When reading articles about retirement, you will most likely hear two particular ages discussed, ‘retirement age’ and ‘preservation age’.
Retirement age is more accurately described as ‘Aged Pension eligibility age’ because, as the name states, it is the age that you become eligible receive the Aged Pension. Retirement age is used, possibly because ‘Aged Pension eligibility age’ is a bit of a mouthful, but also because, if you haven’t managed to build up sufficient savings either through your superannuation or other investments, then it really isn’t financially feasible to retire until you are eligible for the Aged Pension.
The qualifying age for the Aged Pension is currently 65, but will increase to 67 incrementally from July 1, 2017 to July 1, 2023. These increases will occur as follows:
- Born before July 1, 1952, you qualify when you turn 65
- Between July 1, 1952 and December 31, 1953, you qualify when you turn 65 and a half
- Between January 1, 1954 and June 30, 1955, you qualify when you turn 66
- Between July 1, 1955 and December 31, 1956, you qualify when you turn 66 and a half
- After January 1, 1957, you qualify when you turn 67
Preservation age is the age that you can access your superannuation savings. Depending on your circumstances, you might be able to access your entire savings as a lump sum payment (most commonly if you are fully retired once reaching preservation age) or regular payments – but not a lump sum – through a Transition To Retirement (TTR) pension (if you decide to continue with either full-time or part-time work even after reaching your preservation age.
Previously, the preservation age was ten years below the retirement age (55 and 65) for the majority of people; however, that will change to a seven-year gap (60 to 67) over the next few years. Your preservation age can be calculated using the following list:
- Born before July 1, 1960, your preservation age is 55
- Between July 1, 1960 and June 30, 1961, your preservation age is 56
- Between July 1, 1961 and June 30, 1962, your preservation age is 57
- Between July 1, 1962 and June 30, 1963, your preservation age is 58
- Between July 1, 1963 and June 30, 1964, your preservation age is 59
- After June 30, 1964, your preservation age is 60
By Jennifer Lowe