What is the retirement age in Australia?

What age am I allowed to retire?’ or ‘When can I retire?’ are common questions Australians ask.

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.1 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 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.

However, with a TTR it’s only possible to withdraw between 2% and 10% of your super savings every financial year.2

If you’re considering this strategy, we recommend you speak to a financial adviser, to make sure it’s the right approach for you. You can also find out more about a transition to retirement pension through our website.

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.

Currently, the qualifying age for the age pension is increasing by six months every two years until 1 July 2023 when the qualifying age will be 67. However, you age pension age may be under 67 depending on your age.3 

 

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

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). 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. The table below shows the maximum rates you can receive from the Age Pension if you meet the eligibility requirements.4
 

Per fortnight

Single

Couple each

Couple combined

Couple apart due to ill health

Maximum basic rate

$860.60

$648.70

$1,297.40

$860.60

Maximum Pension Supplement

$69.60

$52.50

$105

$69.60

Energy Supplement

$14.10

$10.60

$21.20

$14.10

Total

$944.30

$711.80

$1,423.60

$944.30


It’s important to remember that the age you can become eligible for the Age Pension and the age you can access your super typically won’t be the same. As the Age Pension is also subject to an income test and an assets test, we recommend you speak to a financial adviser to understand whether you’re eligible to receive the Age Pension. The income test assesses your total income from all sources. The assets test assesses the value of your total assets (excluding the home you live in). Financial assets are assessed using the ‘deeming’ rules, where an assumed rate of return is used not the actual earning rate. Financial assets includes cash, term deposits and shares.

When do most Australians retire?

According to the Australian Bureau of Statistics (ABS), the average retirement age for people aged 45 years and over is currently 55.4 years (this figure also includes people who had left their last job due to illness, injury, job loss, and other reasons). But when you narrow it down to the average age at retirement for recent retirees (those who have retired in the last five years) it rises to 63 years.5

The ABS also regularly estimates the life expectancy at birth of Australians. In its latest study from 2016-2018, the ABS estimated the life expectancy for a newborn male is 80.7 years, with a newborn female likely to enjoy 84.9 years. And if you’ve already made it to age 65, you also still have one of the highest life expectancies in the world – a male at age 65 can look forward to living another 19.9 years and a female a further 22.6 years.6

What’s important is we’re not just living longer – we’re also living well for longer too. According to research conducted by the World Health Organization in 2016, Australia’s healthy life expectancy – years of ‘full health’ without disease or injury – is 73 years, which is about 10 years higher than the global average.7

Unsurprisingly, as our healthy life span grows, expectations about retirement shift. We’re not only living longer, we’re feeling young for longer too – older Australians are travelling more and we have higher expectations of what those 20 years of retirement look like.

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 around 65 who own their own home and are in relatively good health, will need the following amount of money each year:8

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. If your idea of a comfortable retirement lifestyle is having more to live off than suggested by the ASFA, it might be time to review your situation to ensure you’re on track. We recommend you speak with a financial adviser.

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. 

By using our retirement calculators and tools, you can get an indication of how much super you may have in retirement and how long your super may last. You can also see the impact that changing items like your income goal, retirement age, contribution amounts or investment mix may have on the results.

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.

To ensure you have sufficient funds to enjoy your retirement, we recommend you visit the retirement section on our website, which includes a range of tools and resources to help kick-start your retirement planning.

Please contact us on Phone (07) 3343 9228 if you seek further discussion on this topic.

1The Australian Taxation Office (ATO) – Accessing your super: https://www.ato.gov.au/Individuals/Super/Accessing-your-super

2In 2020/21, the Government has temporarily reduced the normal minimum drawdown by 50%. From 1 July 2021/22, the minimum drawdown will return to the normal rate of 4%

3Australian Government Department of Human Services – Age Pension: https://www.humanservices.gov.au/individuals/services/centrelink/age-pension

4Australian Government Services Australia – Age Pension: https://www.servicesaustralia.gov.au/individuals/services/centrelink/age-pension/how-much-you-can-get/income-test-pensions 

5Australian Bureau of Statistics – Retirement and Retirement Intentions, Australia, 2018-2019: https://www.abs.gov.au/ausstats/abs@.nsf/mf/6238.0

6Australian Bureau of Statistics – Life Tables, States, Territories and Australia, 2016-2018: https://www.abs.gov.au/ausstats

7World Health Organization – Global Health Observatory (GHO) data: https://www.who.int/gho/mortality_burden_disease/life_tables/situation_trends_text/en/

8Association of Superannuation Funds of Australia (ASFA) – Retirement Standard March quarter 2020, national: https://www.superannuation.asn.au/resources/retirement-standard

Source : MLC Insights December 2020 

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