Some people know when they want to retire, some want to work forever, and some – through health reasons or retrenchment – have the decision made for them.
There are many factors that go into making your decision, starting with working out how much your retirement will cost and how many years your money needs to last.
How to plan your retirement date
When you retire you'll need access to money to pay for your lifestyle. Key dates determine when you can access your money from super and be eligible for an Age Pension.
Your 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 meet another condition of release. Your preservation age depends on when you were born.
|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|
|After 30 June 1964||60|
Accessing the Age Pension
Eligibility for Age Pension depends on when you were born*:
|Date of birth||Eligibility age|
|1 January 1949 - 30 June 1952||65|
|1 July 1952 - 31 December 1953||65.5|
|1 January 1954 - 30 June 1955||66|
|1 July 1955 - 31 December 1956||66.5|
|1 January 1957 and later||67|
How long does my money need to last?
Australians are living longer, which means you'll have to stretch your retirement savings further. Below is the life expectancy of Australian men and women and think – if you lived this long would you have enough?
Life expectancy today for a person born in 2015
Men Women Age 91.5 years old 93.6 years old
While these figures are a handy guide, don't forget that your actual life expectancy depends 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.
Considering early retirement?
Leaving work early could have tax implications. Your preservation age and age 60 are the key ages that impact the tax on your super.
Tax on super withdrawals (including payments from a RetireAccess account)
Age 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
If you're retiring soon there are options for paying yourself an income from your super. TelstraSuper RetireAccess is a competitively priced, flexible retirement income stream account. There may be tax implications when accessing your super which is why TelstraSuper Financial Planning can help you develop a financial strategy tailored to your individual needs to help your super go the distance.
To book an appointment call 1300 033 166 or request a call back online.
How much money will you need?
Lifestyle is a very personal thing – one man's mini is another man's Ferrari. 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 retirement simulator via SuperOnline (prepopulates with your personal details) or on our website (you enter in your details).
Once you've 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, to test your retirement income and boost your super at the same time.
Things you can do for a better retirement
There are things you can do to meet your retirement goals.
- work longer: it goes without saying the longer you work the more you can save
- boost your super: making extra contributions is one of the best ways to ensure you can maintain your lifestyle after finishing work
- consolidate your super accounts: if you've more than one fund you should consider moving them into a single account
- take advantage of super's tax savings: find out if you could benefit from some of the super tax effective ways of saving
- review your investments: choosing your investment options is an important decision that can have a big impact on your super balance and pension income.