Planning to retire in your late 50s? What you need to consider

To get your hands on the money in your super account, you need to have reached your preservation age and also met a condition of release (see below).

As the preservation age is currently 59, with limited exceptions (see below), if you plan to retire earlier than this you will need sources of income other than super to support yourself.

Your preservation age is not the same as the age you can apply to receive the Age Pension, which is currently 66 and six months and progressively rising to age 67. Your preservation age only relates to accessing the benefits in your super account.

Your preservation age varies depending on your date of birth. If you were born after 1 July 1964, you are not permitted to access your super benefit until you reach age 60.

Date of birth	Preservation age
Before 1 July 1960	55
1 July 1960 – 30 June 1961	56
1 July 1961 – 30 June 1962	57
1 July 1962 – 30 June 1963	58
1 July 1963 – 30 June 1964	59
From 1 July 1964	60

Once you have reached your preservation age it’s easier to access your super benefits, but you still need to meet a condition of release and some of these restrict whether you can take a lump sum or income stream from your savings.

When you meet a condition of release and apply to access your super benefit, you can generally choose to withdraw an amount from your super as an income stream, lump sum or a combination of the two. The option you choose will have an impact on the amount of tax you pay (see Question 4).

2. Can I access my super before age 60 and still work?

One of the main conditions of release allowing you to access your super benefits before you turn 60 is reaching your preservation age and retiring from the workforce.

In most cases, this means it’s not possible to access your super before age 60 and continue working.

The main exception to this is if you reach your preservation age and start a transition-to-retirement pension or income stream (TTR or TRIS) while you continue working and begin easing into retirement (see Question 8).

3. Can I still make contributions into my super if I retire before age 60?

Yes.

Under the contribution rules applying from 1 July 2022, if you are aged under 75 you are free to make most types of contributions (such as non-concessional contributions, salary–sacrifice and downsizer contributions) into your super account without having to worry about being employed and meeting the requirements of a work test.

The only exception to this is tax-deductible super contributions. From 1 July 2022, once you reach age 67 you are required to be ‘gainfully employed’ for at least 40 hours in a period of 30 consecutive days during the financial year in which you wish to make your tax-deductible super contribution.

4. What are the tax implications of retiring before age 60?

The key point to remember when it comes to accessing your super account if you retire before age 60 is you will generally pay more tax than if you wait until you reach age 60.

Taking your super before you turn 60 can have a significant impact on how much – if any – tax you pay when withdrawing your super benefit, as super withdrawals after age 60 are generally free of any tax.

The tax rules for withdrawing your super savings if you retire before age 60 are complex. If you withdraw some of your super benefit under the age of 60 but after you have reached your preservation age, you will pay tax on some elements of your super benefit.

5. What are the options for withdrawing my super benefit?

When you withdraw your super savings at retirement, you can choose to take a lump sum, an income stream or a combination of both:

• Income stream (super pension or annuity) – If you decide to take a super income stream, you will receive a series of regular payments from your super fund. These must be paid at least annually and must meet the minimum annual payment rules set by the government.

• Lump sum – This is a single payment whereby you withdraw some or all of your super. If you take a lump sum the money is no longer within the super system; if you invest it outside super, any investment returns received on the money will not be taxed at super’s concessional tax rate of 15%. Instead, your investment earnings will be taxed at your marginal tax rate, which could be as high as 45% (plus the Medicare levy).

Remember, if you retire before age 60 and withdraw your super savings, you miss out on the benefits of compound interest and the tax benefits available within the super system that would continue if you were to leave your savings in super for longer. This can have a significant impact on how much income you have in later years.

6. What is the average super account balance for Australians in their late 50s?

According to ATO figures, in the 2020-21 financial (the latest available data), the median super account balance for males aged 55 to 59 was $191,263, while for females the median was more than 30% lower at $130,714.

Note that this is the median account balance, which is slightly different to the average. The median is the middle account balance of an age group – 50% of the age group will have a higher balance and 50% will have a lower balance.

7. What is my life expectancy at age 55?

Life expectancy is a statistical measure estimating how long a typical person of a specific age and sex is likely to live. It’s based on your year of birth and gender, but does not consider your circumstances, such as your personal health, family history, diet or lifestyle.

This means it’s a population estimate of how long a typical person is likely to live, not a prediction of how long you will live.

The estimates below are the average life expectancy for an Australian male and female aged 55 based on national statistics, without taking into account any personal factors such as your health or family history.

Estimated life expectancy at age 55

	Expected remaining years of life	Life expectancy
Male	28 years and 4 months	83 years and 4 months
Female	31 years and 6 months	86 years and 5 months

Source: 2015–17 Australian Life Tables, Australian Government Actuary. The Australian Life Tables are released every five years, with the next report with updated life expectancy figures to be released in 2024.

8. Can I start a transition-to-retirement income stream before age 60?

A transition-to-retirement income stream (TTR or TRIS) is a pension paid to you from the money you have saved in your super account while you are still working. In some circumstances it can be a good way to scale back your working hours and start enjoying your retirement without reducing your income.

Starting a TTR can also allow you to salary sacrifice into your super account to save tax, while using your TTR income stream to supplement your salary so you can maintain your current lifestyle.

You are eligible to start a TTR if you have reached your preservation age, currently 59, are still working and are a member of an accumulation super fund (90% of Australians are in these funds.)

9. Can I get the Age Pension if I retire before age 60?

No.

To be eligible for the Age Pension, you must have reached the current Age Pension eligibility age, which from 1 July 2023 is 67 years.

In addition to the age requirement, whether you are eligible for an Age Pension depends on you being able to satisfy the Age Pension assets test, income test and residency requirements.

10. Can I get a health card if I retire before age 60?

No.

To qualify for a Commonwealth Seniors Health Card (CSHC), which gives you access to cheaper health care, medications and, potentially, government services, you must have reached your Age Pension eligibility age, which depends on your date of birth. This is currently 66 years and six months but is being increased to age 67 from 1 July 2023.

11. Can I get a state Seniors Card if I retire before age 60?

No.

The eligibility rules for a Seniors Card are different in each state and territory (and they change regularly), but the general rule is you need to be aged at least 60 to apply for a state Seniors Card.

Briefly, the requirements in each state and territory in relation to your age are:

State	Eligible age for Seniors Card
Australian Capital Territory	60 or over
NSW	60 or over
Northern Territory	60 or over
Queensland	60 or over with government concession card 65 or over without government concession card
South Australia	60 or over
Tasmania	60 or over
Victoria	60 or over
Western Australia	64 or over

12. How much super do I need to retire in my late 50s?

When you retire from the workforce in your late 50s, you are likely to be spending 30 years or more in retirement, so you’ll need to create a retirement income stream that lasts a long time.

The amount of super you will need to fund your retirement lifestyle depends on lots of factors, including:

• How many years you will spend in retirement
• Whether you are a couple or single
• How much you plan to spend each year
• Whether you own your home
• What assets or income you have outside super
• How much your investments earn
• Whether you are eligible for the Age Pension
• How much super you want to leave your dependants.

To help get you started, we have detailed tables you can consult outlining how much both couples and singles need in retirement.

To work out how much super you may need if you retire in your late 50s, try ASIC’s MoneySmart retirement planner calculator tool. It allows you to estimate the super balance you would need to generate different annual income amounts for both singles and couples.