What Is Retirement in Australia? Understanding Life after Work

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Retirement is something that most people approach with heavily mixed feelings. On the one hand, it is nice to relax and finally live the life you’ve worked hard for. On the other hand, waking up in the morning and not having anything to do can have a depressing effect—even the mere thought of it. This has put very many elderlies in low, depressed states requiring special aged care.

What is the Definition of Retirement?

Retirement refers to the period in one’s life when one decides to permanently leave their job and stop working. This usually comes with retirement benefits such as age pension and super funds.

Brief History of Retirement System

The idea of retirement goes back just a century and a half.

Retirement was first introduced by German Chancellor Otto Von Bismark in 1889. It was an attempt to curb the high rates of youth unemployment that existed at the time. The Chancellor’s idea was to create employment for the youth by paying an income to those above 70 years to leave work. This is what developed into a pension. Other countries soon followed this example.

Retirement in Australia

The first national aged pension system in Australia was introduced by the Australian labour Commonwealth government led by Andrew Fisher in 1908 under the Invalid and Old-Aged Pensions Act. It has since evolved into very many other facets under the superannuation system.

Now people simply can’t wait to get their hands on their retirement super funds. These funds generally have very favourable tax policies, if any at all.

Current Au Retirement Statistics

Australia’s retirement age has gradually kept going up, that by 2020, statistics show there are about 3.9 million retirees. This may be because life expectancy has increased over the last decade. There’s no other way to put it: Australians are just generally living longer than before.

From 2018-2019, 55% of retirees were women—they’re likely to retire sooner than men, on average.

What is the Australian Retirement Age?

People generally like to know how old they need to retire. Especially the majority that are looking for early retirement. Although there is no law in Australia that dictates what age you must retire, people generally quit working as soon as they hit eligibility for their super.

This is also known as the preservation age and is the earliest you can access your super annuity under normal circumstances. According to the Australian Bureau of Statistics, the average retirement in Australia is about 55-years-old, with the pension as their main retirement income.

The eligibility factor also depends on the date of birth. For the super fund, the eligibility age keeps increasing by six months every two years. It means being born on a certain month could be the line for you becoming eligible.

What Does Retirement Mean Today?

Today retirement is not a decision to be made lightly. It requires financial expertise and no little amount of planning and preparation. An important tip is to make a retirement plan for your retirement savings.

Take note that there are a number of factors that will influence how much income you will receive in pension funds. This includes how much your employer deposited into the system during your working years.

It is advisable to leave your retirement savings on the account and avoid withdrawing it all in a lump sum. This is because money on the account is easier to account for and manage. You may need to get financial advice to best manage your retirement savings. Most people live about 20 years after retiring. This is a long time when you do not have a stable money source.

Conclusion

Retirement is one of the few things everyone looks forward to when they grow old: that long-desired rest from the daily work stress and the hard-earned peace and quiet.

Life after work will seem like a stable retirement for you. This will require retirement planning even years prior to retirement. This is to ensure that your income does not run out on you before your retirement runs out.

At Aged Care Weekly, you can find other valuable reads and information to help you plan for retirement. Browse through the blogs or sign up for our newsletter to receive the latest updates on aged care.

FAQs

1. What is the average retirement income in Australia?

According to the Association of Super Funds Australia(ASFA), you need about $44000 per annum if you are single and $62000 per annum if you’re a couple for a comfortable retirement.

2. Is there a compulsory retirement age in Australia?

It is illegal to force a person for retirement in Australia except for a few factors, including permanent members of the Australian Defense Force who must retire at 60 and reservists at 65.

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