For plenty of Australians, turning 60 feels like reaching the finish line and starting retirement.
It's the age when most people can finally access their superannuation. After decades of work, the money is finally yours.
So why not hand in the resignation letter? Because there's one detail that's easy to miss: the Age Pension generally doesn't begin until age 67. That means if you retire at 60, you're responsible for funding every single day of the next seven years yourself.
That's where the maths starts getting interesting.
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The seven-year gap
Spend enough time on retirement forums and you'll quickly find plenty of doom and gloom. "Retirement is dead." "We'll all work forever." "Nobody can afford to stop."
It's easy to get caught up in that negativity.
According to the Association of Superannuation Funds of Australia (ASFA), a single person needs around $630,000 in super to enjoy a comfortable retirement.
But there's an important catch. That figure assumes retirement begins at around Age Pension age.
Retiring at 60 changes the equation dramatically.
Your super suddenly changes direction
Here's what many people overlook.
The day you stop working isn't just the day your salary disappears. It's also the day your employer stops making super contributions.
Until then, your super has been doing two jobs at once. Investment returns are compounding, while your employer keeps adding another 12% of your salary into the account.
Once you retire, that conveyor belt switches off. Instead of filling the bucket, you start emptying it.
ASFA estimates a single retiree needs around $51,000 a year for a comfortable lifestyle.
If you begin retirement with $630,000, that's more than 8% of your balance withdrawn in the very first year. Repeat that for seven years and your nest egg can look very different by age 67.
Those are also some of the most valuable years for compound returns. Once that capital has been spent, you can't simply replace it.
Waiting until 67 changes everything
Now flip the scenario. Instead of retiring at 60, you keep working until 67. Your super isn't shrinking. It's still receiving employer contributions, while investment returns continue compounding.
Using a simple illustration, a $600,000 super balance earning an average annual return of 6% — alongside ongoing employer contributions — could potentially grow to around $950,000 over seven years. Actual outcomes will vary depending on investment returns, contributions, fees, and market conditions.
That's an enormous difference. One person reaches 67 with a much smaller balance after drawing down their savings. The other arrives at retirement with a significantly larger portfolio.
That's the real cost of retiring seven years early.
There is a middle ground
Fortunately, retirement doesn't have to be all or nothing. A Transition to Retirement Pension (TTR) allows eligible Australians to access part of their super while continuing to work.
That could mean dropping back to three days a week instead of walking away altogether. Your employer is still making super contributions, while your investments continue working in the background.
There's one catch, though. Many people assume a TTR automatically receives tax-free treatment. It doesn't. Earnings within a TTR pension are generally taxed at up to 15%. The tax-free treatment usually begins only once you've fully retired or reached age 65.
The bottom line
Spreadsheets can tell you how much money you might have. They can't tell you how much seven extra years in a job you dislike will cost your health or happiness.
For some Australians, retiring at 60 will be entirely achievable. For others, working a little longer could dramatically improve their financial security.
Neither choice is automatically right or wrong.
The important part is having a plan. Retirement isn't something to drift into. The earlier you understand the trade-offs, the more choices you'll have when the time finally comes to stop working.
