What is the ‘retirement age’ in Australia?

Key points:

• As technology and breakthroughs in medical sciences contribute to Australians living longer and healthier lives, many continue to under-estimate how long they will live
• Age matters when retiring, as retirees rely on superannuation, savings and the Age Pension to support themselves and their families
• Drawing from an existing and scarce personal fund earlier in life can quickly dry up without an adequate income stream

This edition of Your Retirement Living contains information about the importance of age in retirement planning, when you can retire and some significant points of interest for retirement planning.

Your age matters when retiring

Living off just your savings and super is a big chunk of money, and it would impact how long your savings last in retirement. You won’t be able to access the Age Pension until 65 – 67 years of age, depending on the year you were born, and if you retire early and run out of super and savings, you may have to look at other payments, such as JobSeeker.

The general life expectancy of older Australians is 83, however, personal life expectancy is not static and people continue to live longer, healthier lives due to innovations in health. However, retiring isn’t always a choice. You can never know what is around the corner as you get older. If you are injured at work, have taken up intensive caring duties, or struggle to find work, you may have to retire earlier than expected.

You don’t want to receive the Age Pension earlier than intended or unexpectedly. You should be prepared and understand when your super may run out.

According to the latest available data from the Australian Bureau of Statistics [ABS]:

• 55 percent of people living in australia over the age of 55 were retired
• Average retirement age was 55.4 years
• Half a million people intend to retire within five years
• Average age people intend to retire is 65.5 years
• Age Pension was the main income source for most retirees
• On average, women retire sooner than men

However, people can only receive the Age Pension when they hit 65 – 67, depending on which year they were born. It is important to remember that many who retire face challenges reentering the workforce after they leave, due to ageism and potentially deteriorating health.

According to the Australian Bureau of Statistics, 42 percent of Australians returned to the labour force after retiring because of ‘financial needs’ and 32 percent resulting from being ‘bored’ and ‘needing something to do.’ The social and economic stresses of social and financial factors in retirement living may lead to feelings of boredom, apathy and anxiety surrounding a loss of identity.

When can you retire?

Age, financial status and life expectancy are not static, meaning there’s no ‘guideline’ for when retirement becomes viable. Additionally, retirement is not necessarily a choice  for some people, with workplace incidents, accidents or unexpected changes influencing someone’s ability to work.

You can retire at any age, provided that you can financially support yourself through existing funds for the rest of your life. The Age Pension, superannuation and any accrued savings you’ve made during life are safeguards to support your retirement, not alternatives to an income stream. If you are of ‘preservation age,’ which means 55 – 60 and begin transitioning to retirement, you may be eligible to access your superannuation. 

Statistics show that if you make it to the average life expectancy — which is 83 years of age in Australia — you are more likely to live for many years thereafter. As a result, it is important to plan ahead for, potentially, decades in advance. New data from the Association of Superannuation Funds of Australia (ASFA) in the Retirement Standard report also suggests that the amount of money needed to retire has increased due to inflation.