Dreaming of the day you dont have to work anymore? Start turning those dreams into plans. Check what age you can retire and use our tips to decide when youll be in retirement mode.
The Truth About Retirement Age in Australia
After doing a lot of research on this subject, it’s clear that the best age to retire depends on your own unique situation. The Australian Bureau of Statistics says that the average age of people who have recently retired is 63, and the average age of people who want to retire is 65. 4 years. But that doesn’t mean these ages are right for YOU.
Many Australians are working well into their 70s while others are lucky enough to retire in their 50s. It all boils down to your unique situation.
Key Factors That Determine Your Ideal Retirement Age
When deciding when to hang up your work boots consider these critical factors
1. Financial Readiness
Can your savings sustain your desired lifestyle? According to the Association of Superannuation Funds of Australia’s Retirement Standard, to have a comfortable retirement:
- Single people need around $595,000 in retirement savings
- Couples need approximately $690,000
But remember, these are just guidelines! Your specific retirement needs might differ.
2. Access to Super and Age Pension
There are important age thresholds to consider:
- Preservation age: Between 55 and 60 (depending on birth year), when you can access super if retired
- Age 65: When you can access super whether retired or not
- Age Pension age: Between 65.5 and 67, if you qualify
3. Housing Situation
How much income you’ll need in retirement will depend a lot on whether you own your home outright or still have to pay a mortgage or rent.
4. Health Considerations
Your health status affects both your ability to work and your retirement expenses. Medical costs can substantially impact your budget.
5. Work Satisfaction and Purpose
Some people love their jobs and wouldn’t dream of retiring! If that’s you, consider “semi-retiring” by reducing your hours instead of stopping work completely.
6. Lifestyle Goals
What do you want to do in retirement? Travel? Spend time with family? Take up new hobbies? Your goals will influence both when and how you retire.
How Long Will Your Retirement Last?
This is a crucial consideration that many overlook. According to the Australian Government Actuary, factoring in improvements in life expectancies:
- Half of today’s 65-year-old males will live to at least 87
- Half of today’s 65-year-old females will live to at least 89
Most Aussies will be retired for at least 25 years, which is 25 years of not having to work to make money.
Will Your Money Last?
To estimate how long your retirement savings will last, consider:
- Your withdrawal rate: How quickly are you depleting your savings?
- Expected lifespan: The longer you live, the more you’ll need
- Investment returns: How your money is growing while in retirement
- Inflation: The rising cost of living over time
- Other income sources: Part-time work, rental income, investments, etc.
I always recommend using a retirement calculator to get a more personalized estimate. Rest Super and many other super funds offer free calculators on their websites.
The Transition to Retirement Option
Not ready to retire completely but want to scale back? A Transition to Retirement (TTR) strategy might be perfect for you.
With a TTR account, you can:
- Access some of your super while still working
- Reduce your working hours
- Potentially maintain similar take-home pay
But be careful! Starting to use your super earlier means less money for your full retirement. I’d suggest chatting with a financial adviser before implementing this strategy.
Real Retirement Ages in Australia
Here’s what’s actually happening in Australia:
- The formal retirement age (for Age Pension eligibility) is increasing gradually to 67
- The average actual retirement age is 56.9 years
- Many people retire before they initially planned to due to health issues or redundancy
- Some people never formally “retire” but gradually reduce their working hours
My Thoughts on the “Best” Retirement Age
After researching this topic extensively, I believe the ideal retirement age is when:
- You have sufficient financial resources to maintain your desired lifestyle
- You’re still healthy enough to enjoy your retirement years
- You’ve accomplished your major career goals or are ready for a change
- You have plans and purposes to fulfill in retirement
For some, this might be 55; for others, 75. There’s no one-size-fits-all answer.
Planning for Different Retirement Ages
Early Retirement (Before 60)
Pros:
- More active years to enjoy retirement
- Opportunity to pursue second careers or passions
- Potential escape from workplace stress
Cons:
- Significantly more savings required
- Limited access to super before preservation age
- No Age Pension availability
- Longer period to fund
Standard Retirement (60-67)
Pros:
- Access to super
- Potential Age Pension eligibility
- Still young enough for active retirement
- Social norm (many friends/colleagues retiring)
Cons:
- Still requires substantial savings
- May miss peak earning years
Late Retirement (After 67)
Pros:
- Maximize savings and super
- Fewer years to fund in retirement
- Maintain sense of purpose and social connections
- Full Age Pension eligibility (if qualified)
Cons:
- Health may limit enjoyment
- Less time for retirement pursuits
Building Confidence for Your Retirement
Regardless of when you retire, building confidence in your financial security is essential.
