Investing outside super: What retirees need to know as tax rules change

• Super contribution limits mean some Australians may need to look beyond their retirement fund to grow their savings.
• Shares, property, bonds and managed funds offer different levels of risk, returns and access to money.
• Changes to capital gains tax and negative gearing from July 2027 could reshape investment decisions for retirees.

Are you one of the 40 or so per cent of retirees who will fund yourself when you leave full-time work?

Like most Australians, you may have most of your wealth tied up in the family home, with super as your biggest asset. 

But many other investment options exist outside the super environment. What are they? How might they serve your ultimate retirement income needs? More importantly, how could imminent tax changes affect your options?

One reason pre- and post-retirees hold assets outside super is that the caps force them to invest elsewhere. 

Currently, you can contribute $32,500 per annum to super, including the employer Super Guarantee, salary sacrifice amounts and personal deductible contributions. 

After tax, you can contribute another $130,000 annually (as long as your balance was under $2.1 million on 30 June). 

If you have funds beyond these amounts, how else can you maximise their returns? There are many different options, including:

• Cash and term deposits
• Bonds
• Shares
• Managed funds
• Exchange Traded Funds
• Indexed funds
• Listed or direct property

Defining your needs

Before selecting assets based on their likely returns, consider the bigger picture.

Super allows you to be as hands-on or hands-off as you like. With the exception of a Self-Managed Super Fund (SMSF), you can get away with making very few decisions – even your overall investment setting can be a default. 

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And regardless of your marginal tax rate, your super earnings are taxed at 15 per cent until you move to the decumulation phase, when your tax rate drops to zero. These savings are (largely) accessible from age 60.

But for many pre- and post-retirees, access is key, according to Jeremy Duffield, founder of Vanguard Australia and now a director at Retirement Essentials.

 “Not everyone wants their money locked up until their 60s or beyond,” Duffield told The Money Edition.

“People have all kinds of different objectives, and therefore reasons to keep their money outside super. These include saving for a house, paying for kids’ or grandkids’ education, major one-off purchases or even putting money aside for emergencies.”

Risk and returns

Consider your attitude to risk: whether you are risk averse, risk tolerant, or have a strong appetite for risk that can deliver higher returns.

It helps to also consider whether you are planning investments for the long term, the midterm, the short term – or maybe a mix of two or three? 

This matters when comparing different asset classes. 

The following Vanguard chart shows a 20-year return on an initial investment of $10,000 across the major asset classes alongside Australian inflation fluctuations over that period. 

Returns vary widely, with Australian Listed Property going negative over the past 12 months.

The good news is that Australians can access the strong international performers listed above through managed funds, indexed funds and exchange-traded funds.

Tax rules are changing

There are also major changes to CGT and negative gearing to consider, which come into force on 1 July 2027.

Under the changes, the current 50 per cent capital gains tax (CGT) discount will be replaced by a system that adjusts an asset’s purchase price for inflation, with a minimum tax rate of 30 per cent on gains made from 1 July 2027.

Exemptions will apply, including for super funds and certain welfare recipients. 

From July 2027, negative gearing will be restricted to newly built homes, which currently allows property investors to offset rental losses against other income. Investors who owned properties before the May 2026 federal Budget will retain the existing tax benefits.

“What was once straightforward is now quite complicated, particularly when it comes to inflation indexes,” Duffield said.

“You now need advice to understand your situation. The government is making it difficult for investors to make intelligent decisions.” 

Danielle Hart, partner at Marin Accountants, also points to the tax advantages of superannuation under the new rules. 

“Because of these changes, super is back to being the ultimate structure for your savings, particularly given the tax rate (either 15 per cent on earnings or no tax in pension mode) and still eligible for the one-third discount on capital gains within super,” she told The Money Edition. 

Hart agrees with Duffield that these changes strengthen the case for diversified funds rather than investing directly in individual stocks. 

Indexed funds and ETFs can offset gains against losses within the fund, helping to balance investment returns. For individual investors, losses are not treated as favourably as gains. 

In short, there are no easy answers on whether you should invest in addition to your super. It depends on your needs, whether the investments support your wealth-creation strategy, the liquidity they offer, and any associated risks.

The information provided on this website is general in nature only and does not constitute personal financial advice. The information has been prepared without taking into account your personal objectives, financial situation or needs. Before acting on any information on this website, you should consider the appropriateness of the information having regard to your objectives, financial situation and needs.