Retiring before you qualify for the Age Pension can feel like stepping into no-man’s land. You’ve wrapped up your working life, but you’re not yet eligible for government support. It’s a unique stage – and one that’s becoming increasingly common since the Age Pension age increased to 67. This article helps you understand what to focus on, what support is (and isn’t) available, and how to make the most of your resources while you wait.
You’re not working – but you’re not 67 (yet)
Many people leave work well before Age Pension age: by choice, due to redundancy, or for health or caring reasons. Some assume they can apply for the Age Pension as soon as they stop working – but the earliest you can apply is 13 weeks before turning age 67 (if born after 1 Jan 1957). Even then you won’t be eligible until you turn 67, but you’ll be ahead in the Centrelink queue to get your application processed. That leaves a critical ‘bridge’ period, often several years long, where your superannuation and other income sources will need to carry you through.
Super can (usually) be accessed – but needs to stretch
Once you’ve met a condition of release (e.g. retiring after 60), you can usually start withdrawing money from your super. That might be through a lump sum or an Account-Based Pension (ABP).The challenge is how to draw enough to meet your spending needs now, while preserving enough to support you later – especially once the Age Pension kicks in.
Super options before 67
For most Australians, superannuation is the second biggest source of retirement income after the Age Pension. Making the right decisions about how to use it can have a big impact on your financial security.
One common approach is to move super from the accumulation, or saving, phase into an ABP, which provides a regular, tax-free income for those aged 60 or over. But super can also be used in other ways to improve your financial security.
Some retirees consider using their super to pay down a mortgage – a decision that depends on interest rates, cash flow needs, and eligibility for an Age Pension. Others focus on boosting super to create more retirement income using strategies such as:
- Bring-forward rules – allowing larger contributions in a single year
- Catch-up provisions – making use of unused concessional contributions, and
- Downsizer contributions – adding proceeds from selling a home
Is there other support available before Age Pension age?
You may be eligible for other Centrelink payments, such as:
- JobSeeker Payment (if you’re actively seeking work)
- Carer Payment (if caring for someone)
- Disability Support Pension (in limited circumstances)
However, these entitlements are income and assets tested. Many pre-retirees are surprised to find they don’t qualify for these payments.
Planning ahead for Age Pension eligibility
You can project your Age Pension eligibility using the Retirement Essentials Age Pension Eligibility Calculator or speak with a fully qualified adviser in a Retirement Advice Consultation. Small adjustments in how and when you draw down super – or how your assets are structured – can have a big effect.
There are also other important rules to understand, including::
- How the income and assets tests apply
- Gifting rules and asset changes before application
- Defined benefit income streams or inherited income streams
Timing your transition:
Retiring isn’t always a clear-cut moment – often it’s a gradual shift. Many people find a staged approach helpful, achieved by moving into part-time work or casual roles while slowly starting to draw down their super. This approach provides flexibility as well as helping your money to last longer.
Even if certain support options such as the Work Bonus don’t apply just yet, it’s worth keeping them in mind for the future, so you’re prepared when the time comes.
You might also consider how to manage your super so it stretches comfortably until you reach Age Pension age, then review your plan again. If you have a partner who’s eligible earlier, working together on your finances can make a real difference. Knowing how the ‘Younger Spouse’ rules are applied is also helpful.
You’re not alone, and you’re not doing this wrong
This ‘in-between’ phase can feel confusing. You’re ready to slow down, but you’re not yet eligible for government support. That uncertainty is normal, and it doesn’t mean you’ve made a mistake. It just means that this stage calls for careful financial planning and adjustment.
The important thing is to understand your options and seek clarity on what suits your situation – the right information early on can make this transition much smoother and less stressful.
Next steps
Take time to review your current income, assets and super drawdown strategy. Keeping an eye on Age Pension eligibility rules and planning ahead can help you make confident, informed decisions.
For personalised guidance, a Retirement Advice Consultation with a Retirement Essentials financial adviser can help you explore your options and start making a plan tailored to your circumstances.
Questions to reflect upon:
How long do I realistically need my super and other income to last before Age Pension eligibility?
Are there strategies I can put in place now to protect or maximise my Age Pension entitlement when I become eligible?
