The average age of retirement in Australia is 65. At this point, you can access your superannuation regardless of whether you've started work or not, and you're just two years from potentially receiving the Age Pension.
But just because age 65 is the average doesn't mean you have to wait until then if you don't want to.
Perhaps you want to retire a little earlier at age 63? That's predictably doable, but only if you have enough in your superannuation to support yourself.
Let's break down what retirement at age 63 might look like, and how much you'll need to make it happen.
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What could a comfortable retirement look like?
The Association of Superannuation Funds of Australia (ASFA) splits retirement into two broad categories: comfortable and modest.
ASFA defines a comfortable retirement as one that gives retirees 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.
Meanwhile, a modest retirement is defined as being able to cover expenses just slightly above what the full Centrelink Age Pension would provide from age 67.
How much will a comfortable retirement cost?
According to ASFA, a comfortable retirement is expected to cost around $55,923 per year for single Australians and roughly $78,566 per year for a couple living together.
But the catch is that these figures assume you'll be retiring at age 67, will need to fund roughly 10 years of retirement, will be eligible to receive a part Age Pension, own your home in full, and already have an emergency fund set aside.
How much superannuation do I need to fund that?
In order to fund a comfortable retirement, ASFA calculates that at age 67, single Australians will need around $630,000. Meanwhile, couples will need a superannuation balance of around $730,000.
But, if I want to retire earlier at around age 63, how much extra will I need?
If you're planning to retire earlier, at age 63, you'll need to factor in those four additional years.
I've done a quick calculation using ASFA's figures to work out the sum you actually need in your superannuation to be able to retire at age 63 and have the same lifestyle quality.
At age 63, singles will need to have closer to $854,000 in their superannuation.
Meanwhile, couples will need a combined balance of around $1.05 million at age 63.
These figures assume you'll need to fund the additional four years of retirement between the ages of 63 and 67.
But remember, if you don't own your home outright, you'll also need to consider how you'll pay your mortgage or rent, along with your other bills, and budget accordingly.
How does your superannuation balance compare? Are you on track?
