Retirement age and the concept of retirement in Australia is changing dramatically. For some,it’s the age they can access their super. For others,it’s the age they can access the age pension. And for some,it’s never.
Retirement age and the concept of retirement in Australia is changing dramatically,and there are four distinct approaches emerging.Dominic Lorrimer
The recently released 2022-23 Australian Bureau of Statistics retirement intentions survey shows the average retirement age in Australia last year was 64.8 (66.9 for men and 63.2 for women). Interestingly,the average age peopleintended to retire was 65.4. When you dig deeper into the real reasons people left their final role,the picture gets even more interesting.
One-fifth of people lost their last job or closed their business for economic reasons,and never re-entered the workforce,12.8 per cent left because of their own sickness,injury or disability,3.4 per cent left to care for an ill,disabled or elderly person,and 31.8 per cent retired because they reached retirement age,or became eligible for superannuation or the age pension.
When you look at the sources of income people are dependent on in retirement,the real picture of what’s driving our retirement definition becomes even clearer.
In 2022-23,the age pension remains the single most important income source for most Australians in retirement. More people than ever before are retiring with a superannuation balance that will provide them with the ability to use it as a source of income,but the era of superannuation being the primary source of income for most retirees in Australia is still quite a long way off.
For each type of retiree,the opportunities and desires to work differ.
The latest data shows that 31.8 per cent of Australians are completely dependent on the age pension in retirement today and 17.6 per cent are partly self-funded,still drawing a part-pension. That’s at least 49.4 per cent of retired Australians relying on the pension for income. Alongside this,37.1 per cent are fully self funded,a growing cohort.
The data shows that the number one factor influencing someone’s decision to retire is their financial security. No surprises there.
So the fact that IT,mining industry and financial services workers intend to retire earlier than nurses,administrative staff and agriculture workers again will be no surprise. Maybe the latter feel more passion for their jobs,but I suspect it’s the financial security that’s key.
When you get to know today’s retirees like I do,you see four distinct retirement definitions and each do retirement strategy completely differently:
Retirement age= superannuation age. These folks have healthy super balances and can afford to self-fund their early and middle retirement years (maybe even their later years too) without much help from the age pension. For these people the target window for retirement is often 60,the earliest age most can access their superannuation if they stop working.
Retirement age= age pension age. This group pairs a modest super balance with the age pension to create a passive income they can scrape by on without working full-time.
With the age pension qualification age at 67,this is the critical layer of income that enables them to give up full-time work and formally begin to access both the age pension and their superannuation.
Retirement? What retirement? These people love their jobs and don’t want to retire. They stay in the workforce longer and may choose to access their superannuation from the age of 65,without ever uttering the word “retirement”. Age is just a number to these people,and why shouldn’t it be?
The sweet spot strategists.This one is the person who is well-planned,understands how to use both superannuation and the age pension systems together. Having done their homework,they know they have enough superannuation to retire a couple of years before pension age.
They plan to fund those years with a superannuation income stream or lump sum,then shift gears in their late sixties to live in the sweet spot. This involves maximising their income from the age pension before layering on just enough income from their right sized superannuation balance.
Here’s the kicker:most people who retire in their sixties don’t actually stop working entirely. A recent Allianz study of the Epic Retirement Community showed that a whopping 77 per cent of pre-retirees are open to working in some capacity after they officially retire.
Of those,38 per cent plan to actively seek part-time work or other employment opportunities,while 39 per cent are open to the idea but haven’t made firm plans yet.
For each type of retiree,the opportunities and desires to work differ. Some seek the mental stimulation and social connection of part-time work,while others are drawn to the flexibility and creativity of consulting or passion projects.
Our longer,healthier lives make this continued engagement with work a logical and fulfilling choice. Work,in whatever form it takes,brings purpose,social connection,and extra income – all key ingredients for a happy and healthy retirement.
Bec Wilson is the author of the bestseller,How to Have an Epic Retirement. She writes a weekly newsletter at and she is the host of the podcast.
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