What is the retirement age in Australia?

Title
What is the retirement age in Australia?
Short description

There isn't an official retirement age in Australia but there are generally two age rules that impact when most Australians can retire - preservation age and the age pension.

Topics
mlc:Topics/retirement
Time to read
7 min
Effective date
2024-04-04 00:00
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Key takeaways

  • There’s no fixed retirement age in Australia, but there are generally two age rules that impact when most Australians can retire – preservation age and Age Pension qualifying age.
  • For most people, it’s generally only possible to withdraw your super after you’ve reached your preservation age—which from 1 July this year is 60.
  • If you want to withdraw your super as a cash lump sum, you will need to meet a condition of release.

You may be surprised to know that there’s no fixed retirement age in Australia, nor any laws that dictate when someone can retire. It’s enitirely up to you when you want to give up work for good or just cut back on your work hours.

But while most of us may dream of retiring early, there are generally two age rules that impact when most Australians can retire, as they enable you to access funds to support your retirement. They are:

  • Preservation age: this is the earliest age where it’s possible to access your super under the ‘retirement’ condition of release or start a ‘transition to retirement’ pension.
  • Age pension age: this is the age when you can access Australia’s Age Pension, provided that you meet the eligibility criteria – which includes a residency test, income test and assets test.

 

Preservation age and accessing super

Your super is designed to help fund your retirement. Generally, it’s only possible to withdraw your super after you’ve reached your ‘preservation age.’ Previously, the preservation age ranged between 55 and 60, depending on the year you were born, but from 1 July 2024, the preservation age will be 60.

If you were born between 1 July 1963 and 30 June 1964, your preservation age is 59, but for everyone born from 1 July 1964 onwards, the preservation age is 60.

Although you can start accessing some of your super once you reach your preservation age, you won’t have full access to your super until you’ve also met the conditions of release.

 

Conditions of super release

You can start accessing some of your super in the form of an income stream while you’re still working and have reached your preservation age. If, however, you want to withdraw your super as a cash lump sum, you need to meet a condition of release. Conditions of release, which allow you to receive lump sums from your super, include:

  • Turning 65 (even if you haven’t retired)
  • Reach preservation age and retire
  • Satisfy an early access condition of release, such as incapacity or financial hardship.

Retirement means you have ceased gainful employment either:

  • When you were 60 years old or over
  • At any time, once you have reached your preservation age and have no intention of returning to work for 10 hours or more each week. Note that from 1 July 2024, the preservation age will increase to age 60.

 

Accessing your super via a transition to retirement pension

A transition to retirement pension enables you to access your super as an income stream before you retire but after you have reached your preservation age.

Through a transition to retirement pension you can choose to work less, or continue working the same hours while making your own contributions into super. In both cases, you can use the income from your transition to retirement pension to supplement any reduction in your take-home pay.

For example, you can gently transition into retirement by remaining in the workforce on a part-time basis. To maintain the same level of income, a transition to retirement pension allows you to make up the difference in lost income from your super. As you’re still employed, your super will continue to be topped up too.

While this can be a useful way to supplement your income, accessing your super may reduce the amount of retirement savings you have left to fund your eventual retirement.

Another drawback is you are required to receive a minimum pension payment of 4% of your transition to retirement pension account balance each financial year, with a maximum pension payment of 10%.

 

When are you eligible for the Age Pension?

To be eligible for a full or part Age Pension from the government, you must have reached your pension age, satisfy an income test and an assets test, as well as other requirements.

The current qualifying age for the Age Pension is 67.

If you're eligible for the Age Pension, the amount you'll receive will depend on whether you're single, a couple or illness separated couple, along with the amount of income you earn and the value of your assets (such as property, investments and cars, but excluding the home you live in). Super is assessed under both the income and assets test.

The Age Pension is made up of a basic rate, as well as a pension supplement and energy supplement.

There are different rates of Age Pension payments for single and partnered people. The current maximum fortnightly payments are:

Per fortnight

Single

Couple (combined)

Partnered (apart due to ill health)

Maximum basic rate

$1,020.60

$1,538.60

$1,020.60

Maximum Pension Supplement

$81.60

$123.00

$81.60

Energy Supplement

$14.10

$21.20

$14.10

Total

$1,116.30

$1,682.80

$1,116.30

Source: Services Australia.

