The age to retire is often intrinsically linked to age-based milestones such as being able to access superannuation or age eligibility for the aged pension. However, did you know that there is no official retirement age in Australia?
Under current legislation, if you have been born after 1 July 1964 the earliest you will be able to access your superannuation is from the age of 60 subject to meeting a condition of release, the most common of which is retirement. Furthermore, you become age eligible for income support in the form of the age pension from 67 years of age, with your entitlement to receive the aged pension (in full or part) subject to meeting both the assets test and income test. As such, these two age-based factors can sometimes be perceived as the age when people feel they can retire.
While reaching such milestones are important as part of any retirement plan, they alone should not necessarily dictate when you retire. What is important is having clearly defined lifestyle goals and objectives, an understanding of what your financial requirements and needs will be and knowing that your capital and sources of income can adequately support your desired lifestyle throughout retirement. This is paramount regardless of what age you are planning to retire.
There are people that aspire to retire as early as possible, which may be at an age before they can access their superannuation. In such situations, having adequate capital and the financial means outside the superannuation environment to meet their requirements becomes a critical component of their early retirement plan. The inherent challenge with an early retirement is making sure your lifestyle goals and objectives can be met throughout your retirement. Identifying and addressing any potential gaps is an essential component of your life plan.
Prior to retirement, your lifestyle is broadly based around your household income typically earned through employment or personal exertion. When you retire and that income ceases, that income needs to be replaced by drawing down on your capital, investment earnings or a combination of both, and may be further supplemented by the aged pension if eligible at the appropriate age. The replacement income requirement can often be lower in retirement but can also be higher depending on your retirement lifestyle and subsequent needs. Either way, having a robust plan on how much you may spend in retirement is a critical determinant in the amount of capital you will need to support your desired. That is where Independent Wealth Partners can help you.
Regardless of what age you retire, your retirement requires considered and thoughtful planning and a purpose driven strategic accumulation of capital that can sustain your retirement lifestyle, and mitigate against key risks of inflation, longevity and potential aged care needs. If you want to be in control of your path to retirement and beyond, we would love to have a conversation with you to get you started and help you navigate your retirement lifestyle.
General Advice Warning
The information in this article is general advice only. It does not take into account your objectives, financial situation or needs. Before acting on any information, you should consider the appropriateness of the information provided and the nature of the relevant financial product having regard to your objectives, financial situation and needs. You should seek independent financial advice to discuss your personal circumstances.