Early retirement: Is your super balance where you’d like it to be?

By Sophie Wong · · 3 min read
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Woman sits at a desk and is holding her pen above a piece of paper to calculate her super balance

For many Aussies, the intended age of retirement might not match up with their actual retirement age, recent data from the Australian Bureau of Statistics (ABS) shows.

In fact, the average age of planned retirement is 65.5 years. But the reality appears to be much sooner, with the average age of all retirees being 56.3 years.

While pension is the primary source of income for most retirees, this might possibly be overtaken by superannuation in the long term, according to the 2023 Intergenerational Report (IGR).

This means it’s becoming increasingly more important to accumulate enough super for retirement.

What does a young retirement age mean for super?

Two people look at their super on a computer screen

As it stands, women are retiring at an older age when compared to previous years. Nevertheless, the ABS indicates that 500,000 more women over the age of 45 had retired in 2020/21 as compared to men in the same age bracket.

These stats also show that a partner’s income is typically used to support the living costs of 1 in 3 women in retirement. The same can be said for only 7% of men. Generally speaking, this data suggests that retiring earlier could potentially impact the amount of super you receive later down the line.

To be financially comfortable in retirement, the Australian Financial Security Authority (AFSA) notes that couples may need $690,000, and singles may need $595,000 in their super fund at the time of stopping work. In terms of a more modest retirement, a super balance of $100,000 has been recommended for couples and singles receiving the Age Pension.

But the decision to enter retirement is sometimes unavoidable. There are a range of reasons why Aussies may retire early - even without being able to withdraw super, so let’s have a look at them. 

Why are some Aussies retiring before the preservation age?

Person is looking at her phone and is deciding whether to retire before reaching the preservation age

Here are the main reasons retirees have stopped working in 2020-21, according to the ABS:

  • It’s said that a health condition may have interfered with plans of continuing work for 13%. This might include a disability, sickness, or injury.
  • For 7% of Aussies, the availability of work, being dismissed or retrenched was the rationale behind retiring early.

But retiring before you reach the preservation age doesn’t necessarily mean having an insufficient amount of super later on. By being proactive with your super fund, you can potentially grow your balance and have more disposable income in retirement. 

Review your super strategy before retirement

Couple sits at a desk reviewing their super strategy with a financial adviser

When you’re thinking about growing your super balance, there are a couple of things that you could consider looking at:

  • Your super fund investment type. The level of returns you receive on your investments could change depending on your risk appetite. By making adjustments to your super investments, you can choose what’s potentially best for you. For instance, if you’ve selected a high growth investment type, you might be getting a higher return on your super but you’re also taking on more risk. 
  • The long-term performance of your super fund. Some super funds may have a bad year in terms of the returns it gives members. However, if you’ve noticed after several years that you haven’t been getting the returns you’d hoped for, you may consider switching your super provider.

It's good to have an idea of what your retirement saving targets are so that you can be well prepared. In saying that, you might consider seeking professional advice to get a tailored plan for your needs. 

If you want to learn more about super and plan ahead, head over to our superannuation guides hub and start planning for your future.