all.

Recent changes in providing for senior citizens will ensure that you can have a very substantial tax free income in retirement, and this can be enhanced considerably by making the right decisions about your superannuation and avoiding the temptations of lump sums.

If your super is earning 10% and your mortgage interest is 7% I think economic logic should intrude into your comfort zone.