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Planning for Your Desired Retirement Age in Australia

Planning for Your Desired Retirement Age in Australia

Retirement marks a significant milestone in life, symbolising the culmination of years of hard work and the beginning of a new chapter. For many Australians, understanding the age at which they can retire—and how to prepare for it—is essential to achieving a fulfilling and secure future. There are important steps you can take far ahead of your retirement age, to help you navigate the complexities of retirement planning, create personalised strategies tailored to your unique retirement goals, and ultimately take control of your retirement journey.

Retirement Trends in Australia

Key Statistics on Retirement Age in Australia

The latest data from the Australian Bureau of Statistics reveals valuable insights into retirement trends. As of the 2022-23 financial year, the average retirement age for all retirees in Australia was 56.9 years. Among those who retired in 2022, the average age was 64.8 years. For Australians still in the workforce, the average intended retirement age is slightly higher at 65.4 years. Interestingly, women tend to retire earlier than men, though the gap has narrowed in recent years.

The age at which people in Australia reach retirement has changed substantially in the past 40 or so years. According to ABS data, the average age at retirement from full-time work in 1983 was 47.4 years of age. By 2022-23, the average age of an Australian leaving the labour force had risen significantly, up to 56.9 years. This increase to retirement ages suggests Aussies are needing to remain in the workforce for longer, in order to fund their retirement lifestyle. For further insights into how retirement costs can vary based on lifestyle, our recent article on the updated ASFA Retirement Standard is a valuable resource. This standard provides benchmarks for modest and comfortable retirement lifestyles, helping you plan effectively for your desired standard of living.

Trends in Retirement Income Sources

A key aspect of retirement planning in Australia is understanding the diverse sources of income available. According to recent data, government pensions remain a primary source of income for many retirees. However, reliance on superannuation has steadily increased, reflecting the importance of building a strong superannuation balance during your working years. Interestingly, women are seeing greater growth in superannuation reliance, highlighting progress towards addressing gender disparities in retirement income.

Factors Influencing Retirement Decisions

Financial security remains the most significant factor influencing when Australians retire. Other considerations include lifestyle goals, health, and family commitments. With careful planning, it’s possible to address these factors and develop a strategy that aligns with your personal and financial aspirations. Achieving this balance requires a thorough understanding of your financial position and the resources available to you.

Strategies for Reaching Your Retirement Goals at Any Age

Superannuation and Transition to Retirement Strategies

Superannuation plays a critical role in retirement planning. By maximising your pre-tax contributions via salary sacrificing and exploring after-tax contributions, you can significantly boost your retirement savings. Transition to retirement strategies offer additional flexibility. These plans allow you to draw a pre-retirement pension while continuing to work part-time, supplementing your income in a tax-effective manner.

For those considering more control over their retirement savings, a self-managed superannuation fund (SMSF) might be an option. SMSFs enable greater investment control and potential tax benefits, making them a popular choice for those with specific retirement goals. Our recent article on SMSFs provides valuable insights into whether this approach suits your circumstances.

Building a Holistic Financial Plan

A comprehensive financial plan is essential to achieving your retirement goals. This includes tax planning, wealth creation, risk management, and superannuation optimisation. At McKinley Plowman, we integrate advice across wealth management, accounting, and finance broking to provide a holistic service tailored to your unique situation. This approach ensures that no aspect of your financial well-being is overlooked, helping you navigate challenges and seize opportunities effectively.

Exploring Additional Investment Options

Diversification is a critical component of a successful retirement plan. Beyond superannuation, holding investments in your name including investment property and shares can provide additional income streams, long-term growth and bridge the gap between when you want to finish work and when you can access your superannuation. At McKinley Plowman, we help clients identify suitable investment opportunities that align with their risk tolerance and retirement timeline, ensuring a balanced and secure financial future.

Developing Your Retirement Plan

The Role of Superannuation

Superannuation remains one of the most effective tools for retirement planning in Australia, and giving it a boost is something you can do well ahead of retirement age. By taking full advantage of pre-tax contributions and making voluntary after-tax contributions where possible, you can grow your retirement savings while benefiting from tax advantages. Optimising your superannuation performance is crucial to ensuring your financial security in retirement. Regular reviews of your superannuation strategy are vital to adapt to market changes and legislative updates.

Government Pensions and Additional Income Sources

For many Australians, government pensions supplement superannuation as a key income source in retirement. Eligibility requirements and benefit levels vary, making it essential to incorporate this into your overall retirement strategy. Additional income sources, such as rental properties, part-time work, or income from investments, can also provide valuable support for your retirement lifestyle. These income streams can help bridge the gap between your desired lifestyle and available resources.

Planning for Healthcare Costs in Retirement

Healthcare is a significant consideration for retirees, as medical expenses can increase with age. Factoring healthcare costs into your retirement plan ensures that you are prepared for unexpected expenses and can maintain your quality of life. Options such as private health insurance and setting aside savings for potential healthcare needs are crucial components of a robust retirement strategy.

Why Choose McKinley Plowman for Retirement Planning?

Expertise You Can Trust

With over 25 years of experience, McKinley Plowman has helped countless Australians achieve their retirement goals. Our trusted advisers take the time to understand your unique needs, ensuring that every strategy is tailored to your circumstances. Our expertise spans all aspects of retirement planning, from superannuation to wealth creation and estate planning, giving you confidence in our comprehensive approach.

A Comprehensive Approach to Retirement

Our holistic services encompass wealth management, accounting, and finance broking, offering seamless support throughout your retirement planning journey. From maximising your superannuation to creating a tax-efficient income stream, we’re here to guide you every step of the way. Our team collaborates across disciplines to ensure that your retirement plan is both effective and adaptable to your evolving needs.

Ready to Plan for the Retirement You Deserve?

Retirement planning doesn’t have to be overwhelming. With McKinley Plowman’s expert guidance, you can confidently take the steps needed to achieve your goals. Contact our team today to discuss your retirement planning needs.

Call us on (08) 9301 2200 (Joondalup) or (08) 9325 2411 (Perth), or visit our Retirement Planning Services page for more information.

Data from: Retirement and Retirement Intentions, Australia, 2022-23 financial year | Australian Bureau of Statistics

written by:

Justin McMillan

Financial Adviser Justin McMillan has been with McKinley Plowman for several years, following our acquisition of his practice Smartwealth. He firmly believes that while financials, investments, and strategies are important in an individual's financial plan, they are simply the vehicles to allow clients to get where they want to be. Justin takes a holistic and rounded approach and focuses on the individual, taking the time to listen and understand what drives and motivates his clients.