When is the best time to retire?

Retirement – a phase many of us daydream about.

Whether it involves spending more time with family, traveling the world, or volunteering for a cause we’re passionate about, one thing is certain: retirement costs money.

So, when should you take the plunge into retirement, and how much money is enough to comfortably retire on?

What Is the Best Age to Retire?
Ultimately, deciding when to retire is a highly personal choice. However, here are some key considerations:

Average Retirement Age: Of the 140,000 Australians who retired in 2020, the average age was 64.3. Most people still expect to retire in their mid-to-late- 60s.

Financial Factors: Your ability to finance retirement plays a crucial role. Key sources of income for retirees include:

  • Government Pension: Currently, the government pension is the primary source of personal income for retirees in Australia.
  • Superannuation: Many retirees rely on their superannuation funds or account-based pensions (drawn from their super balance).
  • Age Pension: For those born on or after 1 January 1957, the qualifying age for the age pension is 67.

Factors to Consider Before Retiring:

  • Assets: Evaluate your assets, including home ownership, savings, and investments outside of super.
  • Annual Expenses: Understand your annual spending needs.
  • Savings: Decide how much you’re willing to dip into your savings.
  • Housing: Consider downsizing or selling your house.
  • Part-Time Work: Decide if you’ll continue working part-time after retiring.
  • Age Pension Entitlements: Keep in mind that earning over a certain amount per fortnight can affect the amount of pension you receive, however, recent changes allow an age pensioner to earn more from working without it affecting their age pension.

But it is not just about the money
While the financial aspects of retirement are vitally important, it is not the only consideration. In many ways, and perhaps more importantly, the non-financial aspects need to be considered carefully. Ask yourself, and honestly answer the following questions:

How will you spend your time: A couple of weeks in retirement will just feel like being on holiday, but how will you adjust to every week being like the weekend?

Will you suffer from irrelevance? When people are working and are part of a workplace structure, they have a certain status that comes with the position they hold. They may be an expert in a particular field. However, in retirement, that status may simply evaporate.

Has your health called “full time”? For some, the time to retire may be heralded by physical or mental health concerns. Perhaps either the brain or the body is no longer able to cope with the day-to-day pressure of work. Sadly, for some, this may be at a time much earlier than they would have liked.

Caring for others: The current generation of people entering retirement is sometimes referred to as the “sandwich generation”. They become the carers for their grandchildren and their older parents and relatives. While the need to care for others will often be the driver behind people deciding to retire, careful consideration needs to be given to incorporating plenty of time for yourself. You should not swap one full-time job for another (unpaid) full-time job.

While finances and other personal circumstances can dictate the right time to retire, merely retiring because you have reached some arbitrary age dictated by a bureaucrat somewhere in their ivory tower should not be an option. Remember, in Australia, there is generally no mandatory retirement age.

Retire on your terms and when it is best for you.

Seek qualified, independent financial advice to tailor your retirement plan to your specific circumstances. Remember, there’s no one-size-fits-all approach, but thoughtful planning can help you transition into a fulfilling retirement phase.


By Peter Kelly on 21 March 2024



PK believes people have the right to accurate, affordable and unbiased information that addresses all aspects of their preferred retirement lifestyle, thereby giving them the opportunity to make informed decisions that will empower them to live out their lives with dignity, certainty and security.


Copyright © 2021 Realise Your Dream

This is a publication of Alliance Wealth Pty Limited (AFSL 449221) and Professional Investment Services Pty Ltd (AFSL 234951), wholly owned subsidiaries of Centrepoint Alliance Ltd.

General Advice Warning
The information contained in this article is of a generally nature and does not take into account your particular objectives, financial situation or needs. You should therefore consider the appropriateness of the advice for your situation before acting on it. You should obtain and consider the relevant Product Disclosure Statement (PDS) and seek the assistance of an authorised financial adviser before making any decisions regarding any products or strategies mentioned in this publication.

While all care has been taken in the preparation of this blog, to the maximum extent permitted by law, no warranty is given in respect of the information provided and accordingly, neither Centrepoint Alliance Limited nor its related bodies corporate, employees or agents shall be liable for any loss suffered arising from reliance on this information.


Like This

Categories: Finance