retirement age, age Pension age, Centrelink, superannuation preservation age

What’s your retirement age?

And why does it matter?

The 1 July increase in the Age Pension age – from 66.5 to 67 – has caused a lot of angst for many pre-retirees who feel they simply can’t keep working until that age.

But once again, much of the commentary has conflated retirement age with Age Pension age. These two ages are usually not the same thing.

In almost every aspect of retirement income, rules dominate your options. But when it comes to your retirement age, the funny thing is that there is no one single rule. There are quite a few. And no one, except you, can decide your retirement age.

This means, in theory, that you have maximum freedom to decide when you will retire and how you will handle your transition from work to play.

But that’s a fairly simplistic summary.

In reality, there are a few mandatory ages which guide your retirement options and timing. And there are three main factors which tend to lead your decision making up front. Let’s start with them.


When you retire is usually related to what is most doable in your situation. The three factors which influence this ‘doability’ are:

  • Physical capacity
  • Mental capacity
  • Financial capacity.

Note the order. It’s usually your physical and/or emotional situation that calls the shots.

Let’s look at each of these points in order

Your physical capacity

This refers to your physical health and ability to turn up to paid employment and get through the day in good shape. This may be easier to do for a 64-year-old ‘work from home’ copywriter than a 64-year-old plumber who has a lengthy daily commute. So capacity can be a ‘luck of the draw’ aspect to some extent.

Your mental/emotional capacity

This is an umbrella term for a whole host of reasons which may impede your ability to continue to work full time. These include family obligations, mental health, burn out, desire for a change after decades in the same industry or role, skills erosion and many other concerns. 

Your financial capacity

In brief, this can be summarised as the need to cover about 65-70% of what you have previously earned full time (after tax), a rule of thumb defined in the Retirement Income Review 2020.

If you have already retired, you will probably recognise that one of the above three factors was stronger than the others in your decision making. (And we’d love you to share which one in the comments below). If you have yet to retire, it may be worth thinking about these three very different factors and to try to understand which will be the strongest in your case. This provides critical information for planning and setting a date on which you will leave full time work.

Once you understand the major forces which will influence your retirement age, the next step is to review the rules on the different ‘official ages. These rules tend to relate to the five different pillars of income in retirement:

  • Age Pension (alone) or Age Pension plus super income stream
  • Superannuation 
  • Private investments
  • Ongoing work
  • Household equity

Here’s how the rules on retirement age apply for these different income sources:

Retirement Income PillarAge Rules
Accessing Age PensionAge 67 for those born on or after 1 January 1957. 66.5 if you were born before that. Check your eligibility here
Accessing Superannuation (often referred to as Preservation Age)Varies from 55 to 60, depending upon your date of birth
Accessing Private investmentsNo age-related rules
Continuing to receive work incomeThere are a handful of occupations whereby you are required to retire by a specific age (e.g. judges, pilots etc). Otherwise, this is usually decided by you and your employer.
Income tests apply for those on an Age Pension who still receive work income. A Work Bonus also applies.
Accessing equity from your homeTo apply for the Federal Government Home Equity Access Scheme you need to be Age Pension age or older. Some private schemes will lend to those age 60 or older.

So, as you can see, the discussion of what the age of retirement in Australia is tends to be as long as that proverbial piece of string.

What we do know is that many people, due to the need to care for others, poor health or retrenchment often retire far earlier than they had initially planned. As we’ve reported before the target age for most Australians to retire (65.5) is slightly earlier than Age Pension age (67), whilst the average age of retirement is currently a full ten years sooner, at 55.4 (Australian Bureau of Statistics, 2020).

As John Lennon famously noted, ‘Life is what happens while you’re busy making other plans’. So being aware that your planned retirement age is not a certainty, and having clear ideas on your spending needs and how long your own savings might fund you remains the greatest favour you can do yourself.

If you would like assistance to forecast your probable retirement income and how long it is likely to last, an adviser-guided consultation will enable you to project and plan more accurately.

And what has your experience been like?

Have you retired? If so, which factor most influenced the timing?

Do you have any advice for others trying to get their timing right?

We would love it if you could let us know your thoughts in our July Retirement Pulse survey.  It will only take a couple of minutes. 

Click here to get started.