Early retirement: five ways to bring forward the date

An early retirement is possible for Australians who plan and use a few strategies to boost their nest eggs. Here’s what to think about.

Retiring early is a dream for many adults, but a reality for too few as the rising cost of living seems to strip every spare dollar from household budgets.

Money specialists say many people in their 30s, 40s and 50s who adopt some proactive strategies today can often bring forward their retirement date well before the official pension age of 66 years and six months.

Knowledge is the key, they say, and Later Life Advice founder Brendan Ryan says it’s sad that people who haven’t crunched their own financial numbers often continue working even though they can afford to retire.

It’s also sad that others don’t have the choice to stop working because they can’t afford to retire early, Ryan says. “If they had planned and engaged more successfully, they might have had a better retirement,” he says.

These five strategies can potentially help people bring forward their retirement.

KNOW WHAT YOU’LL NEED

The Association of Superannuation Funds of Australia says a couple requires $640,000 for a comfortable retirement and a single needs $545,000 when using a pension and personal savings.

Fully self-funded retirees and early retirees will need more.

Retiring early means more time to spend doing things you love. Picture: iStock

“You can use the Moneysmart.gov.au calculator that looks at how much you have got, what your Centrelink eligibility is, and it gives you a number so you know what levers you have to use,” Ryan says.

BOOST SUPER

Crystal Wealth Partners executive director John McIlroy says salary sacrifice is a sure-fire way to grow your nest egg faster.

“The more you set aside, the more likely you will be able to retire sooner,” he says.

Consider government incentives such as co-contributions, spouse contributions, spouse splitting and catch-up contributions.

HIT THE HOME LOAN

McIlroy says paying off your mortgage as quickly as possible can save you “significant sums in the long run”.

“If you’ve paid off your mortgage, you can opt to put more money into your super or other investment opportunities depending on what suits your financial goals and lifestyle best,” he says.

REASSESS RISK

Younger super savers can afford to target higher-risk assets such as shares and property, which deliver much higher-returns over the long term.

“If you are nearing retirement, it is worth lowering your risks as it can be difficult to recover from negative returns – which can sometimes take as long as six to 10 years,” McIlroy says.

REDEFINE RETIREMENT

Would you prefer a part-time retirement?

The government’s transition to retirement rules allow people to start drawing down from their super savings at age 55 or 60 while they are still working.

Retirees can also earn hundreds of dollars a fortnight before impacting their age pension.