Thinking about early retirement? Here’s how to do it

You will be clocking off in no time!

Dreaming about swapping the nine-to-five for a relaxed whenever-I-feel-like-doing-it lifestyle? If you’re thinking about early retirement, you’re not alone. It turns out one in three Australians under the age of 34 want to retire early, according to Aware Super

There’s even a term that’s been coined for people who want to achieve Financial Independence and Retire Early – it’s called FIRE (get it?)!

But it can seem like a hard-to-achieve dream for some. Not if you follow these early retirement tips from the experts.

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What is the retirement age in Australia

There is no specific retirement age. However, many people base the end of their working life on when they qualify for the Age Pension (AP). As of July 1 2023, the eligibility age increased to 67 years (for anyone born after 31 December 1956).

What is the retirement age for women in Australia?

Both men and women are eligible for the AP at 67. In the past, women received the AP when they turned 60 – this age has consistently increased from the 1990s until it equalised with the male AP in 2013.

However, the age for women to retire is dependent on different factors to men. According to federal data, women save about 30 per cent less for retirement than their male counterparts. This is due to many reasons, including lower wages (on average, women earn 82 cents for every dollar paid to men) and time out of the workforce for child rearing. As a result, women’s retirement age in Australia can be delayed due to inadequate funds.

Let’s face it, no one wants to work for longer than they have to. So what are the financial decisions that will make your dream of retiring early come true?

Make a retirement plan as soon as possible

Financial experts agree that the best way to achieve early retirement in Australia is to calculate your retirement income well in advance.

“The sooner you begin planning, the better equipped you’ll be to take action and work towards your retirement goal,” says a spokesperson from the Australian Securities and Investments Commission (ASIC). 

If you don’t know where to start, the best thing to do is to get some assistance. There are multiple avenues that can help you plan for financial independence early.

  • The free retirement planner tool on
  • Service Australia’s free financial information service.
  • Visit a licensed financial planner to talk through your options. 

Once you’ve worked out how much money you will need once you stop working, and what you expect your living costs will be, you can then figure out how to transition to retirement promptly. 

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Get the most out of your job

One in six Australians consider themselves to be in jobs that pay either fairly or badly, according to YouGov

If you’re dissatisfied with your pay, don’t rest on your laurels – ask for a raise or seek work that will set you up to reach your ideal retirement income sooner.

“Earn your worth,” says financial advisor Christine Lusher from Lush Wealth. “Earn as much as possible for the hours you work. Get a qualification if it will assist you to earn more long term.”

Interestingly, men (59%) are more likely to think they are paid well compared to women (46%). One in five women believe they are paid poorly.  

“I have had a few young women comment that they know they are being underpaid but they love the people they work with because they treat them like family,” Christine says. 

“Let me assure you that your work family may not be around forever. If you are real friends you will stay in touch with them post employment. If your employer does not offer you a competitive salary, seek work elsewhere.”

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Review your superannuation

Superannuation is the biggest source of most people’s retirement savings. It’s typically your biggest asset outside of the family home. 

“Currently 11 per cent of your salary is directed towards a superannuation fund via compulsory Superannuation Guarantee Contributions,” Christine says. 

This is why who you choose to place your super with can make all the difference when it comes to retiring early. Don’t stick with the default option chosen by your employer, shop around and research which funds will best serve you.

“So many people just assume that super is either too far away to worry about, or they think the system doesn’t work so they ignore it,” says financial advisor Brenton Tong from Financial Spectrum. “This leads to paying too much in fees and maybe being invested incorrectly – which leads to a poor outcome, making it even harder to retire in the way that you want.”

ASIC also recommends making “extra super contributions if you can afford it”.

“In theory, you should put as much as you can into super, assuming you have a good fund,” Brenton echoes. “The money goes in before tax is taken out and the super fund pays 15 per cent.  That means you have an instant uplift in capital from day one, and if that’s invested well, it will perform better than anything you can put your money into with after tax dollars.

“You might not be able to save every year of your life, but when you can, you really should have it high on your list of financial goals each year.”

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Start investing while you’re young

The sooner you invest, the more you will reap the benefits of compound interest. You receive compound interest on money you initially deposit, and then you earn interest on the interest. This is why making additional super contributions is an effective way to quickly reach a comfortable retirement income.

But super isn’t the only thing you can invest your money in. It might help to set up an appointment with an accountant to talk about your market options, and what investments work for you. Just make sure you prioritise paying off your debts first. 

“Be mindful of what you’re investing into and chase returns when you’re younger,” Brenton warns. “However, investing too cautiously can have the opposite effect and you miss out on great tax effective returns at a time in your life when you can handle the risks.” 

There you have it, our top tips on how to retire early. Time to start saving!

*This article takes general advice from ASIC’s Moneysmart as well as  financial advisors Christine Lusher from Lush Wealth and Brenton Tong from Financial Spectrum. Make sure you seek financial advice appropriate to your individual circumstances before making decisions. 

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