Australia lifted the age pension age from 65 years old to 67 in 2023.
It’ll mean a longer wait for people like Ross, who told the ABC that after decades of working as a manual labourer his body was “destroyed” and he was unable to keep working until pension age.
With limited superannuation, Ross has been living on JobSeeker payments, which are lower than the pension, for the last four years and struggling to survive.
Ross’s story sparked a wave of comments from other Australians with similar experiences.
“I still have eight years of work left and I think I will die with my boots on,”
Laurie said.
“I will not make it to retirement and get to enjoy life as I should — if I don’t have my health then what is the use.”
“We are working ourselves to the grave,” Matt said.
Nurses and disability support workers also told the ABC of the toll on their bodies from years of working in physically demanding jobs.
“My body is stuffed I have chronic back issues, shoulder and neck issues,”
Karen said.
“The stress and anxiety from chronic and relentless pain is compounded by overwhelming financial pressures, so it’s terrifying,” Barb said.
Financial coach Karen Eley said it was a serious issue for Australia’s aging population.
“It’s disappointing the government hasn’t considered the unintended consequences of increasing the age pension for hard-working Australians,” Ms Eley said.
Karen Eley is a money coach who runs Women Talking Finance. (Supplied: Karen Eley)
So, what are the options for those who want, or need, to retire early?
It will depend on whether you’re relying on the age pension or superannuation for income.
This article contains general information only. You should consider obtaining independent professional advice in relation to your particular circumstances.
When can I access my super?
You can access your super when you reach 65 years old, even if you’re still working and haven’t retired.
But you can also access your super earlier if you’ve reached your preservation age and satisfy the work/retirement criteria.
Preservation age is between 55 and 60 years old, but it depends on the year you were born.
| 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 |
| After 1 July 1964 | 60 |
Once you have reached your preservation age, you can either fully retire or start a transition to a retirement income stream while continuing to work.
That means you may be able to reduce your working hours without reducing your income when you reach your preservation age.
Your part-time working income may be supplemented with your super savings as a transition to a retirement income stream.
When can I access the pension?
You can get the age pension from the age of 67 if you are living in Australia and have been an Australian resident for the last 10 years.
But you have to meet an income and asset test.
To get a full pension there are limits on the value of the assets you can have.
The government includes most real estate assets you own in your assets test.
But this generally doesn’t include your principal home and up to the first 2 hectares of land it’s on.
Assets also include income streams and superannuation pensions.
The asset limits for a full pension:
| Your situation | Homeowner | Non-homeowner |
|---|---|---|
| Single | $321,500 | $579,500 |
| A couple, combined | $481,500 | $739,500 |
| A couple, separated due to illness, combined | $481,500 | $739,500 |
| A couple, one partner eligible, combined | $481,500 | $739,500 |
And, the asset limits for a part pension are as follows:
| Your situation | Homeowner | Non-homeowner |
|---|---|---|
| Single | $704,500 | $962,500 |
| A couple, combined | $1,059,000 | $1,317,000 |
| A couple, separated due to illness, combined | $1,247,500 | $1,505,500 |
| A couple, one partner eligible, combined | $1,059,000 | $1,317,000 |
The normal rates of the age pension before tax is:
| Per fortnight | Single | Couple each | Couple combined | Couple apart due to ill health |
|---|---|---|---|---|
| Maximum basic rate | $1,051.30 | $792.50 | $1,585.00 | $1,051.30 |
| Maximum Pension Supplement | $83.60 | $63.00 | $126.00 | $83.60 |
| Energy Supplement | $14.10 | $10.60 | $21.20 | $14.10 |
| Total | $1,149.00 | $866.10 | $1,732.20 | $1,149.00 |
What if I’m not that old but can’t work anymore?
You can access your super early but under limited circumstances.
These include:
- Compassionate grounds — to pay for medical treatment, palliative care, funeral expenses and preventing the forced sale of a home.
- If you have a terminal medical condition.
- If you are permanently incapacitated — sometimes known as “disability super benefit”.
Your fund must be satisfied that you have a permanent physical or mental medical condition that is likely to stop you from ever working again in a job you were qualified to do.
You may also be able to access any income protection insurance you hold within your funds.
- Severe financial hardship — this is assessed by your super fund and can include things like being unemployed and not being able to meet your mortgage payments.
A lump sum is generally limited to $10,000.
There may be tax consequences to early withdrawals depending on your age.
Are there any other alternatives to help me retire?
A reverse mortgage allows you to borrow money using the equity in your home as security. (ABC News: Brendan Esposito)
Financial coach Karen Eley says while it is not ideal, people who own their own homes can use a reverse mortgage to access funds.
“This lending facility allows you to borrow money against your home, without requiring repayment until you pass away or sell the property,” she said.
She said it’s important to get independent advice to make sure you understand what you’re signing up for “as essentially you are creating a debt against your home that will need to be repaid in the future.”
“It can however provide financial assistance in the form of accessing the equity in your home if you have a mortgage-free property.“
The Australian Securities & Investment Commission’s (ASIC) Moneysmart website has a calculator that can help work out how much you could potentially borrow.
Downsizing a home can help those looking to retire early, Ms Eley says. (ABC News: Keana Naughton)
Ms Eley said downsizing your home was another possible strategy to help those needing to retire early.
“If your family home is worth $700,000 and you can find a property to live in for $500,000 perhaps relocating to a smaller house or more affordable suburb, you can use the difference in the sale and purchase price to inject money into your super, or use it to live on until you meet super or age pension eligibility requirements,” she said.
A spokesperson for the Australian Tax Office (ATO) said if you have turned 60 or retired, you may be eligible for tax offsets.
This will depend on your income and assets, where your income comes from, and whether you’re fully or partly retired.
If your super benefits won’t fully support you when you retire, you may also qualify for a part-pension.
And, in recognition that it is harder for an older person to find employment, those over 55 who have spent nine months on JobSeeker receive an extra $55 a fortnight.
Where can I get help?
Ms Eley says there can be long-term implications for accessing your super earlier than your preservation age. (ABC News: Cason Ho)
Moneysmart has information and tools to help you prepare to retire.
Your super fund may also offer a range of calculators to help you.
For more personalised information and advice, you can contact your super fund or a registered financial adviser.
Ms Eley said there could be long-term implications for accessing your super earlier than your preservation age.
“Mortgage brokers or banks can also provide you information about accessing the equity in your home if you’re over 60.
“However, it’s important to understand the costs and the long-term impacts on drawing down on the equity in your home through these loans,” she said.
Loading…
