Australians can access their superannuation when they reach the preservation age (60 years old) and have permanently retired.
That means that at the age of 61, it is absolutely possible to start living your dream retirement lifestyle. There's no need to wait until the average retirement age of 65. You also don't need to wait until you can (if eligible) access the Age Pension at age 67.
The only issue is, it can be difficult to work out exactly how much you actually need in your superannuation.
After all, the balance you need at any retirement age depends entirely on your living situation, financial situation, and the lifestyle you want to live when you finally stop working.
Are you one of those who want to retire earlier than the norm? Let's break down what retiring at 61 might look like and how much money you'll need.
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What does a comfortable retirement look like?
In Australia, retirement is generally split into two broad categories: modest and comfortable.
A modest retirement, according to the Association of Superannuation Funds of Australia (ASFA), is defined as being able to cover expenses slightly above what the full Centrelink Age Pension would provide from age 67.
But a comfortable retirement is defined as one that enables retirees to maintain a good standard of living well beyond the age pension. It budgets for expenses beyond a modest retirement, including top-tier private health insurance and regular leisure activities. It allocates funds for home repairs or renovations, and perhaps even an annual holiday.
How much will a comfortable retirement cost me?
ASFA estimates that a comfortable retirement will cost around $55,923 per year for singles and $78,566 for couples.
It assumes you'll receive a part Age Pension and that you own your home in full. It also assumes you'll be able to stick to financial goals, and plan your budget carefully.
What do I need in my superannuation by age 65 to be able to afford that?
In order to fund a modest comfortable retirement, ASFA calculates that single Australians will need around $630,000. Meanwhile, couples will need around $730,000.
The catch is that this figure assumes you'll access your superannuation from age 67. It also assumes you'll need to fund around 10 years of a comfortable retirement.
If you're planning to retire earlier, at age 61, you'll need to factor in those six additional years.
I've done a quick calculation and using ASFA's figures. Singles will need to have closer to $900,000 in their superannuation, while couples will need around $1.3 million at age 61. This assumes you'll need to fund around 16 years of retirement.
Remember also, that if you don't own your home outright, you'll also need to consider how you'll pay your mortgage or rent on top of your other bills.
It's also wise to have an emergency fund set aside.
