Retirement Planning

How Much Do I Need to Retire at 65?

Putting coins into a piggy bank

For many people, 65 sounds around the right age to retire, but why should that be?

It could be a throwback to the earliest days of Australia’s federation when the age pension was introduced in 1909 for men aged 65 and over (and for women at 60 years).

Mind you, the average life expectancy for men at that time was 55.2 and for women, 58.8 years, so a long and happy retirement was something only achieved by a few.

Over the century or so since, life expectancy has increased to 81.2 years for men and to 85.3 years for women, but it has only been since 2017 that the Age Pension eligibility has incrementally increased to now sit at 67 years for those born on or after 1 January 1957.

Is 65 the right age to retire?

Whether 65 is the right age to retire depends on a number of factors.

  • Do you still enjoy your job?
  • Are you still able to work?
  • Are you clear of debts?
  • What do you plan to do in retirement?

Lastly, and perhaps most importantly, do you have enough money to retire?

You should have a pretty good idea of that when you reach the superannuation preservation age of 60. If your balance isn’t where you’d like it to be, you have five years to make changes to help ensure you have a comfortable retirement.

How much do I need to retire at 65?

Everyone is different, but there is one thing we should have in common and that is a budget. Now’s the time to crunch the numbers and work out precisely how much you need not only to live comfortably today, but also for specific needs as you get older.

Those factors include:

  • Housing expenses – those household bills don’t stop just because you’ve stopped working. In addition to rates and utilities, there are also home maintenance costs to account for from gardening and pool care services to major repairs and renovations.
  • Health costs – it’s inevitable that you’ll be spending more on health costs as you get older, so looking at health insurance and budgeting for additional health expenses will be particularly important during your later retirement years.
  • General living expenses – the good news is that your general household living expenses typically go down in retirement without the need to commute to work, raise dependent children, and pay off a house.

Let’s not forget large one-off or infrequent purchases either. For example, you might want to treat yourself to a new car or take a bucket list holiday to kick off your retirement.

And lastly, holding a decent amount of cash in reserve for your daily expenses, as well as an emergency fund, is also wise financial practice.

With the recent changes for retirees, what does this mean for your pension?

How much super do I need to retire at 65?

According to the Australian Super Fund Association, a couple will need between $100,000 and $690,000 in their super account balance to enjoy either a modest lifestyle in retirement or a comfortable one.

That’s a big disparity. However, the lower amount factors in access to the Age Pension, from age 67.

How much do I need to retire comfortably at 65?

Comfortable means different things to different people and depends on your lifestyle goals as well as your overall health.

Again, the ASFA has some numbers, as of June 2024, their figure is a retirement income of $67,647 a year per couple is required to have a comfortable retirement from the age of 65.

But once you have a well-thought-out budget, you can put your own figures into a calculator like this one to work out how much you really need each year.

Can I withdraw my super and keep working at 65?

Yes, you can.

It’s important to note that if you want to access your super at the preservation age of 60 (or earlier, dependent on your date of birth), you will need to satisfy the fund’s criteria of having ceased work.

However, at the age of 65 and after, you have full access to your super, regardless of whether or not you’ve retired.

Since there is no compulsory retirement date in Australia, you might decide to work past your superannuation preservation age if you’re enjoying your job or want to add to your retirement fund.

You can also reduce working hours and draw from your super to maintain a ‘full time’ income and the money you take from your super is tax-free.

It should be noted that you can continue to make voluntary contributions to your super up until the age of 75 (through salary sacrifice, for instance), after which only employer contributions are eligible.

Keep your money working too

Your superannuation balance might look impressive as a lump sum but remember – that’s going to have to last you through your retirement – even if you plan to claim the age pension when you reach the age of 67.

Your retirement planning should include an investment strategy to help replenish the balance and make your money last the distance. One of the ways to do this is to discuss with your financial advisor various investment options such as a ‘bucket strategy.’

There is also another way to boost your super and that is to take advantage of the downsizer super contribution scheme.  You can put up to $600,000 per couple from the sale of your family home without impacting your super contribution caps.

That means you can enjoy a brand-new rightsized home in an over-50s lifestyle community with holiday resort-style facilities and further reduce your household expenses.

Find financial freedom with GemLife over 50s resorts

There’s plenty to consider when preparing for retirement and finance is usually the top of the list.

Looking to rightsize to a GemLife over-50s lifestyle resort can make getting ready for retirement easy – new luxurious homes designed for low maintenance living, located in a gated community with exclusive sporting, leisure and lifestyle facilities for active over 50s.

In a land lease resort, you own your home and simply lease the land it is on. There are no entry and exit fees, deferred management fees or capital gains fees.

A modest weekly site rental covers the cost of resort maintenance.

And you don’t have to be retired to enjoy that ‘just on holidays’ feeling. Downsize today and take advantage of reduced day-to-day living expenses, less home maintenance and a better lifestyle with like-minded people.

To receive an information pack or to book a personalised tour contact our specialist team today.