Over the last few decades Australians have tended to reach 55 and take their superannuation, but the superannuation reforms are designed to encourage workers to stay in their jobs past 60 and plan better for their retirement.
At the centrepiece of the budget changes is a plan to abolish tax on income derived from superannuation for people aged 60 and over from July 1 next year.
The changes will add $1 billion to the government's original estimates of a $6.2 billion, four-year price tag for the reforms.
Mr Costello believes the additional costs will have huge benefits for government revenue.
"The financial incentive to hang on until 60 rather than the preservation age, which is currently 55, and the financial incentive to maintain part-time employment after 60 will produce enormous benefits of the revenue side of budget," he said.
The government will introduce legislation into the parliament later this year implementing the changes, which will largely begin at the start of next financial year.
However Mr Costello ruled out any lift in the current superannuation guarantee level of nine per cent that employers have to contribute for their staff.
Big injection
The simplified superannuation arrangements include a window for people to make a big injection into superannuation.
It includes allowances for people to make a post-tax contribution of up to $1 million to their superannuation before June 30 next year.
This is designed to accommodate retirees who were planning a big injection of funds into their superannuation just prior to retirement but were caught off-guard by the cap put in place in the budget.
The new limit for post-tax contributions will be $150,000 from July 1, next year.
However, people under 65 will be able to bring forward two years' worth of contributions, giving them the option of putting up to $450,000 into superannuation in one year.
Small business owners will also be able to put up to $1 million from the sale proceeds of their assets if they have held them for 15 years or more.