Many Australians ask the same question as they move through their working lives. What age should I retire?
The answer depends on several factors, including how you plan to support yourself once you stop working, the type of retirement lifestyle you would like, and how long you expect your retirement to last.
In Australia, retirement timing is often linked to when people can access superannuation or qualify for the Age Pension. Understanding how these income sources work can help explain why many Australians retire around certain ages.
This article explains the common retirement ages in Australia, the income sources people often rely on in retirement, and how superannuation and the Age Pension typically support retirement income.
The Age Pension and retirement age in Australia
For some Australians, the Age Pension supports all or a large portion of retirement income. In those situations, retirement may occur when Age Pension eligibility begins.
The Age Pension age is currently 66.5 years for many Australians and is scheduled to increase to 67 years depending on date of birth.
As at September 2021, Age Pension payments were approximately:
$25,155 per year for singles
$37,923 per year for couples combined
At around this stage of life, many Australians may also be able to access their superannuation if they meet the required access conditions. This means retirees may have two potential income sources to draw on during retirement.
Is the Age Pension enough to retire on?
For some Australians, the Age Pension combined with superannuation may provide sufficient retirement income. According to the Australian Bureau of Statistics (ABS), many people expect to retire around age 65, and a large proportion expect the Age Pension to be their main source of retirement income.
This level of spending is often referred to as a moderate retirement lifestyle.
Some retirees may also qualify to receive part of the Age Pension alongside income from their superannuation savings.
What is considered a comfortable retirement?
Another commonly discussed retirement benchmark in Australia is the comfortable retirement standard, developed by the Association of Superannuation Funds of Australia (ASFA).
According to ASFA estimates, a comfortable retirement lifestyle requires approximately:
$44,818 per year for a single person
$63,352 per year for a couple
To support this level of annual spending, the estimated super balance required at retirement is approximately:
$545,000 for a single person
$640,000 for a couple
These estimates assume retirees own their home and may receive some Age Pension support.
Higher retirement income goals
Some Australians aim for higher retirement income levels. For example, funding a retirement lifestyle of $75,000 per year or more may require larger superannuation balances or additional assets outside super.
These may include investments such as:
Shares
Managed funds
Investment property
Other savings or investment assets
Over long periods, these types of investments may contribute to retirement income alongside superannuation and the Age Pension.
When many Australians begin planning for retirement
While retirement often occurs around age 65 or later, many people begin thinking about retirement planning earlier.
Starting earlier allows more time to understand how retirement income works and how different financial factors may influence retirement outcomes.
For example, people may begin considering retirement planning around age 50 in order to:
Think about what retirement lifestyle they would like and what it may cost each year
Understand how superannuation and other income sources may support retirement
Explore ways retirement savings may grow over time
Planning earlier can provide more time to understand options and how long-term financial decisions may influence retirement outcomes.
Growing retirement savings over time
Retirement savings are typically built gradually over many years through superannuation contributions and investment earnings.
Over long timeframes, investments such as shares or property may experience periods of growth as well as periods of volatility. These fluctuations are a normal part of long-term investing and reflect how markets move over time.
Starting retirement with lower savings may increase the likelihood that retirement income needs to be managed carefully across a longer retirement period.
Understanding retirement options
Because retirement income can come from multiple sources, understanding how superannuation, the Age Pension and personal savings interact can help Australians better understand retirement timing.
Digital tools and licensed advice platforms can help explain how these systems work and how retirement income is commonly structured, using general information and modelling.
The age at which someone retires in Australia depends on a range of factors including income sources, retirement goals and accumulated savings. Many Australians retire around the time they can access superannuation or qualify for the Age Pension, while others may continue working longer.
Understanding how retirement income works, how superannuation grows over time and how the Age Pension fits into the system can help Australians better navigate retirement planning.
Learning how these elements work together can provide greater confidence about retirement timing and long-term financial wellbeing.
Sources: Australian Bureau of Statistics (ABS) and the Association of Superannuation Funds of Australia (ASFA). Figures referenced relate to retirees aged 65 who own their home and were current at June 2021.