Retirement looks different for each person.
For some of us, it means wrapping up our time in the workforce to dedicate to a passion project for the rest of our lives. For others, it means permanently ending our working stint to travel or spend time with loved ones.
Whatever it looks like for you, retirement is a new life stage that requires planning and preparation.
Part of preparing for retirement is considering the options available to you. In Australia, one key option is accessing the Government Age Pension. To receive the Age Pension, you need to meet certain eligibility criteria, including the legislated retirement age in Australia.
Retirement age in Australia
In Australia, the retirement age is the eligibility age to receive the Age Pension. This is currently at least age 66 but varies depending on when you were born.
The table below summarises the retirement ages that apply based on date of birth:
But reaching retirement age isn’t the only factor that qualifies you to receive the Age Pension. To be eligible, you must also meet residence rules, an income test, and assets test.
Even if you’re able to access the Age Pension, it’s generally not enough even for a modest retirement. And if you’re reading this, chances are you’re on the journey to financial independence and want more than just a modest retirement!
So, how much do I need to retire?
There are mixed views out there on how much you need to retire in Australia. However, all agree that as the cost of living rises, the amount we need to retire continues to increase.
It all comes down to how much you’ll need to spend in retirement, based on the lifestyle you desire. Other factors to consider include the age you’d like to retire at and your personal circumstances.
To estimate how much money you need to retire, you can use Pearler's Financial Independence calculator . This calculator helps you calculate the age at which you’re likely to reach financial independence. That way, you can work out when you can retire.
How can I prepare for retirement?
There are a few different ways you can prepare for retirement. As I mentioned before, the Age Pension can provide some income in retirement (if you’re eligible). Even so, it’s not enough on its own. Other sources of income in retirement include:
- Superannuation – the primary purpose of super is to save for retirement, so it’s worth taking the time to set up your super properly.
- Property investing – this is a great way to build your wealth over the long term, giving you the option to sell your property in retirement for lump sum income. Take note that owning property may make you ineligible to receive the Age Pension (assets test).
- Shares investing – another useful way to build long term wealth and earn passive income.
- Savings – just as you might build an emergency savings fund, you can also set up a separate savings account specifically for retirement.
As you prepare for retirement, it’s best to seek advice from a licensed financial adviser to make a well-informed plan. And if shares investing is part of that plan, start your journey with Pearler today!
