Most Australians retire at around age 65. At this point, you can access your superannuation regardless of whether you've stopped working or not.
But did you know there is the opportunity to retire much earlier if you have the funds to support yourself?
Let's take a look at what retirement at age 59 could look like.
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What is a comfortable retirement?
According to the Association of Superannuation Funds of Australia (ASFA) a comfortable retirement is defined as one that enables retirees to maintain a good standard of living well beyond the age pension and a modest retirement.
That means that it budgets for things like top-tier private health insurance, regular leisure activities, and occasional meals out. 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 single Australians.
A couple living together can expect to spend around $78,566 per year combined.
How much do I need in my superannuation to afford a comfortable retirement?
The catch here is that many government or association estimates around retirement are based on the understanding that you'll retire even later, at age 67.
ASFA estimates that single Australians will need around $630,000 in their superannuation accounts. Meanwhile, couples will need a combined balance of around $730,000.
Of course, these figures assume you'll be retiring at age 67. The calculation also assumes you will only need to fund around 10 years of retirement, will be eligible to receive a partial Age Pension, and that you own your home outright.
Which means, at age 59, you'll need a very different figure.
Also note that you can't actually access your super until age 60, unless you meet early release conditions. So you'll also need extra savings on the side to finance the 12 months before you hit that preservation age.
I still plan to retire at age 59. What exactly do I need to have saved in my superannuation?
First, you'll need to ensure you can support yourself until you turn 60 and can start withdrawing from your super. Based on ASFA's figures above, individuals will need around $55,923 set aside separately in an accessible savings account.
Couples would need around $78,566 in savings to fund the additional year.
Then you'll need to ensure your superannuation balance is high enough to fund your retirement years from age 60.
ASFA's $630,000 and $730,000 estimates won't work here because you'll need to fund an additional seven years of retirement between the ages of 60 and 67.
I've run the numbers to work out what you'll need instead.
At age 60, singles will need to have closer to $1 million in their superannuation. Meanwhile, couples will need a combined balance of around $1.3 million at the same age.
These balances assume you'll need to fund the additional seven years of retirement, and that you'll be able to fund your retirement years between ages 59 and 60 out of additional separate savings.
If you don't own your home outright, you'll also need to consider how much extra you'll need to put aside for your mortgage or rent throughout the life of your retirement.
I don't think I'll have enough. What can I do?
The obvious choice is to delay your retirement by a year or even longer. Every additional year of compound growth works to boost your final superannuation balance.
If that isn't an option, you need to consider how you can increase your balance before you finish working. Additional contributions within your applicable limits are the most straightforward option.
It is also worth reviewing your super fund's performance and risk profile. Every additional cent helps towards your end goal.
