6 tips to start your retirement planning

14 June 2023

The perfect retirement will look different for everyone, but what people do have in common is the need to have some sort of plan in place. A recent study into retirement confidence has shown this can help you feel more confident about your retirement, both financially and mentally1.

Before you start planning your retirement, it's important to think about what you want your retirement lifestyle to look like. Do you want to travel and explore the world or just your own state? Do you want to retire fully, or work part-time for a few years? Or maybe you have some home renovation plans and want to finally perfect your hobby. The best thing about retirement is that it’s your choice.

Setting clear goals and developing a plan will help you achieve your vision - a good place to start is with these 6 steps.

 

1. Know when you can access your super

Let’s talk about age. There are 2 important numbers you need to know about: your Preservation Age and your Qualifying Age. There’s a key difference between the two.

Your Preservation Age

This is the minimum age you must reach before you can access your super. This age varies depending on the year you were born. Reaching your Preservation Age is the first step to access your super, but you must also have retired, ceased an employment arrangement on or after the age of 60, or turned 65.

Use the following table to find your Preservation Age:

Preservation Age

Birth year Age you can access your super
Before 1 July 1960 55
1 July 1960 to 30 June 1961 56
1 July 1961 to 30 June 1962 57
1 July 1962 to 30 June 1963 58
1 July 1963 to 30 June 1964 59
 1 July 1964 or after 60

Visit the ATO website for the latest information.


Your Qualifying Age

This determines when you can apply for the Government Age Pension. Your Qualifying Age is higher than your Preservation Age, because even if you’ve reached the age where you can access your super, you still might not be old enough to qualify for the Age Pension. There are several eligibility requirements you need to meet, including residency rules and income and assets tests.

Use the following table to find your Qualifying Age:

Qualifying Age 

Birth year age you may qualify for the pension
From 1 July 1952 to 31 December 1953 65 years 6 months
From 1 January 1954 to 30 June 1955 66 years
From 1 July 1955 to 31 December 1956 66 years 6 months
On, or after 1 January 1957 67 years

Visit the Department of Social Services, Australian Government website for the latest information.

READ MORE: PRESERVATION VS QUALIFYING AGE


2. Consider how much you’ll need for your retirement

The right time to retire doesn’t just come down to your age. Your current and future financial needs should also be a key consideration in your decision.

Think about the type of life you want to lead in retirement to help estimate how much your retirement years may cost. This can also depend on whether you’re single or in a relationship. For an idea of how this could impact your retirement planning, the Association of Superannuation Funds of Australia (ASFA) publishes a quarterly retirement budget breakdown.

A clear idea of how much the average person or couple spends in retirement can help you plan your finances. You can also use the AustralianSuper Super Projection Calculator to get an estimate of how long your super may last.

EXPLORE: SUPER PROJECTION CALCULATOR


It’s never too late or too early to take steps to maximise your super. While you’re still working, consider making voluntary contributions to your super to grow your balance. Even adding small amounts can make a huge difference over the long term. Any extra contributions could also be
tax deductible.2

 

3. Understand your retirement income options

There are 3 main sources of potential income in retirement: your super, the Government Age Pension and any assets you have.

Super 

Even when you reach your preservation age you can keep your super working for you. Depending on your circumstances, whether you want to retire or keep working, there are options to consider.

If you’re a member of AustralianSuper you can check your balance in your online account, and also on the AustralianSuper app

Account based pension – paying yourself from your super

Did you know you don’t need to take all your super out at once?

The option of an account based pension allows you to draw a regular income from your super while it continues to stay invested. You can also access extra money whenever you need it.

AustralianSuper’s award-winning3 account based pension is called Choice Income. 

EXPLORE: ACCOUNT BASED PENSION - CHOICE INCOME


Government Age Pension

As at 26 March 2021, around 62%4 of older Australians over the age of 65 receive either a part or full Government Age Pension. The Age Pension is a regular fortnightly payment which can provide you with a supplementary income once you’ve retired, if you’re eligible.  

To be eligible for the Age Pension you must meet the age and residency requirements and pass the income and asset test. If you’re eligible, your Age Pension payments can supplement your income payments from your super.