Working out your entitlements isn’t always straightforward. You can find out more regarding your eligibility and entitlement to the Age Pension payment through Services Australia or refer to our article to figure out if you're eligible for the Age Pension.

 

How do you want your retirement to look?

The amount needed each year in retirement will be different for everyone, but the Association of Superannuation Funds of Australia (ASFA) estimates that Australians aged 65-84 who own their own home and are in relatively good health, will need the following amount of money each year (December quarter 2023):1

Total per year Comfortable lifestyle p.a. Modest lifestyle p.a.

Couple

Single

Couple

Single

$72,148.19

$51,278.30

$46,994.28

$32,665.66

 

The figures in each case assume that the retiree(s) own their own home and relate to expenditure by the household. This can be greater than household income after income tax where there is a drawdown on capital over the period of retirement.

A modest retirement lifestyle is considered better than the Age Pension, but one where you’re only able to afford basic activities.

A comfortable retirement lifestyle allows retirees to maintain a good standard of living, including being able to afford things such as better quality consumer goods, private health insurance, and recreational activities.

 

Factors involved

Working out how much is enough for your retirement depends on many factors, such as your plans, lifestyle, and the number of years you expect to spend retired. Additionally, estimating how much you’ll have when you plan to retire depends on factors such as your current salary, super balance and assets.

By using our personal super calculator and tools, you can get an indication of how much super you may have in retirement and how long your super may last. You can also see the impact that changing items like your income goal, retirement age, contribution amounts or investment mix may have on your results.

 

Thinking about retiring but not sure if you can?

There’s no magic age at which to retire, and it’s a very personal decision. Deciding when to retire will depend on a range of factors, and you’ll need to consider what kind of lifestyle you want to have in retirement. You’ll also need to understand whether you’ll have enough money to support this.

To ensure you have sufficient funds to enjoy your retirement, we recommend you visit the retirement section on our website, which includes a range of tools and resources to help kick-start your retirement planning. Also, refer to our retirement planning guide to help you prepare well for retirement and get a handle on what to expect when that momentous day arrives.

You may also want to consider speaking to a financial adviser. They can help you determine how much you should save and invest each month to reach your retirement goals, and whether your investment strategy is right for you. They can also identify any tax savings or government benefits that may be available to you.

 

Frequently Asked Questions

When was the retirement age raised to 67 in Australia?

As of 1 July 2023, Australians born on or after 1957 will have to wait until they’re 67 years old—up from 66 years and six months—before they can apply for the Age Pension.

This age requirement also applies to the Commonwealth Seniors Healthcare Card.

What age can I access my super in Australia?

You can access your super when you retire and reach your preservation age which is 59 if you were born between 1 July 1963 and 30 June 1964, and 60 for everyone else born after 30 June 1964.

There are some circumstances where you may be able to access your super earlier.

When can I access my super tax free?

Generally, once you reach age 60, your super payments are tax free.

 


 

1 ASFA Retirement Standard December quarter 2023 https://www.superannuation.asn.au/resources/retirement-standard

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Related links

How much money do you need to retire?

Help your retirement funds last the distance

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  • This article has been prepared by NULIS Nominees (Australia) Limited ABN 80 008 515 633 AFSL 236465 (NULIS) as trustee of the MLC Super Fund ABN 70 732 426 024. NULIS is part of the Insignia Financial group of companies comprising Insignia Financial Ltd ABN 49 100 103 722 and its related bodies corporate (‘Insignia Financial Group’). The information in this article is current as at May 2024 and may be subject to change. This information may constitute general advice. The information in this article is general in nature and does not take into account your personal objectives, financial situation or needs. You should consider obtaining independent advice before making any financial decisions based on this information. It is recommended that you consider the relevant Product Disclosure Statement (PDS) and Target Market Determination (TMD) before you make any decisions about your superannuation. You can obtain the latest copy of the PDS (or other disclosure documents) and TMD by calling us on 132 652 or by searching for the applicable product at mlc.com.au. You should not rely on this article to determine your personal tax obligations. Please consult a registered tax agent for this purpose. Opinions constitute our judgement at the time of issue. The case study examples (if any) provided in this article have been included for illustrative purposes only and should not be relied upon for decision making. Subject to terms implied by law and which cannot be excluded, neither NULIS nor any member of the Insignia Financial Group accept responsibility for any loss or liability incurred by you in respect of any error, omission or misrepresentation in the information in this communication.