WHAT AGE CAN I RETIRE?
‘What age am I allowed to retire?’ or ‘When can I retire?’ are common questions.
As there’s no fixed retirement age in Australia, nor any laws that dictate when someone can retire, it’s completely up to you when you want to give up work for good or simply cut back on your work hours.
But while most of us may dream of retiring early, there are generally 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 earliest age where it’s possible in normal circumstances to access your super
- Age pension age: this is the age when you can access Australia’s Age Pension, provided that you meet the eligibility criteria – including you’re an Australian resident and pass the income test and the assets test.
Preservation age and accessing super
Your super is designed to help fund your retirement. Generally, it’s only possible to withdraw your super after you’ve reached your ‘preservation age’ which is between 55 and 60, depending on when you were born. The table below can help you identify your preservation age:
| 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 |
However, although you can start accessing some of your super once you reach your preservation age, you won’t have full access to your super until you’ve also met a condition of release.
Conditions of super release
You can start accessing some of your super while you’re still working once you’ve reached your preservation age in the form of an income stream. But, if you want to withdraw your super as a cash lump sum, you need to also meet a condition of release. Conditions of release which allow you to receive lump sums from your super include:
- Reaching your preservation age and fully retiring
- Turning 60 and ceasing employment after age 60.
- Turning 65 (even if you’re still working).
- There are also some special cases where you may be able to withdraw your super savings early.
Accessing your super during a transition to retirement (TTR)
If you’ve reached your preservation age, but you’re not quite ready to permanently retire and haven’t met a condition of release allowing access to lump sums, you can still access a portion of your super through a transition to retirement pension (TTR).
A TTR is an account-based pension that provides regular payments from your super. As part of your retirement plan, a TTR can give you more financial flexibility and free up precious time, or can help you maintain your work hours while saving on tax. You can take an income of between 4% and 10% of the value of your TTR pension each financial year.
When are you eligible for the Age Pension?
To be eligible for a full or part Age Pension from the government, you must have reached your pension age, satisfy an income test and an assets test, as well as other requirements.
The age at which you may be eligible for the Age Pension depends on your date of birth, as summarised in the table below.
| Date of birth | Age pension eligibility age |
| Before 1 July 1952 | 65 years |
| 1 July 1952 – 31 December 1953 | 65 years and 6 months |
| 1 January 1954 – 30 June 1955 | 66 years |
| 1 July 1955 – 31 December 1956 | 66 years and 6 months |
| From 1 January 1957 or later | 67 years |
If you’re eligible for the Age Pension, the amount you’ll receive will depend on whether you’re single or a couple, the amount of income you earn and the value of your assets (such as property – excluding owner occupied home, investments and cars). Super is generally assessed under both the income and assets test.
The Age Pension is made up of a basic pay rate that all eligible people receive, as well as a Pension Supplement and Energy Supplement. There are different rates of Age Pension payments for single and partnered people. The current maximum fortnightly payments are1:
| Per fortnight | Single | Couple each | Couple combined | Couple apart due to ill health |
| Maximum basic rate | $936.80 | $706.20 | $1412.40 | $936.80 each |
| Maximum Pension Supplement | $75.60 | $57.00 | $114.00 | $75.60 each |
| Energy Supplement | $14.10 | $10.60 | $21.20 | $14.10 each |
| Total | $1026.50 | $773.80 | $1547.60 | $1026.50 each |
How much are you likely to need each year in retirement?
The amount needed each year in retirement will be different for everyone, but the Association of Superannuation Funds of Australia (ASFA) estimates that Australians aged 65-84 who own their own home and are in relatively good health, will need the following amount of money each year (September quarter 2022):2
| Total per year | Comfortable lifestyle p.a. | Modest lifestyle p.a. | ||
| Couple | Single | Couple | Single | |
| $68,014 | $48,266 | $44,034 | $30,582 | |
The figures in each case assume that the retiree(s) own their own home and relate to expenditure by the household. This can be greater than household income after income tax where there is a drawdown on capital over the period of retirement.
A modest retirement lifestyle is considered better than the Age Pension, but still only able to afford fairly basic activities. A comfortable retirement lifestyle enables an older, healthy retiree to be involved in a broad range of leisure and recreational activities.
Factors involved
Working out how much is enough for your retirement depends on many factors, such as your plans, lifestyle and the number of years you expect to spend retired. Additionally, estimating how much you’ll have when you plan to retire depends on factors such as your current salary, super balance and assets.
Thinking about retiring but not sure if you can? There’s no magic age at which to retire, and it’s a very personal decision. But deciding when to retire will depend on a range of factors, and you’ll need to consider what kind of lifestyle you want to have in retirement. You’ll also need to understand whether you’ll have enough money to support this.
By MLC