Wondering when you can retire? Here’s what you should know.
Whilst the average age of retirement in Australia is 55, most pre-retirees are planning to work well into their sixties to access their pension and secure a more stable source of income.
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15 March 2023
Stories
| Retirement Living
Wondering when you can retire? Here’s what you should know.
Whilst the average age of retirement in Australia is 55, most pre-retirees are planning to work well into their sixties to access their pension and secure a more stable source of income.
Many of us will spend at least a quarter of a century in retirement – and for some, that could be even longer with ongoing advancements in healthcare. It’s never been more important to plan for life’s ‘third act.’
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What do we mean by retirement?
What do you see in your mind’s eye when you think about retirement? Are you travelling the world on a cruise ship? Spending more time with family? Taking up a new hobby? Dreams of retirement look different from one individual to the next, but in a formal context, the definition of retiring is simply stepping away permanently from the workforce.
There is no right or wrong way to retire, and just as the working population chooses careers that are varied and diverse ranging, equally your retirement lifestyle will reflect your own unique interests, goals, and skills.
When do most Australians retire?
According to the latest research from the Australian Bureau of Statistics (ABS), the average retirement age in Australia (for both men and women) is 55 years old. This may sound early, but most pre-retirees over the age of 45 are planning to retire at age 65 or older, according to the same data set.
This aligns with the age most people can access their Age Pension, which is 66-67 years old, depending on your date of birth. In 2019, Age Pension was the main source of income for retirees (ABS, 2019).
And even if most people dream of an earlier retirement, the decision of exactly ‘when’ will be largely based on the income available to you once you stop earning.
How to fund your retirement
In Australia, there are two main sources of income that most people can depend upon once they leave the workforce: the Age Pension and Superannuation.
1. Age Pension – this is paid to you by the Australian Government, and in most cases, you must be over 66 years and 6 months old to receive it. On 1 July 2023, the Age Pension age will increase to 67 years old.
To access the Age Pension, you usually need to have been an Australian resident for at least 10 years.
The Age Pension is means tested, and the amount you receive will depend on:
- your income
- how much property you own
- if you’re single or part of a couple.
You can find out about the current rates of the Age Pension here.
2. Superannuation – this is money that your employer(s) has put aside for you during your working life, ready for you to live on once you retire. The fund may also include any additional contributions that you have made over the years.
Your ‘super’ becomes accessible once you reach what is known as your ‘preservation age,’ which is between 55-60, depending on your date of birth. You must be retired to access the entire fund; however, some people choose to access portions of it before they stop working completely, reducing their hours over time and bolstering their income with their superannuation fund. This is known as a Transition to Retirement Income Stream (TRIS)
The way you choose to fund your retirement will be dependent on your own personal circumstances, and how you choose to transition out of the working world. As with any major life change, it’s wise to seek professional advice so you know what’s best for you financially.
The many paths to retirement
Not everyone is counting down the days to their retirement – more than 32% of retirees in 2019 were forced to stop working earlier than planned. This isn’t always a welcome turn of events – especially if you aren’t financially ready. According to the ABS, 11% of all retirees were forced into early retirement due to dismissal or redundancy, unable to find alternative work.
Sickness or disability can also force early retirement and is surprisingly common. As many as 21% had to leave the workforce in 2019 due to their own ill health. In addition, people often need to retire to care for a family member full time.
The majority of retirees in 2019 (46%) decided to retire because they became eligible for either the Age Pension or superannuation. This often coincides with people reaching a stage in life where they want to pursue other interests, such as travel or playing a more active role with grandchildren.
What’s the average length of retirement?
These days, most of us can confidently expect to live into our eighties, with the average life expectancy for men being 81, and 85 for women (ABS, 2021). And, with ongoing advancements in healthcare, this age is only set to become higher over time.
Therefore, with most Australians retiring between 55-65, most of us can expect at least two decades of retirement, if not three. As we’ve seen, there is a fair chance you might also need to retire earlier than planned, should you fall ill and no longer be able to work, or if you need to care for somebody. All in all, it makes good sense to plan for a retirement that’s longer than you might expect.
Plan how you’ll spend your time
Whatever your path to retirement, it’s important to plan how you will spend your time - having realistic goals and a new routine will give you a sense of purpose as you make the transition. Many retirees enjoy taking up new hobbies, or volunteering in the community.
Above all, maintaining regular social interaction is crucial for your emotional wellbeing. Retirees often talk about missing the social aspect of work life – the small, day-to-day interactions with peers. It’s important to find ways to recreate these in your retired life, too.
A wonderful way of doing this is to consider downsizing to a Retirement Village.
Retirement villages are often home to beautiful facilities that the whole family can enjoy.
What is a retirement village?
Retirement villages – often referred to as retirement living or retirement communities – are an increasingly popular option for retirees – aimed at those who are seeking an active, independent lifestyle amongst others at a similar stage of life. They also have added benefits such as little to no maintenance costs, and the option to receive care in your own home if your health needs change over time.
Retirement villages are often home to beautiful, ‘resort-style’ amenities, such as swimming pools, cafes, and bowling greens, creating that ‘village’ feel and a strong sense of community.
They are a wonderful option to consider when planning for retirement. Learn more about ‘village life’ and decide if it's for you.
How do I find a BaptistCare retirement village near me?
You can explore the benefits of a retirement community near you, by simply using BaptistCare’s handy online tool to find a location in New South Wales or Canberra. Why not book in a tour and get an idea of what retirement living is all about?
BaptistCare has been trusted by thousands of Australians across the retirement living, aged care and community service sectors since 1944. While we are not-for-profit, there are a few things that we certainly are for: outstanding quality and a quest to truly make a difference, not just in our retirement living communities, but in all communities.
Click the link below to learn more about BaptistCare services:
Retirement Living | Financials Explained | Adaptive Living | Find a village
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