Australians have enjoyed the benefits of superannuation since the scheme was initiated in July 1992.
To 'superannuate' someone means to retire someone with a pension. According to Thinking Ahead Institute, Australian pension assets have grown from 108% of gross domestic product (GDP) in 2013 to 145% in 2023.
The firm estimates Australians held over $2.4 trillion in pension assets at the end of 2023, the world's fifth largest holdings behind Canada, the UK, Japan and the US, respectively. Most of these are in equities, like those in the iShares Core S&P/ASX 200 ETF (ASX: IOZ).
That's a lot of capital, and I'm sure by now you're wondering what age Australians typically access their super.
Let's examine the details surrounding superannuation access, various retirement intentions, and the financial aspects related to these.
Accessing superannuation: Preservation age
In the vast majority of people's cases, the preservation age is the earliest you can access your superannuation. I emphasise 'earliest' because it's not the most common age.
For those born after July 1964, the preservation age is 60 years old.
So, to be considered 'retired' at preservation age, you have to be at least 60 and have ceased employment (with no intention of returning to work more than 10 hours a week).
But what if you intend to work beyond 60?
Once Australians reach this age, they can generally start accessing their superannuation funds, even whilst still working.
But you cannot access the funds as a lump sum yet. Only as an income stream.
If you want to access super as a lump sum, the criteria known as a 'condition of release' is:
- Turning 65: Access to superannuation is available even if you haven't retired.
- Retirement: Ceasing gainful employment and having no intention of returning to work.
So the key difference in how and when you access super depends on whether you want to start drawing it as income or as a lump sum, and what age (or if) you intend to officially retire.
Critically, in both instances, the super payments are tax-free.
No matter what though, once you hit 65 years old, you can access your superannuation.
Interestingly, according to a report by super fund MLC, the average retirement age for Australians varies but has been trending upwards. MLC notes the average age at which individuals retire is approximately 65.4 years.
This figure differs between genders and industries, with men typically retiring later than women.
Superannuation trends and statistics
According to MLC, the average superannuation balance for Australians aged 65 to 69 is $428,738, with a median balance of $207,540.
These amounts are usually sufficient to fund a 'modest' retirement lifestyle, it says.
What does a 'modest' lifestyle look like in retirement, you ask? MLC provides the following table from the Association of Superannuation Funds of Australia (ASFA):
| Total per year | Comfortable lifestyle p.a. | Modest lifestyle p.a. | ||
| Couple | Single | Couple | Single | |
| $72,148.19 | $51,278.30 | $46,994.28 | $32,665.66 | |
These figures will likely change over time as inflation plays its course.
Foolish takeout
Accessing superannuation can begin at the preservation age of 60 as an income stream. However, many Australians often wait until the retirement age of around 65 years old to access their super as a lump sum.
Understanding the conditions of release and planning your finances can ensure a comfortable retirement. Always seek professional help when needed.