READ MORE: GOVERNMENT AGE PENSION ELIGIBILITY


Assets

Personal savings and assets, such as property and shares, can also make up part of your income in retirement. It’s good to understand the role your assets play in your retirement plan.

For example, one option available to Australian homeowners is downsizing. If your home is too big for your needs in retirement and you downsize, you may be able to contribute money from the sale of your primary home into your super.

VICKI’S STORY – DOWNSIZING YOUR PROPERTY FOR FREEDOM IN RETIREMENT


Continue to work in retirement

While your Preservation Age and Qualifying Age determine when you can access your super or apply for the Age Pension, it's up to you to decide when you retire. For many people, reaching Preservation Age comes before they’re ready to stop working. Transitioning into retirement slowly offers a balance between finishing your working life and entering retired life.

An easy way to keep working and start accessing your super once you’ve reached Preservation Age is to open a Transition to retirement (TTR) Income account alongside your regular super account. A TTR Income account gives you the flexibility to top up your take-home pay, so you can work less or save more.5

EXPLORE: TRANSITION TO RETIREMENT - TTR INCOME ACCOUNT


4. Discover your retirement confidence score

AustralianSuper and Monash University surveyed over 3,000 people aged 50 and over to see how confident they feel about retirement.

The study found there are 4 key factors to feeling confident in retirement including:
  • financial awareness and skills,
  • health and wellbeing,
  • social factors, and
  • retirement awareness and planning.

In 2022, the average score for Australians in, and approaching retirement was 66 out of 100. Participants felt more optimistic about their financial behaviours and attitudes than in previous years. 

The study also found that people are more confident once they’ve retired. 

Discover your own score, and read more about the findings with the Retirement Confidence Index tool.

DISCOVER YOUR RETIREMENT CONFIDENCE SCORE

 

5. Check your insurance cover

While most super funds offer automatic insurance, it's important to make sure your insurance cover is right for you. As you get older, your needs change. This might mean your current level of insurance could be too much or too little.

Certain situations, like if your children move out of home or your relationship status changes, might be a good opportunity for you to reconsider your cover.

Depending on where you’re at in life you might consider the following cover types:

  • Income Protection
  • Total & Permanent Disablement (TPD) cover
  • Death cover (also known as life insurance)

LEARN MORE: UNDERSTANDING YOUR INSURANCE COVER


It’s important to note that insurance cover is not included with the Choice Income or TTR Income accounts. For this reason, some members choose to maintain their super account so they can keep their existing cover.

 

6. Ask for advice if you need it

AustralianSuper offers a range of advice and support to help you plan your retirement, including webinars from our education team.

These free videos give simple insight into how to plan, and what you need to focus on, to help you learn about retirement planning.

REGISTER FOR A WEBINAR 


Sources:

  1. AustralianSuper and Monash University. The 2022 Retirement Confidence Index.
  2. Before adding to your super, consider your financial circumstances, contribution caps that may apply, and tax issues. We recommend you consider seeking financial advice.
  3. AustralianSuper received the Canstar Outstanding Value Award for Account Based Pension in 2022. Awards and ratings are only one factor to be taken into account when choosing a super fund.
  4. Australian Institute of Health and Welfare. Accessed on 14/02/2023.
  5. Transition to Retirement (TTR) can be complex and isn’t suited to everyone. It’s a good idea to get financial advice before deciding if a TTR Income account is right for you.

*Source: The 2022 AustralianSuper Monash University Retirement Confidence Index. Based on answers from approximately 3,000 people aged 50 and over. Retirement scores are compared to the Australian average, estimated from the key socio-demographic variables captured in the study

This may include general financial advice which doesn’t take into account your personal objectives, financial situation or needs. Before making a decision consider if the information is right for you and read the relevant Product Disclosure Statement, available at australiansuper.com/PDS or by calling 1300 300 273. A Target Market Determination (TMD) is a document that outlines the target market a product has been designed for. Find the TMDs at australiansuper.com/TMD. AustralianSuper Pty Ltd ABN 94 006 457 987, AFSL 233788, Trustee of AustralianSuper ABN 65 714 394 898.


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