Retirement understanding the basics

Retirement - Understanding the basics

Wouldn’t you like to have the peace of mind in knowing that you will be able to afford the life style you want in retirement?

Are you getting ready to retire?

Australians are living longer and retiring earlier and many people are now spending more than a quarter of their lives in retirement. It’s good news, but it also shows how critical it is to plan for your retirement. It’s never too late to start planning, and the sooner you start, the easier it is.

Here are some important questions to consider if you are getting ready to retire.

  • How soon would you like to retire?
  • What do you plan to do with your time when you retire?
  • How much super do you have?
  • How many years of retirement do you need to plan for?
  • Are you thinking of working part-time?
  • Will you be making any big purchases like a house, car or holiday?
  • Will you access the age pension or other Centrelink benefits?

Remember you are the one who has worked hard to build your super savings and now it's time to make your money work for you in retirement. To learn more read OnePath's Retirement fundamentals (623kb PDF) booklet, or talk to your financial adviser to work out the best strategy for you to live comfortably in your retirement.

How much will I need for a comfortable retirement?

Everyone is different and how much you need to live comfortably in retirement will depend on a range of factors including whether you are married or single, if you have dependants, how you plan to spend your time, your hobbies and interests just to name a few.

The Association of Superannuation Funds of Australia (ASFA) has put together a guide which shows how much you will need for a comfortable standard of living and the types of things you may need to spend your money on. They have estimated that to live comfortably:

  • retired singles will need $38,611 per year
  • couples will need $51,727 per year.

To help you work out if you have enough for retirement why not look at OnePath’s Retirement fundamentals (623kb PDF) booklet. It’s also a good idea to talk to your financial adviser who can help you with tips and strategies to improve your retirement savings.

Do I have enough to retire?

To work out whether you have enough to retire there are three things you need to know:

  1. How much income you’ll require in retirement
  2. How many years will you spend in retirement
  3. How much you expect your investments to earn over your retirement years

We are living longer and it is not unusual to live more than 20 years in retirement, so it's important to determine your needs in retirement.

It’s also a good idea to speak to your financial adviser who can help you with tips and strategies to improve your retirement savings.

When can I access my super savings?

Generally Australians can only access their super savings when they reach their preservation age. For people born after 30 June 1964, the magic number is 60. But for those born before this date it can be earlier.

Date of birth Preservation age

Before 1 July 1960


1 July 1960 - 30 June 1961


1 July 1961 - 30 June 1962


1 July 1962 - 30 June 1963


1 July 1963 - 30 June 1964


1 July 1964 onwards


In making decisions about when to retire, don’t forget you could save a large amount of money by delaying your retirement until 60. This is because super can be accessed tax free after this age. So even if you had plans to retire earlier it might be worthwhile to wait.

How can I access my super savings?

You’ve worked hard all your life to accumulate your super savings and now you’re ready to retire, what do you do with it? Basically you have three options for super when you retire:

  1. Withdraw your super as a lump sum.
  2. Take it in the form of a retirement income stream.
  3. A combination of both.

To learn more about these retirement income streams read OnePath’s Retirement fundamentals (623kb PDF) booklet.

Remember, the way you access your super monies can affect the amount of tax you pay and your Centrelink entitlements. Before making a decision it is important to talk to your financial adviser who can help you make the right decision based on your individual retirement needs.

Can I get the age pension?

For many people the age pension will not provide enough money to fund a comfortable retirement. But it can still play an important role in qualifying you for pensioner concession care, saving you money on expenses relating to health, utilities and transport.

You can generally access the age pension when you reach a certain age provided you meet Centrelink’s residency requirements and your income and assets are below a certain amount. It is important to note that the Government has recently announced a proposal (this is not yet law) to increase the age at which some people qualify for the age pension from age 65 to age 67.

The mix of your income and assets can impact the level of support you receive from the Government through Centrelink. That’s why it’s important to talk to your financial adviser who can help you work through the eligibility criteria and ensure you receive your maximum entitlements.

This has been provided for general information purposes only. It does not purport to recommend any particular adviser or provide you with financial advice. In addition to seeking financial advice, potential investors must always read the Product Disclosure Statement for the relevant product before making an investment decision.