There is actually no hard and fast retirement age in Australia. For most people, the point at which they call it a day and retire from the workforce is generally determined by a few factors:
Generally, you must reach what’s called your ‘preservation age’ before you can access your super. You can use the following table to work out your preservation age, which depends on your date of birth.
|Date of Birth||Preservation Age|
|Before 1 July 1960||55|
|1 July 1960 - 30 June 1961||56|
|1 July 1961 - 30 June 1962||57|
|1 July 1962 - 30 June 1963||58|
|1 July 1963 - 30 June 1964||59|
|From 1 July 1964||60|
Upon reaching your preservation age, you must also meet a ‘condition of release’ to access your Superannuation. A condition of release is basically a list of reasons the trustee of your Super fund can accept to release your funds. Retirement is one of these conditions; however, what is actually classified as retirement depends on the person’s age. For instance, if you’re under 60 you must have ceased gainful employment and intend to never again become gainfully employment for 10 hours or more each week.
However, once you have reached 65 you can access your superannuation without any restrictions.
Men and women are now eligible for the age pension at 65.
The Government announced in the 2009 Federal Budget that the Age Pension age is set to increase to 67 years of age from 2023. This change will occur in a staggered approach rather than in one swift increase from 65 to 67.
Use the following table to work out your qualifying age.
|Born||Eligible at age|
|From 1 July 1952 to 31 Dec 1953||65.5|
|From 1 Jan 1954 to 30 June 1955||66|
|From 1 July 1955 to 31 Dec 1956||66.5|
|From 1 Jan 1957||67|
This change is bound to impact the potential retirement age of Australians going forward. For most, the Age Pension remains a key part of any retirement plan, even when you have superannuation and other investments. Regardless if you are only entitled to a few dollars in Age Pension, you still qualify for the extra benefits such as discounts on prescriptions, council rates and some other household bills.
Approximately 80% of Australians who have reached Age Pension age receive a full or part Age Pension. As it currently stands, some couples who hold in excess of $1 million in assets on top of their family home are still eligible for a part Age Pension.
The ASFA Retirement Standard suggests for a comfortable retirement, a couple need to spend $56,317 a year and a single person $41,170 per year. As a couple, even if you qualify for the full Age Pension of $31,688 per annum, this still leaves a large shortfall to meet the requirements of a comfortable standard of living. Therefore, it’s fair to say that social security entitlements alone are generally not enough to provide a comfortable retirement for most people.
The Australian Bureau of Statistics state the average life expectancy for a male aged 65 is around 19 years and for a female aged 65 is nearly 22 years. The ASFA Retirement Standard estimates (based on their assumptions) the lump-sums required to provide for a comfortable retirement are as follows:
• $430,000 for a single
• $510,000 for a couple.
This assumes you own your home outright and are reasonably healthy. In my experience with many clients over the years, the above figures are roughly comparable to some real-life cases I have worked on.
The question of how much in assets you require will depend on a number of factors including age, lifestyle and entitlement to government assistance. The above figures give you a rough guide only as to what you may need in retirement.
It is best to speak to a professional to determine how much you require in retirement and whether you’re on track to meet this goal. And don’t do what many others do and leave this until just before you’re about to retire, as you may be in for a reality check as to what you can achieve.