Lifetime annuities, which give regular payments for life, are one option to think about. National Seniors Australia says that people who have a guaranteed income for life are more financially secure than those who only rely on market-linked retirement savings.
As John McCallum from National Seniors says, “Annuities give you an additional layer of protection for life, or for a chosen investment term. They can help retirees increase their Age Pension entitlements and provide regular income to help fund essential expenses during retirement.”
Creating Your Retirement Timeline
Here’s how I recommend approaching your retirement planning:
- 40s: Start serious retirement planning, assess your super, and consider boosting contributions
- 50s: Fine-tune your retirement vision, pay down debt, and create a detailed budget
- 55-60: Evaluate your preservation age and possible transition to retirement options
- 60-67: Consider your ideal retirement timing based on finances, health, and goals
- 67+: Reassess regularly if continuing to work
The Bottom Line
The best age to retire in Australia isn’t a one-size-fits-all number. It’s when YOU are financially, emotionally, and mentally ready.
What matters most is planning for a potentially long retirement and ensuring you have the resources to enjoy it. Start planning early, consider all aspects of retirement beyond just finances, and regularly reassess as your situation changes.
Remember Marney Perna’s wise words from the Challenger article: “Consider what your retirement future entails, and how much money you’re going to need for that. Take time early in your life, even in your 40s, to think this through.”
Whether you retire at 55 or 75, the goal is the same: to have the freedom to enjoy your later years with financial security and purpose.
Have you started thinking about your ideal retirement age? What factors are most important in your decision? I’d love to hear your thoughts in the comments below!
Disclaimer: This article contains general advice only and does not consider your personal situation. Consider seeking professional financial advice before making retirement decisions.
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What’s the Average Retirement Age In Australia? (When Should You Retire?)
FAQ
What age do most people retire in Australia?
The average retirement age in Australia is around 64 to 65 years, a figure that has been steadily increasing and is now higher than it has been in decades, according to recent data from the Australian Bureau of Statistics (ABS) and KPMG.
Can I retire at 60 with $500k in Australia?
You can retire at 60 with $500,000 and this will provide you with an annual income of $43,000 (increasing with inflation) until age 95 if you are single, and $52,000 until age 95 if you are a couple. The charts below illustrate your investment balance over time.
How much do I need to retire on $100,000 a year in Australia?
You need $2. 0M to retire on $100,000 per year in Australia if you retire at age 60; and $1. 7M to retire on $100,000 per year if you retire at age 65. These amounts will provide you with an income of $100,000 per year until age 95.
How much money do I need to retire to Australia from the USA?
To retire in Australia in style, a married couple needs to spend $73,875 a year and a single person needs $52,383 a year. These numbers include living expenses, healthcare, groceries, leisure activities, and housing costs. A more modest lifestyle might run $48,184 for a couple and $33,386 for singles.
When can I retire in Australia?
In practice, there are two age rules that impact when most Australians can retire because they allow you to access funds to support your retirement. These are: Preservation age: This is the age when you can access your super provided you have also met a condition of release (such as retiring or turning 65).
What is the average age of retirement in Australia?
The average age of retirement in Australia has been rising steadily for decades, from age 53. 5 in 2000 to 64. 8 in 2022, with women tending to retire one or two years before men on average. From what the Australian Bureau of Statistics (ABS) says, these are the most recent numbers. People are likely to keep retiring later.
Is there a’retirement age’ in Australia?
There’s no such thing as a ‘retirement age’ in Australia, nor any laws that dictate when someone can retire. In theory, you can choose to retire whenever you want, although there are some age-based rules that impact when many Australians choose to retire. More on those later. Background: This wasn’t always the case.
When is the best time to retire for tax purposes in Australia?
If you are over 60 and don’t have any taxable (not taxed) money in your super, you can take out as much super income as you want without having to pay tax on it. This is what makes age 60 the best time to retire for tax purposes in Australia.
Why should you consider retirement in Australia?
Here’s just a few of the key considerations. Australia doesn’t have a fixed retirement age, so it’s up to people to weigh up their finances, employment, health, relationship status and retirement goals to work out when they will transition out of the workforce.
Can a 65 year old retire in Australia?
No, mandatory retirement at 65 is generally unlawful in Australia. You have the right to work as long as you can perform your job safely and effectively. What if I want to keep working but also access super? A Transition to Retirement (TTR) plan means you can cut back on work hours and supplement your income with super.