Latest posts by Wally David (see all)
- The 3 decisions you need to make before retirement - October 14, 2014
- 1 January 2015 Pension Changes - October 1, 2014
- Should I pay off my mortgage or invest? - September 24, 2014
- Age Pension Increase September 2014 - September 22, 2014
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 couple of factors:
- The age that you can access your superannuation
- Your qualifying age for the Age Pension from Centrelink
What is the retirement age in Australia?
Factors to consider
Accessing your Super
In most cases, you must reach your ‘preservation age’ to get your hands on your super. The following table provides your preservation age based 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|
Once you reach preservation age and have retired, you can access your super.
Jacqui is 56 and was born on January 13th, 1958. She has just retired from the workforce and doesn’t intend to work again. She can withdraw from her superannuation, subject to any tax considerations.
If you are still working, then you may only have limited access to your funds. By limited I mean you may be able to access your super in the form of an income stream, rather than a lump sum payment. The technical name for this is a transition to retirement pension where you can receive regular payments from your super while you continue working. You can access up to 10% of your super account balance each financial year.
An example of this is John who has a super balance at July 1st of $300,000. He can start a Transition to Retirement pension and receive up to $30,000 in pension payments for that financial year.
Once you have reached 65 you have the green light to access your superannuation without any restrictions. You can take it as a lump sum if you want to pay off something big like your mortgage or you can take it as a regular payment or pension.
Men and women currently aged 65 are eligible for the age pension.
Set to increase
The Government has just announced in the 2014 Federal Budget that the Age Pension age is set to increase to 70 years of age from 2035. This change will occur in a staggered approach rather than in one swift increase.
From 1 July 2025, the age pension qualifying age will start rising by six months every two years, from 67 years to 70 years by 1 July 2035.
In effect, someone born after 1 January 1966 will not be able to apply for the age pension until 70.
Use the following table to work out your qualifying age.
|Date of birth between||Eligible at age|
|1 July 1952 to 31 Dec 1953||65.5|
|1 Jan 1954 to 30 June 1955||66|
|1 July 1955 to 31 Dec 1956||66.5|
|1 January 1957 and 30 June 1958 ||67|
|1 July 1958 and 31 December 1959 ||67.5|
|1 January 1960 and 30 June 1961||68|
|1 July 1961 and 31 December 1962||68.5|
|1 January 1963 and 30 June 1964||69|
|1 July 1964 and 31 December 1965||69.5|
|1 January 1966 and later||70|
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.
This does not mean you will need to work to age 70, just that you will need to rely on superannuation and other savings between retiring from the workforce and reaching age pension age.
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