Are you planning to retire early?

Written on the 17 July 2024 by Parkside InvestorPlus

Sarah, a 55-year-old marketing executive, sits at her desk, scrolling through photos from her recent vacation to Bali.

The pristine beaches and serene landscapes remind her of a life beyond the confines of her office walls.

As she glances at the calendar, marking another day until her planned retirement at 65, a thought crosses her mind: "What if I could make this my everyday reality sooner?"

Sarah's story is not unique.

In 2024, many Australians find themselves contemplating early retirement, driven by various factors including workplace stress, health concerns, or simply a desire for more leisure time.

However, the path to early retirement is often less travelled and requires careful navigation.

The Early Retirement Landscape in 2024

The Growing Trend

According to the Australian Bureau of Statistics (ABS), the average retirement age in Australia has been steadily increasing, reaching 65.4 years in 2023.

However, a surprising counter-trend has emerged.

A 2023 survey by Super Consumers Australia found that 37% of Australians aged 50-60 were considering early retirement, up from 31% in 2020.

Financial Readiness

The Association of Superannuation Funds of Australia (ASFA) estimates that for a comfortable retirement, a single person needs $595,000 in savings, while a couple needs $690,000 as of December 2023.

However, early retirees typically require significantly more due to the extended retirement period.

Health Considerations

The Australian Institute of Health and Welfare reports that life expectancy at age 65 has increased to 20.1 years for males and 22.8 years for females in 2024.

Early retirees must plan for potentially longer retirements and increased healthcare costs.

Key Strategies for Early Retirement

Superannuation Optimisation

While many early retirement guides focus on investments outside of superannuation, maximizing your super contributions should be a priority.

The power of compound interest in a low-tax environment cannot be overstated.

Health and Lifestyle Planning

A 2023 National Seniors Australia survey found that 68% of early retirees reported improved mental health after leaving work.

However, the same survey found that 42% of early retirees struggled with finding a sense of purpose in the first year of retirement.

So, what do you do?

Invest in preventative healthcare.

The average out-of-pocket health costs for Australians aged 55-64 were $1,200 per year in 2023 (ABS).

Consider part-time work or volunteering.

A 2024 Deloitte Access Economics report found that retirees who engage in 15 hours of work or volunteering per week report 23% higher life satisfaction scores.

Early retirement is an achievable goal, but it requires careful planning and consideration of factors beyond just savings.

By optimising superannuation, building a bridge to preservation age, reducing major expenses, and planning for health and lifestyle needs, Australians like Sarah can turn their early retirement dreams into reality.

Remember, everyone's financial situation is unique.

It's advisable to consult with a financial planner to create a personalised early retirement strategy that aligns with your specific goals and circumstances.

If you’re wanting to retire early or are approaching retirement age, the best advice is to seek professional advice.

At Parkside InvestorPlus, we help may up and coming retirees and retirees maximise their retirement years, contact us to see how we can help you not only navigate your retirement phase, rather, help you prosper in this most amazing phase of your life, (02) 9899 4899.