Access to financial support is the top reason prompting Australians to commence their retirement, according to a new report from the Australian Bureau of Statistics (ABS).
This includes reaching the preservation age for access to superannuation and reaching the 'retirement age', which refers to the age at which we become eligible to receive the age pension.
Most retirees in Australia today are from the Baby Boomer generation. The Boomers were born between 1945 and 1964, making the youngest in this cohort 60 years of age.
Preservation ages vary depending on when you were born. For those born after 30 June 1964, it's 60 years of age. That means every boomer will have access to their superannuation after this year.
Meanwhile, the pension age in Australia is 67. So, the youngest baby boomers still have seven years to wait to be eligible for this financial support.
Currently, the age pension is the main income source for most Australians in retirement, with superannuation the second main source.
Bjorn Jarvis, ABS head of labour statistics said:
In 2022-23, a Government pension or allowance was still the main source of personal income at retirement for 43 per cent of retirees. This was followed by Superannuation, an annuity or private pension at 27 per cent.
What does financial support actually mean?
Superannuation
Obviously, everyone has varying amounts of money in their superannuation account at preservation age.
However, according to Australian Taxation Office (ATO) data, the average superannuation balance for an Australian aged between 65 and 69 years is $428,738.
If we break the numbers down by gender, the average balance for men is $453,075, and the average for women is $403,038.
Age pension
Following the most recent inflation indexing update on 20 March, the full age pension is now a taxable $43,752.80 per annum for couples and $29,023.80 for singles.
These amounts include the maximum pension supplement and energy supplement.
What are the other top 4 reasons for retirement?
The ABS data looks at the reasons Australia's 4.2 million retirees entered retirement.
As we said earlier, the top reason was access to financial support (31% of respondents).
The second most common reason for retirement was sickness, injury or disability (13%).
The third most common was being retrenched, dismissed, or unable to find work (5%).
Next on the list is retiring to care for an ill, disabled or elderly person (3%).
And finally, the fifth most common reason was that their employment ended because their job was temporary, seasonal or holiday work.
The important thing to note here is that many people retire for reasons that are not of their choosing. This is leading to many retiring earlier in life than planned.
8-year gap between actual and intended age of retirement
The ABS data shows a significant disparity between when people actually retire and when they intend to retire.
The average age at which most people intend to retire is 65.4 years. But among those already retired, the age at which they retired was substantially lower at 56.9 years.
A new survey from insurer TAL shows six in 10 Australians retired earlier than expected. This is a reminder to all of us who are still working that we need to start our financial planning sooner rather than later.
Ashton Jones, TAL General Manager of Growth, Retirement & Wealth Partnerships said:
When retirement arrives sooner than expected, it can derail a person's ability to prepare as much as they'd like to.
Some common themes that emerged for retirees were that many wish they'd put more into superannuation when they had the chance, or that they'd started salary sacrificing earlier.
