How to prepare for unexpected early retirement

14 December 2023

Having to retire unexpectedly can disrupt your retirement plans and leave you feeling anxious. But you may be more prepared for an early retirement than you realise. Find out how to retire early with confidence – even if it's unexpected.

A significant number of Australians retire before they intend to. According to the Australian Bureau of Statistics (ABS), the average age people plan to retire is around 65 years old. But the actual average retirement age is closer to 56 years1.

Unexpected circumstances such as redundancy, ill health, being unable to find work, or having to care for a loved one are all reasons retirement can come sooner than planned.

 

Planning your perfect retirement

The ideal retirement will look different for everyone. For some, it includes a holiday every year or a campervan road trip. For others, it’s volunteering in the community or simply spending more time with the grandchildren. Either way, some planning and goal setting can really help you achieve your perfect retirement.

While having to retire early may take you by surprise, it doesn’t have to mean your retirement plans fly out the window. Here are some things you can do if your retirement comes sooner than expected.

 

4 actions to consider for an unexpected early retirement

1. Review your current financial position

If you had to retire today, how's your superannuation balance looking? Knowing how much money you could have available if you stopped work unexpectedly is a good first step in your planning.

When reviewing your finances, consider your assets, debts and any income sources, such as government assistance. For example:

  • your superannuation
  • any savings you have
  • any debts you may have, such as a credit card or home loan
  • income from personal investments such as shares or property
  • your eligibility for the Government Age Pension. 

LEARN MORE: YOUR AGE PENSION ELIGIBILITY

2. Calculate your living expenses

Once you understand your assets and income sources, it’s a good idea to calculate your living expenses. This helps you estimate how much you’ll need to spend each year in retirement. Retirement expenses can include rent, bills, food, entertainment, holidays, insurance, home or car repairs, and health expenses.

It can be hard to know how much super is enough to last you in retirement, or if your savings will give you the lifestyle you want. Use our super projection calculator to see how much income you could have in retirement. You can also see how adding extra money to your super2 could increase your balance over time.

TRY THE SUPER PROJECTION CALCULATOR

3. Know when you can access your super

Super usually can’t be accessed until you reach a minimum age, called your preservation age. This is set by the government. Currently, the preservation age is between 55 and 60, depending on when you were born.

Your preservation age

DATE OF BIRTH YOUR PRESERVATION AGE
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

READ MORE: AGE PENSION AGE VS PRESERVATION AGE

To access your super you need to have reached preservation age and also:

  • have permanently retired, or
  • want to transition to retirement3 while you’re still working, or
  • stop working for an employer on or after turning 60, or
  • have turned 65 (even if you’re still working).

Regardless of your circumstances and whether you’re working, everyone can access their super at age 65. At this age, even if you’re still working, you’ll have full access to your super.

In some cases, you may be able to access your super early before your preservation age. This could be due to financial hardship, compassionate grounds, or becoming permanently disabled.

FIND OUT MORE: ACCESSING YOUR SUPER EARLY

4. Explore how to turn your super into a regular income – account based pension

If an early retirement comes unexpectedly and you’ve reached preservation age and meet the eligibility criteria, you have a few options. These include taking your super as a lump sum or moving it to a specially designed retirement account, such as an account based pension. With an account based pension you can:

  • receive regular income payments from your super - similar to receiving a salary or pay from your employer;
  • access extra money from your super whenever and for whatever you need; and
  • keep your balance invested where it could benefit from investment returns4.
FIND OUT MORE: THE BENEFITS OF AN ACCOUNT BASED PENSION

 

Feel confident as you approach retirement

A study by AustralianSuper and Monash University shows retirement confidence is affected by 4 key factors:

  1. Financial awareness and skills
  2. Health and wellbeing
  3. 3. Social connectedness
  4. Retirement awareness and planning.

Explore the Retirement Confidence Index to see how Australians feel about retirement, and to get your own retirement confidence score.

Discover your retirement confidence score

It can be reassuring to know that whatever you experience, you’re not alone. Hear how other members have navigated their retirement journey in our podcast series titled ‘The moments that count.’ In episode 15 of the series, we discuss retiring earlier than you’d planned.

Listen to ‘The moments that count’ podcast

 

Get professional financial advice

Retiring earlier than planned means relying on your super for longer. This may seem daunting, but speaking to a financial adviser can help you understand your situation and feel more confident about your finances. The earlier you start planning, the more control you will have.

For AustralianSuper members, there are several education and advice options available, including free retirement webinars. These provide an insight into planning and managing your finances. We also offer members different types of advice5 to suit the level of help you’re looking for. This ranges from over-the-phone simple super advice to putting you in touch with a qualified financial adviser for more tailored and comprehensive advice.

Explore your retirement advice options

 

References:

  1. ABS – Retirement and retirement intentions, Australia. Information for the period 2020-21 financial year.
  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. 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.
  4. Minimum drawdown rates apply. Investment returns are not guaranteed.
  5. Personal financial product advice is provided under the Australian Financial Services Licence held by a third party and not by AustralianSuper Pty Ltd. Fees may apply.

*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.


Ready to open a Choice Income account?

Joining online will take you less than 15 minutes.

Join now
Back to top