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Deciding when may be best to retire depends on a range of factors.

Many workers want to continue in their job well beyond any expected or mandatory retirement age.

The decision to finish working can be a big one, ranking as highly as other life milestones including marriage, divorce, having children and buying a home.

And it can take a great deal of discussion, consideration and planning before you leave your job. Your financial security, desired lifestyle and enjoyment of employment will all play a part in your decision making.

Reasons for retiring

  • Reached the mandatory age for retirement
  • Need to care for partner or other family members, such as grandchildren
  • Poor health, either yourself or other family members
  • Too stressful or boring to continue in your current job
  • Keen to enjoy hobbies, time with family or travel
  • Received inheritance or other lump sum of money

Check your financial resources

If you have always had an income, or you and your partner have both had employment earnings to live off, it could be daunting to imagine what it might be like to have spare time but no regular pay coming into your bank account.

There are ways of investigating and estimating how much you might need to retire.

The Association of Superannuation Funds of Australia’s (ASFA) Retirement Standardhas researched benchmarks that give a guide as to what you could need for a ‘comfortable’ or a ‘modest’ retirement.

The projections take into account home ownership, whether you want to travel overseas regularly or holiday in Australia, how old your car is and how often you like to eat out or enjoy leisure and sports activities.

Boost your retirement savings

If you’re concerned that your current (or projected) super balance may not allow you to enjoy the retirement lifestyle you would like, it’s worth considering ways you can increase your super while still working.

Salary sacrificing might be an option. You can discuss with your employer if you might be able to put extra money into your super from your pre-tax salary and/or bonuses. Instead of being taxed at your marginal tax rate, salary sacrifice contributions are taxed at just 15% for most people.

You might be eligible to claim a tax deduction for making personal super contributions - again these are taxed at just 15% for most people when received by your fund.

You could also consider making contributions to your super from your own after tax money and/or making a contribution to your spouse's super account - depending on the amount of the contribution and your spouse's income, you could receive a tax offset for doing so.

There are caps that apply to different types of contributions and extra tax may apply for exceeding these caps. You can check the Australian Taxation Office (ATO) website to ensure you know the current contribution caps so you can contribute tax-effectively.

Make a plan

Once you reach your ‘preservation age’ - from 55 to 60, depending on your date of birth – you can start thinking about how you might be able to transition to retirement, with access to some of your super while still working.

There are several ways you can choose access your super and this may impact the amount you’d like to retire with as well as when will be best to retire.

Try our retirement calculator

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Things you should know

This article contains general advice only. It does not take account of your individual objectives, financial situation or needs. You should consider talking to a financial planner before making any financial decision based on this information. This document has been prepared by Commonwealth Financial Planning Limited ABN 65 003 900 169, AFSL 231139, (Commonwealth Financial Planning) a wholly-owned, but non-guaranteed subsidiary of the Commonwealth Bank of Australia ABN 48 123 123 124. Commonwealth Financial Planners are representatives of Commonwealth Financial Planning. 

Information in this article is based on current regulatory requirements and laws. While care has been taken in the preparation of this document, no liability is accepted by Commonwealth Financial Planning, Commonwealth Financial Planning related entities, agents and employees for any loss arising from reliance on this document. Taxation considerations are general and based on present taxation laws. You should seek independent, professional tax advice before making any decision based on this information. Commonwealth Bank is not a registered tax (financial) adviser under the Tax Agent Services Act 2009 and you should seek tax advice from a registered tax agent or a registered tax (financial) adviser if you intend to rely on this information to satisfy the liabilities or obligations or claim entitlements that arise, or could arise, under a taxation law.

Before you make a decision about your combining your super if you multiple accounts, you should compare the costs, fees, risks and benefits of each super fund. It makes sense to consider whether you can replace any insurance cover you may lose when you bring your accounts together, as well as any costs for withdrawing from other super funds and any investment or tax implications.