A larger amount of retirement savings is being withdrawn from superannuation funds as lump sums as opposed to taking it as an income stream.

Australian Prudential and Regulation Authority figures show in the 2014/15 financial year account holders withdrew a whopping $31.4 billion in lump sums as opposed to $29.5 billion being taken from accounts as a pension.

In 2013/14 lump sum withdrawals were also higher than super savings taken as an income stream — $27.7 billion was withdrawn in lump sums compared to $26.1 billion taken as a pension.

From little things ... Australians are being warned to think twice before they withdraw their superannuation fund in a lump sum come retirement.Source:Supplied

But Australians are being warned that withdrawing your entire superannuation savings in one hit can be a bad financial move, particularly for those with larger balances.

The Australian Institute of Superannuation Trustees’ chief executive officer Tom Garcia said there’s many things to consider before withdrawing funds at all once.

“There are still a lot of retirees with small balances, for whom taking a lump sum may be the optimal choice,’’ he said.

“Many retirees with small balances take a lump sum but use it pay off the mortgage or invest in a term deposit.

“In weighing up taking a lump sum versus an income stream you need to consider a range factors, including the size of your super balance, any investments or debts outside super and tax incentives.’’

Think about it ... Tom Garcia says there’s a lot to consider before withdrawing your entire super.Source:News Corp Australia

AIST research found that around one quarter of lump sums are used to pay off home loans or make home improvements, while another 20 per cent are used to pay off debt or a vehicle.

But Australian Super’s group executive of membership Paul Schroder said he had seen a shift away from members taking out their superannuation savings in one lump sum.

“More people are taking an income stream than they did in the past because they are starting to see the value of an income stream in conjunction with the aged pension,’’ he said.

“Most people don’t know what to do with a large sum of money because they are used to getting paid a wage.”

Intrust Super chief executive officer Brendan O’Farrell said many members remained unclear of the benefits of account-based pensions.

“The account-based pensions provide members with some financial discipline while providing regular payments while enjoying the tax free earnings in pension phase,’’ he said.