How to prepare for unexpected early retirement

6 August 2024

Having to retire unexpectedly can disrupt your retirement plans and leave you feeling anxious. But you may be more prepared for an early retirement than you realise. Find out how to retire early with confidence – even if it's unexpected.

A significant number of Australians retire before they intend to. According to the Australian Bureau of Statistics (ABS), the average age people plan to retire is around 65 years old. But the actual average retirement age is closer to 57 years¹.

Unexpected circumstances such as redundancy, ill health, being unable to find work, or having to care for a loved one are all reasons retirement can come sooner than planned.

Planning your perfect retirement

The ideal retirement will look different for everyone. For some, it includes a holiday every year or a campervan road trip. For others, it’s volunteering in the community or simply spending more time with the grandchildren. Either way, some planning and goal setting can really help you achieve your perfect retirement.

While having to retire early may take you by surprise, it doesn’t have to mean your retirement plans fly out the window. Here are some things you can do if your retirement comes sooner than expected.

4 actions to consider for an unexpected early retirement

1. Review your current financial position

If you had to retire today, how's your superannuation balance looking? Knowing how much money you could have available if you stopped work unexpectedly is a good first step in your planning.

When reviewing your finances, consider your assets, debts and any income sources, such as government assistance. For example:

• your superannuation
• any savings you have
• any debts you may have, such as a credit card or home loan
• income from personal investments such as shares or property
• your eligibility for the Government Age Pension. 

LEARN MORE: YOUR AGE PENSION ELIGIBILITY

2. Calculate your living expenses

Once you understand your assets and income sources, it’s a good idea to calculate your living expenses. This helps you estimate how much you’ll need to spend each year in retirement. Retirement expenses can include rent, bills, food, entertainment, holidays, insurance, home or car repairs, and health expenses.

It can be hard to know how much super is enough to last you in retirement, or if your savings will give you the lifestyle you want. Use our super projection calculator to see how much income you could have in retirement. You can also see how adding extra money to your super² could increase your balance over time.

TRY THE SUPER PROJECTION CALCULATOR

3. Know when you can access your super

You can access your super when you reach 60 years of age and retire. The meaning of ‘retire’ depends on your age and how and when you finished work:

• If you’re 60-64:
  • You stopped working permanently, or
  • You stopped working for any employer after you turned 60
• If you’re 65 or older:  you can access all your super, even if you’re still working.

In some cases, you may be able to access your super early. This could be due to financial hardship, compassionate grounds, or becoming permanently disabled.

FIND OUT MORE: ACCESSING YOUR SUPER EARLY

4. Explore how to turn your super into a regular income – account based pension

If an early retirement comes unexpectedly and you’ve reached age 60 and meet the eligibility criteria, you have a few options. These include taking your super as a lump sum or moving it to a specially designed retirement account, such as an account based pension. With an account based pension you can:

• receive regular income payments from your super - similar to receiving a salary or pay from your employer;
• access extra money from your super whenever and for whatever you need; and
• keep your balance invested where it could benefit from investment returns³.

Hear how others have navigated approaching retirement

It can be reassuring to know that whatever you experience, you’re not alone. Hear how other members have navigated their retirement journey in our podcast series titled ‘The moments that count.’ In episode 17 of the series, we discuss retiring earlier than you’d planned.

Listen to ‘The moments that count’ podcast

Get professional financial advice

Retiring earlier than planned means relying on your super for longer. This may seem daunting, but speaking to a financial adviser can help you understand your situation and feel more confident about your finances. The earlier you start planning, the more control you will have.

For AustralianSuper members, there are several education and advice options available, including retirement webinars. These provide an insight into planning and managing your finances. We also offer members different types of advice options⁴ to suit the level of help you’re looking for. This ranges from over-the-phone simple super advice to putting you in touch with a qualified financial adviser for more tailored and comprehensive advice.

Explore your retirement advice options