Feel like retiring but not sure when you'll be able to? It helps to know if you'll have enough savings to provide an income that will give you the lifestyle you deserve in retirement.
We often hear about retirement being at age 60 or even older if you’re talking about when you can receive the Age Pension, but there is no set retirement age in Australia. Technically, you can retire whenever you’re ready. The challenge is being able to afford to retire and this often comes down to how much you have in your super.
Super is money put aside while you’re working that will be used to fund your lifestyle when you retire. Your super grows over time and you can access it when you retire and reach your preservation age – which ranges from 55 to 60 depending on the year you were born1 or when you reach age 65.2
While many Australians rely at least partially on the Age Pension in retirement, it’s not a lot of money and is unlikely to support the lifestyle most of us want in retirement.
If you want to travel, drive a reasonable car and regularly eat out in retirement, you’ll need to have enough put aside in your super to pay for a higher standard of living.
The Association of Superannuation Funds of Australia (ASFA) Retirement Standard estimates an individual requires $28,254 a year to live modestly and $44,412 to live comfortably in retirement. For couples, these amounts are $40,829 and $62,828 respectively.3 At these levels, a part Age Pension could still be used to help meet your income needs (depending on your other assets). Without a part Age Pension to rely on, retirees would need significantly higher savings to support a comfortable lifestyle.
To figure out when you can afford to retire, you'll need to consider a few things:
To retire at the age you want and lead the kind of retirement lifestyle you desire, you need to take some steps today to ensure you have enough super in the future. Here are a few key tips to consider:
How soon you can retire is entirely up to you - and your super! To find out more about how to boost your super, call us on 1300 369 901 or make an appointment with an EISS financial planner.
1 The preservation age for individuals born before 1 July 1960 is 55. For individuals born between 1 July 1960 and 30 June 1961 it’s 56. For individuals born between 1 July 1961 and 30 June 1962 it’s 57. For individuals born between 1 July 1962 and 30 June 1963 it’s 58. For individuals born between 1 July 1963 and 30 June 1964 it’s 59. For individuals born after 30 June 1964 it’s 60 years.
2 Australian Government Department of Social Services, Seniors, Benefits payments, Age pension, July 2019. Please note, this comes into effect for 67 year olds from 1 July 2023 and from 1 July 2021 it is for people aged 66 years and 6 months.
3 ASFA Retirement Standard, March Quarter 2021.
4 Australian Bureau of Statistics, Life expectancy continues to increase in Australia, November 2020.
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