Could you retire at 55 with the average superannuation balance? Here’s what the numbers say

Once you reach your 50s, you’ll probably start thinking about what it’ll take for you to stop working and start your retirement. This is the age bracket where you’ll need to start fine tuning your retirement strategy and think about maximising your superannuation balance.

Some might even think about how they can retire much earlier than the average age of 65. 

But while it’s not impossible to retire at age 55, it’s not as straightforward as you might think.

Let me explain why.

The price of retirement versus the average balance at age 55

According to data from the Association of Superannuation Funds (ASFA), a comfortable retirement is one defined as a good standard of living. 

It typically would include top-level private health insurance, ownership of a reasonable car brand, regular leisure activities, funds for home repairs and renovations, occasional meals out, and an annual domestic trip. 

It also assumes you own your home outright and that you’re receiving the age pension.

ASFA has calculated that a comfortable retirement will cost approximately $54,840 per year for individuals and $77,375 per year for couples.

That lifestyle requires a superannuation balance of around $630,000 for a single person, or $730,000 for a couple.

Compare this figure to the average superannuation balance for Australians aged 55.

For men aged 55-59, the average balance is $319,743 and for women it is just $242,945.

As you can see, the average superannuation at age 55 isn’t enough to fund a comfortable retirement. In fact, the figures are very far apart.

But the average balance isn’t the only thing preventing 55 year old Aussies from retiring.

Accessing your superannuation balance in retirement

Age 60 is considered the preservation age. This is the milestone where Australians can start living off their superannuation provided they have stopped working.

Once you hit age 65, you can access your superannuation regardless of whether you’re earning an income or not. You can withdraw it as a lump sum, start an income stream or do a combination of both.

Then at age 67 you can access the Age Pension payment, if you meet eligibility requirements. Many government or association estimates around retirement are also based on the understanding that you’ll retire at age 67.

At age 55, none of these are available to you. That means in order to retire you’d need other savings or income to fund yourself for at least the next five years.

Also, by retiring 10 years ahead of the average age and 12 years ahead of the age used to calculate retirement estimates, your money needs to stretch a lot further.

So, yes it’s possible to retire at 55, but not with any superannuation, let alone the average balance at that age.

The post Could you retire at 55 with the average superannuation balance? Here’s what the numbers say appeared first on The Motley Fool Australia.

More reading

• Vanguard ETF dividends to be paid today
• 3 ASX dividend shares raising dividends like clockwork
• 3 ASX 200 blue chip shares to buy with $20,000
• I’d buy this ASX dividend stock in any market
• $10,000 invested in Zip shares one month ago is now worth…

Motley Fool contributor Samantha Menzies has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.