When to retire

In a perfect world, we'd all choose exactly when we want to retire, as well as plan the perfect retirement party…

Sadly, not everyone will have enough saved to retire when they want to. Fortunately, we’re here to help you figure out when the best time to retire could be for you, how much your planned retirement will cost and how many years your money may need to last.

As with any big financial decision, it can be a good idea to get financial advice before leaving the workforce.

 Planning your retirement date

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  1.  Key retirement ages

    1. Preservation age
    Legally, part of your superannuation may be ‘preserved’ – that is, you cannot take it out of the superannuation system until you permanently retire from the workforce on or after your preservation age or satisfy a condition of release. Your preservation age depends on your date of birth.

     Date of birth
     Preservation age

    Before 1 July 1960


    1 July 1960 - 30 June 1961


    1 July 1961 - 30 June 1962


    1 July 1962 - 30 June 1963


    1 July 1963 - 30 June 1964


    After 30 June 1964


    2. When you can get the Age Pension
    Eligibility for Age Pension depends on when you were born*:

     Date of birth
     Preservation age

    1 January 1949 - 30 June 1952


    1 July 1952 - 31 December 1953


    1 January 1954 - 30 June 1955


    1 July 1955 - 31 December 1956


    1 January 1957 and later


    * Source: Department of Human Services Age Pension page 6 March 2014 

    3. How many years your super may need to last
    Australians are living longer, which means we will have to stretch retirement savings further. Look at the below life expectancy for Australian men and women and think – will you have enough?

    Life expectancy today

    Age 91.5 years old 93.6 years old

    † Source: The 2015 Intergenerational Report, Treasury, 5 March 2015

    While these figures are a handy guide, don’t forget that your actual life expectancy will depend on factors such as your family history, current lifestyle and health. For more information about Australian life expectancy, search for the Australian Bureau of Statistics Life Tables.

    4. Considering early retirement?
    Don’t forget what this could mean when it comes to tax. The key retirement ages for tax purposes are your preservation age and 60.

    Tax on lump sum withdrawals

    Tax on taxable component of your lump sum
    Tax on non-taxable component of your lump sum
    60+ Nil Nil
    Preservation age-59 First $195,000 tax-free. Amounts above $195,000 taxed at 15% (plus the Medicare levy). Nil
    Under preservation age 20% (plus Medicare levy). Nil

    These figures do not include the Temporary Budget Repair levy

  1.  How much money will you need?

    Lifestyle is a very personal thing – one man’s caravan is another man’s Concorde. ASFA’s retirement budget guide gives some handy information around modest and comfortable living expenses and can be a good starting point for figuring out how much you may need.

    for more information about your retirement budget and end super balance needs, see How much super is enough?

    try our Telstra Super Simulator via SuperOnline (prepopulates with your personal details) or on our website (you enter in your details).

    Handy hint
    Once you have worked out your annual retirement income, have a trial run at living on this amount. You could salary sacrifice the difference between your current wage and your proposed retirement income into your super, so you test your retirement income and boost your super at the same time.

  2.  How can you fund more retirement years?

    In most circumstances, working an extra year will fund more than one extra retirement year. While this will depend on your situation – your age, how much you are earning and what you are contributing to super – the principle that a little extra work pays for a lot more retirement should hold.

    learn more about the difference extra contributions can make
    find out more about Transition to Retirement
    find out more about government programs

Expert advice

Figuring when you should retire can be a difficult decision to make. A financial adviser can help you work out the full financial implications of retiring either sooner or later.

To talk to an adviser from Telstra Super Financial Planning or to discuss your advice needs,
call 1300 033 166 between 8.00am and 5.30pm (Melbourne time) Monday to Friday.