Understanding Your Pension after Retirement in Australia
Are you looking to retire soon? – Knowing how much you’ll need to live comfortably in retirement can be a challenge.
Retired Australians often question the age from when they will receive a pension. In the simplest terms, from 55 to 60, you will gain access to your super. You then become eligible for the pension at 65½, an age which is set to become 67 by the year 2023.
As there is no enforced retirement age in Australia, many people naturally think that they will become eligible for the pension right after they retire. However, that’s not how it works.
Your employment opportunities, health, and your partner’s situation should be considered before you retire because finance will play a crucial role.
If you’re looking to make smart financial decisions and understand your pensions after your retire, here’s what you need to know.
When can you access your super?
There are several eligibility criteria you need to meet, along with your date of birth, to access your age pension. However, you can access your super depending on your retirement plans and preservation age.
What is your preservation age?
Preservation age starts from the moment you become eligible to access your super. In most cases, it is between 55 and 60 years.
Date of birth Preservation age
- Before 1 June 1959 55
- 1 June 1959 – 31 May 1960 56
- 1 June 1960 – 31 May 1961 57
- 1 June 1961 – 31 May 1962 58
- 1 June 1962 – 31 May 1963 59
- From 1 June 1963 60
What do you need to think about when deciding when to retire?
If you are thinking of getting hold of your pension money, you need to think financially and prepare emotionally before retirement.
Transitioning from employment to retirement requires careful thought and planning. You need to consider a few things before starting your retirement plan.
You may need to fund a longer retirement
According to the ageing healthcare experts at Get A Healthy Life, “with healthcare improving, Australians are living longer than ever and will need more savings to fund a long retirement. Delaying retirement and not considering the pension amount immediately is the best way to make enough money to fund your life after retirement.”
However, your health may not support your plans to work longer.
Health is crucial if you want to work past the traditional retirement age of 65. As much as you may want to continue working and continue saving for your employment, it is not always possible if you have ill health and are forced to step back.
This will directly influence the accumulation of savings that will later fund your retirement.
According to data sourced by the health team at Peak Performance Massage “by 2035, one in five women and one in four men in their 60s will have poor health. As a result, it is wise to start saving for your retirement or super fund from as young as possible, instead of leaving it for later.”
Voluntary contributions throughout your entire career will be the best option to supplement your age pension if you want to fund your retirement. Planning now can make living tomorrow considerably easier. Small deposits today will add up to major sums when you do retire.
How much do you need to retire?
According to calculations sourced by our team of Accountants, “you need to have an approximate annual income of $43,317 if you want to lead a comfortable lifestyle after retirement. This is considering that you are relatively healthy and have your own house with no mortgage.”
If you compare, the maximum amount of pension rate of an Aussie is $24,081.20 per year.
That is almost HALF of what you need to comfortably enjoy your retirement. You have worked your entire life, your retirement is your time to rest and enjoy the world, not to worry about finances.
For this reason, you should consider arranging for other sources of income to supplement your pension.
It is also essential to save money for different recreational activities. As per the reports of ASFA Retirement Standard, those who are living a comfortable life usually spend approximately 20% of their income on recreation and leisure.
So, it is best to get involved in recreational activities and hobbies once you are out of work to supplement your choice of super fund.
After all, you need to enjoy the finer things in life after retirement. But, you need to have enough money to afford them in the first place.
Do you know any retirement tips worth sharing? Let us know in the comments!