For many of our retirement planning clients in Bendigo, turning 60 is a significant milestone. It marks a moment to reflect on goals and adjust expectations for a more comfortable, independent future, the idea of retiring and enjoying more freedom becomes increasingly appealing.
There is no universal answer. For some people, retiring at 60 is financially achievable and offers the opportunity to enjoy more time doing the things they love. For others, working another five years can make a significant difference to their superannuation balance, retirement income and long-term financial security.
But it also raises an important question: should you retire at 60, or keep working until 65?
There is no universal answer, and a simple retirement planning conversation can go a long way.
For some people, retiring at 60 is financially achievable. It also offers the opportunity to enjoy more time doing the things they love.
For others, working five more years can improve their superannuation balance, retirement planning, retirement income and long-term security. This approach supports long-term financial security.
The right decision depends on your personal circumstances, financial position, and retirement planning goals. It should align with how you want your future to unfold.
If you’re approaching retirement, here are some important considerations when deciding whether to finish work at 60 or continue until 65.
1. How much superannuation will you need?
One of the first things to consider is whether your superannuation and other investments can support the lifestyle you want in retirement.
Retiring at 60 means your savings may need to fund a longer period without employment income. You could potentially spend 25, 30 or even 35 years in retirement.
This makes it important to understand not just how much superannuation you have, but how much income it can realistically provide.
Consider:
- Your current superannuation balance.
- Your expected retirement living expenses.
- Whether you have a mortgage or other outstanding debts.
- Your partner’s superannuation and financial position.
- Other investments, savings or income sources.
- Whether you expect to receive a full or part Age Pension later in retirement.
A person with a relatively modest superannuation balance but a debt-free home and lower living expenses may be in a stronger position than someone with a larger balance and significant ongoing financial commitments.
The important thing is to understand how all your financial resources wor
2. What difference could another five years make?
Working from age 60 to 65 can have a meaningful impact on your retirement position.
There are several reasons for this.
Firstly, you may continue receiving employer superannuation contributions. Secondly, your existing superannuation investments have another five years to potentially grow. Thirdly, you may be able to continue making additional contributions, depending on your circumstances.
Perhaps just as importantly, continuing to work means you may not need to draw on your superannuation to fund your everyday living expenses.
This can give your retirement savings more time to grow and potentially reduce the amount you need to withdraw later.
However, it is important not to assume that working until 65 will automatically leave you better off in every situation. Investment returns are not guaranteed, and the financial benefit needs to be weighed against the value of having more time outside the workforce.
For some people, working part-time or reducing their hours may offer a useful middle ground.
3. When can you actually access your superannuation?
An important consideration is understanding the difference between retirement age, superannuation preservation age and Age Pension age.
In Australia, eligible individuals can generally access their superannuation from age 60 if they have retired or met another relevant condition of release. There are also transition-to-retirement arrangements that may allow eligible people to access some of their super while continuing to work.
From age 65, you can generally access your superannuation regardless of whether you have retired.
The Age Pension is different.
The current Age Pension age is 67, subject to meeting the relevant residency, income and assets requirements.
This means someone retiring at 60 may need to fund approximately seven years before reaching Age Pension age.
That period needs to be considered carefully as part of your retirement planning strategy.
You can find more information through the Australian Government’s Moneysmart guide to accessing your super.
4. Could you use a transition-to-retirement strategy?
Not everyone wants to move directly from full-time employment into complete retirement.
For some Australians, gradually reducing working hours can be an attractive alternative.
A transition-to-retirement (TTR) strategy may allow eligible individuals aged 60 or over to access some of their superannuation through a transition-to-retirement income stream while continuing to work.
Depending on your circumstances, this may help supplement your income if you reduce your working hours.
It may also form part of a broader superannuation and tax strategy while you continue working.
However, TTR strategies are not suitable for everyone. There are restrictions on the amount you can withdraw, and the potential benefits need to be assessed against your overall financial position.
You can read more about this option in the Moneysmart guide to transition-to-retirement strategies.
5. Don’t overlook the Age Pension
Although many people focus primarily on their superannuation when planning retirement, the Age Pension can form an important part of their longer-term retirement income.
You cannot generally access the Age Pension until age 67, and eligibility is subject to income and assets tests as well as residency requirements.
For someone retiring at 60, this creates an important planning consideration.
You may need to rely on superannuation, personal savings and other investments to fund the years before reaching Age Pension age.
Once you reach 67, your eligibility and potential payment will depend on your circumstances at that time.
It is also worth understanding how your superannuation, investments and other assets may affect your eligibility.
The Services Australia Age Pension eligibility guide provides further information.
6. What does retirement actually look like for you?
Financial considerations are obviously important, but they are only one part of the decision.
It is also worth asking yourself what you want to do with your time.
For some people, retirement means travelling, spending more time with family, pursuing hobbies or simply having more freedom over their day.
Others enjoy their work and may prefer to continue contributing in some capacity.
There can also be a significant difference between being financially able to retire and being emotionally ready to stop working.
Some questions worth considering include:
- Do you genuinely want to stop working, or would reducing your hours be preferable?
- Do you have plans for travel, hobbies or other activities?
- Will your partner also be retiring, or will you have different retirement dates?
- How will your day-to-day routine change?
- Are there health or family considerations that influence your decision?
Retirement should be something you look forward to, rather than simply a financial milestone.
7. Have you considered the tax implications?
The way you structure your retirement income can make a difference to your overall financial position.
For many Australians aged 60 or over, withdrawals from taxed superannuation funds are generally tax-free. However, there can be exceptions depending on the type of superannuation benefit and your circumstances.
There are also important considerations around:
- Starting an account-based pension.
- Making additional superannuation contributions before retirement.
- The transfer balance cap.
- Tax treatment of investments held outside superannuation.
- The timing and structure of superannuation withdrawals.
Making decisions without considering the tax implications can potentially reduce the amount of money available to fund your retirement.
This is one reason why it is worth looking at your entire financial position before deciding when to retire.
The Australian Taxation Office’s information on accessing super to retire is a useful starting point.
8. So, is retiring at 60 better than waiting until 65?
The answer will be different for everyone.
Retiring at 60 may be the right decision if you have sufficient financial resources, manageable living expenses and a clear understanding of how you will fund your retirement.
Working until 65 may be more appropriate if you want to build your superannuation balance further, reduce debt, strengthen your financial position or simply prefer to keep working.
There is also a third option: gradually transitioning into retirement.
Rather than treating 60 and 65 as two fixed choices, you may be able to reduce your working hours, access some of your superannuation when eligible and move towards full retirement at a pace that suits you.
The important thing is to understand the financial implications of each option before making a decision.
Retirement Planning in Bendigo: Get a Clearer Picture Before You Finish Work
Deciding when to retire is one of the biggest financial decisions you will make.
At Greybox Wealth, we help individuals and couples across Bendigo and regional Victoria understand their financial position and develop strategies for the years leading into and throughout retirement.
Our approach to retirement planning considers more than just your superannuation balance. We look at your broader financial circumstances, expected retirement income, investments and the decisions that may influence your financial position over time.
Whether you’re considering retiring at 60, working until 65 or gradually reducing your hours, having a clear retirement plan can help you make an informed decision.
If retirement is approaching and you’re unsure whether you’re financially ready, we’d welcome the opportunity to discuss your circumstances.
Learn more about our Retirement Planning services
General information only. This article does not take into account your personal objectives, financial situation or needs. Before making financial decisions, consider whether the information is appropriate for your circumstances and seek professional advice where required.