Key Takeaways
- The Retirement Reality Gap: While Australians intend to retire at an average age of 65.4, the actual average retirement age is 56.9 years. This gap highlights the need for early financial planning to cover unexpected early exits from the workforce.
- Primary Income Sources: Government pensions remain the main source of income for 43% of retirees. Superannuation and private annuities follow as the primary income source for 27% of the retired population.
- Drivers of Retirement: Financial security is the leading factor for 36% of retirees. However, personal health or physical abilities dictate the timing for 22% of people.
- Closing Gender Gap: The difference in retirement intent between men and women is shrinking. There is now only a six-month difference in when each gender intends to retire compared to a full year a decade ago.
- Upcoming Retiree Volume: Approximately 710,000 Australians plan to retire within the next five years. Of these, 226,000 intend to leave the workforce in the next two years.
Australian life expectancies are increasing over time. We can now expect to live longer, on average 5 to 7 years longer, than our parents or grandparents did.
The problem is that as we live longer, we also need to support ourselves for longer in retirement. This is compounded by the fact that, according to the Australian Bureau of Statistics (ABS), we are retiring earlier these days. The average age of retirement is reported to be 56.9 years. Interestingly, the average age people intend to retire is 65.4 years.
The Gap Between Intended and Actual Retirement
According to the ABS May 2024 report:
- There were 4.2 million retirees.
- The average age at retirement of all retirees was 56.9 years.
- 130,000 people retired in 2022, with an average age of 64.8 years.
- The average age people intend to retire is 65.4 years.
- A government pension was the main source of income for most retirees.
In their Media Release supporting their 2024 retirement report, the head of labour statistics at the ABS said: "While the average age people intend to retire has risen over time, it hasn't changed much in the last 10 years. This average has been between 65.0 and 65.6 years for close to a decade. On average, men intend to retire slightly later than women, but this gap is closing. In 2022-23, there was around half a year difference between men and women, compared to a year difference a decade ago."
Source: ABS
Common Sources of Income at Retirement
According to the ABS retirement report, a government pension or allowance was still the main source of personal income at retirement for 43% of retirees. This was followed by superannuation strategies, an annuity, or a private pension at 27%.
The data shows that many Australians still rely heavily on the safety net of the Age Pension. However, as life expectancy grows, relying solely on government support may not provide the lifestyle many expect. This is why professional investment advice is essential for those wanting more autonomy in their later years.
Source: ABS
Key Factors Influencing the Decision to Retire
In 2022-23, the most common factor influencing older workers' decision to retire was still financial security at 36%. Personal health or physical abilities followed at 22%. Around one in eight retirees, or 14%, said reaching the eligibility age for an age or service pension was a key factor.
These figures suggest that while we want to work longer, our bodies often have other plans. If you are forced to retire due to health, having a robust retirement planning strategy already in place can prevent a financial crisis.
The Importance of Proactive Retirement Planning
According to the ABS, 710,000 people intend to retire in the next 5 years, with 226,000 in the next 2 years. Will you be one of these people? If so, do you have the confidence your plans will be enough to support you?
Your Morgan's adviser can review your position and recommend strategies that will help you stay on track. This ensures that your retirement is an enjoyable stage of life. If you are already retired, we can help there too.
Find a Retirement Specialist
Planning for a longer life requires a strategy that accounts for health, lifestyle, and market changes. Our team can help you navigate pension eligibility and superannuation to ensure you are ready. Find a Morgan's adviser today to secure your future.
Contact your Morgans adviser today to schedule an appointment to discuss your retirement plans.
Frequently Asked Questions
What is the average retirement age in Australia?
The current average retirement age for all Australian retirees is 56.9 years. However, data for those who retired more recently, specifically in 2022, shows an average retirement age of 64.8 years.
What is the main source of income for Australian retirees?
A government pension or allowance is the primary source of income for 43% of Australian retirees. Superannuation, annuities, and private pensions serve as the main income source for 27% of retirees.
Why do people retire earlier than they planned?
The most common reasons for retiring earlier than intended include personal health issues or physical limitations. While many intend to work until 65, these health factors influence roughly 22% of all retirement decisions.
Is the retirement age gap between men and women closing?
Yes. The gap in retirement intent between genders has halved over the last decade. There is currently only about a six-month difference between when men and women plan to stop working.
How many Australians rely on the Age Pension?
Approximately 43% of retirees report that the Age Pension or another government allowance is their primary source of personal income. This remains the most significant pillar of retirement funding in Australia.
