How much do I need to retire before age 67
So you’re in your early 60s but don’t want to wait — or can’t wait — until Age Pension age to retire. If you don’t know how much you need to retire before 67, or you’re unsure how to plan your finances as a self-funded retiree, you’re not alone.
Today, let’s dive into the important issues when retiring before Age Pension age, and the financial impact it could have on your nest egg if you plan to retire in your early to mid-60s.
When Can You Retire?
Any financial planner will tell you the two most frequently asked questions are:
- When can I retire?
- How much do I need to retire?
The good news? You can retire whenever you like! However, there are significant age milestones to consider:
- Age 60 — You can access your super savings if you satisfy a retirement condition of release.
- Age 65 — You have full access to your super, regardless of your work status.
- Age 67 — You may become entitled to Age Pension support from the Government, depending on your financial means and residency status.
How Much Do You Need?
There is no one-size-fits-all answer. However, the Australian Superannuation Fund Association (ASFA) provides benchmark figures for Australians aiming for a “comfortable” or “modest” retirement lifestyle.
According to ASFA, at age 67:
- A couple would need around $690,000 to support annual living expenses of just over $73,000.
- A single retiree would need around $595,000 to support about $51,805 annually.
These figures assume that Age Pension benefits will supplement your private income.
For a detailed breakdown, refer to:
What If You Want to Retire Earlier?
Those ASFA figures assume retirement at age 67. If you want to retire earlier, you’ll need a bigger nest egg.
For example:
- Retiring at 65 — You’d need approximately $745,000 as a couple, and $660,000 if you’re single.
- Retiring at 63 — You’d need about $800,000 as a couple, and $720,000 as a single retiree.
In either case, you would need to self-fund your lifestyle until you become eligible for Age Pension at 67. For a couple, retiring four years earlier at 63 could mean needing an extra $110,000 in savings, with fewer working years to achieve this.
Options to Help You Retire Earlier
- Boost Your Super
- Use catch-up contribution strategies and tax incentives to maximize your super in your final working years.
- Downsizing
- Selling your home and moving to a smaller property can release equity to bolster your retirement savings.
- Home Equity Access Scheme
- At age 67, you could consider using your home equity to access a government-sponsored loan to supplement your income.
- Review Your Budget
- Assess your real living expenses. Do you truly need $73,000 a year? Create a realistic budget and add a safety buffer.
- Invest Accordingly
- Align your investments with your risk tolerance and timeframe. Avoid a one-size-fits-all strategy.
- Delay Accessing Super
- If possible, rely on cash savings or term deposits first to allow your super to recover and grow.
Why Personalized Planning Matters
While ASFA’s guidelines are useful starting points, they don’t replace a personalized retirement plan that considers:
- Your mix of retirement assets
- Investment properties
- Any outstanding debt
- Age gaps between partners
- Lifestyle changes
Working with a qualified financial planner can help you map out your options, risks, and opportunities to enjoy a financially secure and fulfilling retirement.
Start Planning Today
If you’re considering self-funding your retirement before age 67, it’s never too early to start planning. A qualified financial planner can help you tailor a strategy that suits your individual needs and goals.
Shaun Jones MAppFin (FP)
Financial Planner at About Retirement
